Ted Baybutt, founder of MovieSweep, explains why he, and many other startup company founders, have a complicated emotional relationship with Google.
It’s a quandary. I’m trying to figure out how I feel about Google. I respect Google, as it has helped my startup in so many ways, but it kind of troubles me a bit too, because of its market dominance, which is consolidated through the use of loopholes to minimise its tax bill.
At the start of the year, Google struck a deal with the UK tax authorities to pay £130m in back taxes. The payment covers money owed since 2005 and the Chancellor hailed it as a “victory” for the government.
I’m not so sure “victory” is the right word; after all, the value of Google’s sales in Britain in 2013 was £3.8bn, but it paid just £20.4m in taxes. Its international tax structures are complex, that’s for sure, but the company states it has abided by international tax rules and isn’t breaking any laws.
It seems to me Google is simply doing what most would do in the same situation. Put it this way, if someone told you a legal way of saving money on your internet provider bill, you’d do it. I know that if I was able to cut costs to aid cash flow in my small company – a tech startup based in Greenwich – I would.
The government announced its planned Diverted Profits Tax, AKA the “Google tax”, in 2014, but it arguably doesn’t go far enough – it asks companies like Google to report themselves to the taxman. Sounds like asking a turkey to vote for Christmas or a burger for BBQ season.
I don’t wish to sound ungrateful. The reality is, I actually think Google is an extraordinary company and, without it, companies like my own probably wouldn’t exist. But I would ask Google to review the financial pressures it places on startup companies in relation to its gatekeeping charges and its 20% levy on in-app purchases.
That said, there are so many services created and provided by Google that I use on a day-to-day basis, from Google Search to Google Mail and Google Analytics to Google Drive. They’re all hugely effective and make my team’s life so much easier. The fact Google provides these essential services to us, and for pretty much next to nothing, has to be applauded.
All in all, my call to action is directed as much to the UK government as to Google. Credit to the government for the creation of the UK Games Fund (for which the application process went live on 19th January this year) and improved tax relief (eg SEIS), but if it could try to tip the balance just a little more in favour of Britain’s great and innovative small businesses, then we’d all have a fairer playing field. Otherwise it’s just not cricket!
MovieSweep is a fun film app for movie buffs. The game features film clips and trivia, challenging players to test their knowledge of the movie industry. Head to www.moviesweep.co.uk to download it now!