Friday 24 May 2013

Assistance sought of competent or semi-competent number cruncher

Because, to be fair, I am not either, but there I was reading this piece - Why isn't a global tax on multinational profits on the agenda for G8? by Ben Chu in the Indy - when this started me thinking - never a good idea - but, all the same:-
Of course, what Mr Schmidt and Google love isn't us Britons as individuals, but our money. The UK is the second-biggest advertising market for Google in the world, recording $4.9bn (£3.2bn) in transactions here in 2012.
Now I don't pretend to fully understand the ins and outs of how that £3.2 billion materialises, but I felt it must in some way be linked to people in the UK using that famed search engine.

And based on the number of days in the year, and the numbers of hours in the day and the number of minutes in an hour and the number of seconds in a minute (I did confess to lack of competence earlier, so be fair) that, I decided with the aid of a calculator, worked out at just about £101.50 a second.

And I felt reasonably sure that "just the one" search per second was unlikely to generate revenue of £100 plus, there would probably have to be "a lot of them per second" - even if each search raised as much as say the majestic sum of 2 pence for Google, well that's 5000 plus "searches" in the UK every second.

That's a lot of searches. Some of which I guess will be of a "serious research type nature" conducted by businesses and others of a "serious research type nature" by people wishing to become the customers of businesses; and some of a "serious research type nature" by people seeking facts and enlightenment which could be business related, or of an educational nature, even if a lot are considered shall we say, frivolous.

Now just supposing Ben got his wish and Google was subjected by the UK, and indeed just about everywhere, to "a tax levy based on how much business they do in each jurisdiction". Ben doesn't specify the level of the levy, nor ascribe a cash figure to what he expects it to generate for HM Treasury.

But as this ruckus has blown up around "alleged failure to pay sufficient corporation tax" it seems safe to assume he would want the levy to equate to the amount of 'unpaid' UK corporation tax that Google is accused of dodging, and that it would be related to that £3.2 billion revenue figure.

So I just idly wondered how much that might be, and whether it would be sufficiently big enough to convince Google to start making that quite useful search engine (and yes I know there are others, so presumably any of them available in the UK would be subject to the same levy if they generated "revenue") only available on payment of some "user subscription" and how much it might be.


Assuming they couldn't extract much more from the people buying their advertising (who presumably would pay extra if they felt they could pass on their extra costs to customers, but cut back their advertising if they felt they couldn't, thus probably reducing Google's UK generated revenue) because if Google really aren't making much in the way of profit in the UK, then the proposed levy is probably going to turn that into a biggish loss, and despite their "do no evil" ethos, I think they would be evil enough to think "we ain't no charity, and we certainly can't afford to be one."

3 comments:

Mark Wadsworth said...

According to this there are 46,000 google searches a second, but that's globally. Maybe a tenth of that it UK? Which is surprisingly close to your 2,000 estimate.

Tim Almond said...

Google ads (if you aren't aware) work on search terms and clicks.

And Google maximises the rent for the space for the ads. So, let's say that you have a search term like "adabas programmer" (adabas is an ancient and obscure DB system). Hardly anyone wants to use it. So, a click will cost you pennies.

On the other hand, some of the search terms I use for my non-obscure programming skills cost as much as £2 for a click. A search term I used for a client cost £6 for a click.

I don't know what the average ad price is, but that's how they make £100~ per second. 50-100 people (I'm guessing) clicking an ad.

The Thought Gang said...

Further to the comment above.. they won't charge users for searching because it destroys that model. The volume and variety of searches is what enables them to sell clicks for £6, for 0.0006p, and for everything in between. That volume and variety comes from their dominant position. They lose that if they try to charge, because there will always be someone who'll be able to make a bunch of money doing it for free (like Google do now).