Google Regulations

 

As measures to address the monopoly of Google's mobile operating system (OS) and tax evasion are being established worldwide, Korea is no exception to the moves.

Much attention is being paid to whether or not the problem of reverse discrimination against local companies due to Google's exemption from Korean laws can be solved.

According to sources in the Science, ICT, Future Planning, Broadcasting, and Communications Committee of the National Assembly on Sept. 17, members are discussing a proposed plan to enact a law tentatively named, “the Act to prevent a monopoly and reverse discrimination,” to target Google.

Over the last few years, lawmakers affiliated with the committee have pointed out Google's monopoly and reverse discrimination whenever inspecting government offices. This legislation will reportedly have a measure to address Google's mobile OS monopoly and prevent reverse discrimination against local firms.

This kind of legislation is being created around the world. For example, since 2010 the E.U. has been investigating whether or not Google's Web search service violated antitrust laws. A representative of the government of Germany said, “We could force Google's operations to be divided.”

In particular, the OECD has decided to establish a law to regulate tax evasion by global companies like Google. On Sept. 16 (local time), the international organization released a draft bill to tackle tax optimization by multinational corporations (MNCs) using countries with low corporate tax rates. The bill is also aimed at rooting out “tax switching” by U.S. companies to reduce taxes.

This legislation is said to specify a measure to make MNCs like Google explain to tax authorities from which countries their sales come and to which countries they actually pay taxes. In addition, the measure is aimed at breaking up paper companies created in nations with low corporate taxes such as the Netherlands or Luxembourg. Recently, efforts to regulate Google have continued worldwide, as shown by Aptoide's complaint against Google for violating antitrust laws on the grounds that the search engine giant is creating an environment unfair to competition.

In August, Korea also announced that the Ministry of Strategy and Finance will impose value-added taxes on overseas companies starting next year. So far, local firms have been required to pay taxes from the domestic sales of mobile applications via local app markets, but overseas app markets such as the Google Play Store and Apple’s App Store have been excluded from the tax list.

This unfair tax policy has been cited as a prime example of reverse discrimination against local companies, and this time the government announced that it will levy taxes on Google and Apple.

According to industry sources, Google Korea turns over 100 billion won (US$96 million) a year, mainly from the ad market through Internet searches or YouTube. However, its sales are estimated at more than 1 trillion won (US$958 million) when sales from Google Play in the country are added to its total earnings.

The government's move to strengthen its regulation of Google is due to problems with Google's monopoly in mobile OS and Internet searches. According to data compiled by the Ministry of Science, ICT and Future Planning last month for the local environment for Internet uses, Google's Android makes up 85.4 percent of the local mobile OS market.

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