Deputy Chief Executive of Orange SA, Gervais Pellissier stated that the way Alphabet Inc is taxed is unfair, saying “We think the way that tax is collected today makes us a very easy target because we have physical infrastructure. We think there is a need for a level playing field.” He believes that firms like Alphabet Inc are getting an unfair tax deal (in comparison to Orange SA), due to their lack of physical infrastructure.
Alphabet Inc Raided in France
Last week, an Alphabet Inc facility in France was raided, with documents & hard drives seized. The raid was ordered by the state financial regulator. It has been suggested that they are taking advantage of the low corporation tax rate in Ireland, thus avoiding the 33% corporation tax rate in France. The firm is not the only firm using loopholes to pay less tax, with Facebook Inc (originally) only paying £4,327 (around $6,500) in corporation tax in 2014 for its UK operations.
A Closer Look at Alphabet Inc (GOOGL)
Alphabet Inc is a large American holding company, and its most notable subsidy is the search engine giant Google. Other firms held by them include Calico (a leading biotech R & D firm,which launched in 2013), Google Capital (a venture capital firm, providing funding to mature businesses) & Google Fiber (Google’s own television & internet service.) In 2015, Google had 66.41% share of the search engine market, giving the firm monopoly power. Google generates the vast majority of its revenue through advertising.
As the markets closed on the 03/06/16, a share in Alphabet Inc was trading at $735.86, down by 1.13% (on the day), giving the firm a market capitalization of $497.7 billion. In 2015, the firm generated a revenue of almost $75 billion, and towards the start of February 2016, they surpassed Apple Inc’s market capitalization. The President & Director of Alphabet Inc is the Russian born American, Sergey Brin.
Google Likely to Continue Dominating Search Engine Market
Although its rivals are working hard to expand & gain market share, it seems that Google will continue to be the leading international search engine for the foreseeable future. In 2015, its closest rival was the Chinese search engine Baidu, with a market share of just 12.33%. Bing & Yahoo also lagged behind, at 10.16% & 8.76% respectively. It is Google’s dominant position in the search engine market that allows it to generate a significant amount of revenue from advertising. It is therefore a highly desirable & profitable position. To put their dominance into perspective, Google’s market share is more than 6 times greater than Bing’s market share.