Google restructures European operations amid growing pressure

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Google is changing the the structure of its European business as it anticipates further regulatory scrutiny across the continent.

Related: European commission reopens Google antitrust investigation

Facing investigations and complaints driven by politicians and commercial rivals across Germany, France, Russia and other European countries, Google has merged its disparate European businesses into one, continent-wide operation.

The new European, Middle East and Africa (EMEA) arm will be overseen from London by Matt Brittin, previously head of Google’s northern and western Europe businesses. Individual country managers will report directly to Brittin in a bid to unify the company’s actions across European nations.

The reorganisation is in response to failures to deal with escalating challenges in individual European countries.

The so-called “right to be forgotten” ruling in May 2014 arose from a local issue in Spain, but became a Europe-wide ruling after being promoted to Europe’s highest court in Strasbourg.

Regulatory scrutiny and political ill-will

Google also faces potentially serious consequences for its business operations in search and advertising from a recently re-opened anti-trust investigation by the European Commission.

The European parliament’s approval of a motion calling for a break-up of Google’s search and other businesses in November was a demonstration of the political ill-will felt for Google. It is regarded by some as the tip of the spear of US control of the European technology market.

A plan by chancellor George Osborne to introduce a new tax on multinational corporations accused of diverting profits – dubbed the “Google tax” and announced in the autumn statement – also underlines a key challenge to Google’s business in Europe.

Closely watched by other countries across Europe, Osborne’s plans mean that from April companies face a 25% tax rate on profits from economic activity that is “artificially shifted” abroad.

It will target companies that employ complex structures to divert profits to low-tax nations such as Luxembourg and Ireland, where Google’s European operations are headquartered.

Commercial rivals have also put pressure on Google’s core business, with Facebook and Twitter growing as a source of news, for instance.

Meanwhile, companies such as Russia’s Yandex have lodged complaints with regulators over abuse of Google’s monopoly over its Android smartphone and tablet operating system, instigating further regulatory scrutiny.

Google is likely to use its new pan-European structure to consolidate power and attempt to appease politicians and regulators to avoid potentially damaging disruption.

In a bid to win over skeptics, the company has pledged to train one million Europeans in digital skills and invest a further €25m in skills initiatives.

But Google’s support of a single European digital market – a proposal put forward by EC president Jean-Claude Juncker – is likely to be its biggest push.

Brittin will tell officials in Brussels on Thursday: “For Europe to reach its full potential, we need to clear the way for companies online. We need a single market in the digital world that reflects the single market we enjoy in the physical world already. With over two dozen regulatory and frameworks to contend with, businesses stumble when they seek to sell, grow or hire across borders.”

Powered by Guardian.co.ukThis article was written by Samuel Gibbs, for theguardian.com on Thursday 26th February 2015 12.16 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010