OK

For anybody who has just awoken from a 20 year long nap, Google Inc. is a multi-national technology company with headquarters in Mountain View, CA, USA. Because of that it is generally referred to as being an American company, but is it really? It currently finds itself as one of the major technology companies in the cross hairs of the NSA data collection controversy. This group of companies are being portrayed as being forced by orders of the FISA court to do the bidding of the US government.

I am interested in exploring the situation of the various players on the international internet. Since that involves many national governments and many private companies, it seems like a good idea to take a specific focus. Google seems like a good candidate for that. It has supplanted Microsoft as the technology company with the most visible and pervasive presence on the world stage. In less than 15 years it has grown from being a tiny startup to one of the world's major enterprises. More importantly it has pushed the technological envelop to make its presence on the internet essentially unavoidable.

I am using it as a case study to explore what it means to be a multinational company in the 21st C. Much of what can be said about Google is true of most large multi-national companies. Traditional manufacturing companies have their operations distributed around the globe. However their tangible products move from place to place and pass through ports of entry. With service companies such as financial services or technology it is more difficult to track their operations and they become more diffuse and dispersed. Google is an outstanding example.

A good place to start is looking at their geographical presence. It comes as no surprise that a handy Google Map is available.

Google locations  

It is notable that they don't have any offices in Greenland or Antarctica. However, with global warming on the way they likely are taking options on good beach front property.

The vast majority of their business activity is conducted in bits and bytes and flows over the internet. People can be active participants in this business from any location where they can establish an internet connection. One of the company's newest projects is the floating of giant reflective balloons to extend WiFi to the most remote locations on earth. Their major product lines are search, cloud computing, software and online advertising.

One of the things that Google has in common with NSA is a strong taste for secrecy. The efforts to find out what they are up to have spawned a sizable cottage industry. One question that is very difficult to answer is how many people work for Google and where do they work. Here's an example of one effort to figure that out.

Google quietly contracting with global outsourcing firm for some employees at Ann Arbor office  

Google is contracting with Bermuda-based outsourcer GenPact Ltd. to help staff its AdWords sales office in downtown Ann Arbor, said independent sources familiar with Google’s operation.
The revelation — a rare insight into a company that takes great pains to keep its internal workings secret — raises questions about how many Google employees work at the Ann Arbor office.

When Google launched its Ann Arbor office in 2006, the company promised to hire 1,000 employees by 2011 in exchange for a $38.25 million tax credit from the Michigan Economic Development Corp.’s Michigan Economic Growth Authority (MEGA) board.

Since then, Google has been consistently hesitant to reveal the exact number of workers it employs in Ann Arbor, generally giving estimates instead of specifics. The company told AnnArbor.com earlier this year that it had more than 250 workers at its Ann Arbor office — unchanged from two years ago.

I ran across this particular piece in the process of using Google to Google Google. I was trying to come up with a breakdown of how many employees they have and where they work. I found myself essentially going around in circles. The total number gets reported in a range from 30k - 50k. There have been a number of controversies about the US H1B visa program that allows companies to bring foreign workers to work in US offices. This becomes fairly irrelevant to a company like Google. Not only do they have offices all over the world, but there is no compelling reason that people have to be in a particular place to perform work. It is clearly an international workforce.

A more fundamental question is the relationship of such a global company to the national governments of the many countries in which it conducts its activities. I think that most of the offices spread around the above map are basically small sales operations dealing with corporate customers. Google supposedly operates about a million servers spread around the globe and those are connecting to billions of computers.

One of the first big flaps over government control came in 2006 when Google agreed to comply with demands of the government of China to filter search results for specified keywords and websites. This was a deal to avoid having Google entirely blocked for Chinese users. They have made more limited concessions to the governments of Germany, France, the UK and US. European governments are attempting to impose a stricter regime of internet privacy regulation than that established by the US. Google is presently tap dancing around the issue. At present the issue of cooperating with government surveillance has only come up in relation to the US. However, since it has been revealed that other governments have their own versions of such activities, it would seem unlikely that Google wouldn't come into the picture as well.

According to one company financial report Google now gets 54% of its revenue from outside the US. That seems like a significant threshold to have crossed. That of course raises the question of paying taxes on all that money. Google has followed a similar plan for global tax avoidance as that which was publicized about Apple. Large sums of money are parked in off shore tax havens such as Bermuda and Ireland.

As with privacy, governments of the EU have been pushing for a more aggressive international tax regime. However the US government is not inclined to cooperate.

US blocks crackdown on tax avoidance by net firms like Google and Amazon  

France has failed to secure backing for tough new international tax rules specifically targeting digital companies, such as Google and Amazon, after opposition from the US forced the watering down of proposals that will be presented at this week's G20 summit.

Senior officials in Washington have made it known they will not stand for rule changes that narrowly target the activities of some of the nation's fastest growing multinationals, according to sources with knowledge of the situation.

The Organisation for Economic Co-operation and Development (OECD) has been told to draw up a much-anticipated action plan for tax reform at the gathering of G20 finance ministers this Friday, but the US and French governments have been at loggerheads over how far the proposals should go.
 

So, we find multi-nationals taking tax shelter where they can pay the least, but the US government that is losing out of the tax revenue providing them with shelter and protection from regulation.

There is a good bit of discussion about what impact the NSA data collection revelations will have on the fortunes of AMERICAN tech companies. People are suggesting that it will cause them to lose business to foreign companies. We really don't know a lot about the relationship of the US government to tech companies like Google. We can be sure that it is more complicated than just a few security letters.

The question that comes to my mind is what does it mean to be a company with a national identity. Once upon a time it meant a business located in a particular country with most of its employees and customers located in the same country. For large corporations that has been changing steadily since WW II. It is not even a matter of a big company based in a particular country with some foreign subsidiaries. The lines get fuzzier and fuzzier. For global companies like Glodman Sachs and Google they are fuzzier than for most.

I don't have any ringing calls for action to make. This, like the changes in technology, is all part of a changing world. However, I think that not only do we need to reassess the impact of the technology on our lives, we also need a different understanding about the players in the game.  

Originally posted to Richard Lyon on Tue Jul 16, 2013 at 02:15 PM PDT.

Also republished by Community Spotlight.

EMAIL TO A FRIEND X
Your Email has been sent.