- Google decides the advertising rates for different publications by its own metrics.
- The company, a mass aggregator, does not pay publishers directly for content created.
- Google, without a ‘permanent establishment’ in India, is still battling tax authorities.
- Publishers have complained about the Chrome ad-filter, which will block advertisements it deems intrusive from February.
- Concerns over search manipulation have led to the European Union cracking down on the web giant.
“Currently, the predominant business model for commercial search engines is advertising. The goals of the advertising business model do not always correspond to providing quality search to users.”
Google co-founders Sergey Brin and Larry Page wrote those words—evergreen and prescient—20 years ago and 12,383 km away. People today could find it a tad ironic that the words were not merely courier-delivered by the two, but actually authored by them—the quote is from their Stanford paper, The Anatomy of a Large-Scale Hypertextual Web Search Engine, which dates back to the same year that the search engine came into being. So, do truths change? Maybe.
Why they called it ‘Google’ and not the now-odd-sounding ‘BackRub’ was because “googol, or 10^100, …fits well with our goal of building very large-scale search engines.” Google became the gateway drug to the larger fix that was the internet, or even what Maggi was to noodles, but it was primarily a search engine. Not anymore.
Google office in Gurgaon
If the World Wide Web is indeed a gossamer mesh spun by many over time, Google is now the largest spider, the one that has the gardeners worried. It watches over everything, and decides which pieces of data flow where. Almost every other form of normal online activity seems to happen through it, as if it were the ether itself. Or a looming omnipresence/omniscience. But, in a way, it too is being watched now. Or rather, searched—its giant, mutating form is eliciting more than a little interest for the way it dominates and controls the landscape, without itself being subject to any reciprocal commitment. Since no one can escape its all-pervasive nature, others are beginning to resent the way it itself eludes an externally set responsibility while exerting huge power.
In one way, it’s the old world trying to catch up with the new. Look at taxation. It’s a shadow that hounds most of the digital economy globally—it’s following Google around too. As perhaps it should. Consider this: Google’s India revenue was Rs 7,208.9 crore in 2017, up from Rs 5,904 crore the previous year, and it pays minuscule taxes on that. Then there’s the matter of anti-trust legislation it has got entangled into of late—the way Microsoft did in the 1990s. As an operating system, that was as inescapable; Google eludes your veto by being an omnibus that surrounds you from within and without.
It’s been an amazing outward expansion along all axes that brought it here. The once-pristine search engine with that iconic uncluttered white screen first became everyone’s default e-mail service, then a browser, a library of every book that was ever written, an archive of every website you’ve been to, every photo you’ve clicked, then your phone’s OS, your GPS-enabled map, your YouTube, your newspaper boy who will deliver your news, then make a permanent mental noting of what you read…. In short, you’ve been well and truly Googled.
But what’s intriguing is how the modalities of news have changed with Google. And, concomitantly, the rules of advertising. According to market research company Statista, 94 per cent of India’s desktop search traffic goes to Google. And Google’s Android OS (with its in-built Google Chrome browser) runs nearly 80 per cent of India’s mobiles. So it’s not just about Google News as a curation platform. It’s through Google search that every headline, each piece of news, every offering of media houses, swims into people’s consciousness.
Google for ‘Narendra Modi’, and the top three links that pop up are news items. A couple of years ago, the first result would probably have been the Wikipedia link. Google has been ringing in the changes, subtly. These vast powers of dissemination also mean more than the clichéd lion’s share of the digital advertising pie—in fact, it decides how to slice and distribute the pie. Once you are taken to that piece of news, what ads pop up on the media site are governed by Google’s algorithms. More vexing for media firms, even the rates for those ads are decided by Google’s own analytics. So, from ‘creatives’ that litter digital neon boards to ‘content’, Google has it all covered. Is it fair then to think of it, along with Facebook, as the ‘new Big Media’?
Most experts think so, but in degrees. “I would regard them as media companies, but I would not think of them as credible news organisations,” says Durga Raghunath, CEO-digital at The Indian Express. Despite being only media-tech firms that “get information and services to users”, she sees them as the ‘new big media’ for two reasons: “Firstly, the amount of money advertisers are spending on them to get to an audience and, secondly, the different ways we use them in terms of social networks, maps, e-mail and videos.”
Look at Google’s Rs 7,208.9 crore on a comparative scale. BCCL, the conglomerate that owns the Times Group, believed to be India’s largest media group, with a vast array of content creators in its kitty, posted a consolidated revenue of Rs 9,976 crore for FY 2016, for all its subsidiaries, according to a report in TheHoot.org. The Old Lady of Boribunder has been around for 180 years; and Google, still a teenager, is abreast of India’s third largest media house, Zee, which brought in close to Rs 6,434 crore in 2017. HT Media and the ABP Group were at Rs 2,681 crore (FY 2017) and Rs 1,326 crore (FY 2016), respectively, while The Economic Times reported that Star India Pvt Ltd posted revenues worth Rs 10,800 crore in FY 2016.
But Google hasn’t zoomed to near the top of the news market by playing the same old game. Traditional media applies an editorial mind: it creates entertainment, gathers news, selects, edits, curates, does due diligence, and adopts a stance towards the reality it reports on. It also spends on news gathering, not to mention printing, production and distribution. Google, on the other hand, pulls out links and tells the user what the most popular story is, seemingly value-neutral on all other counts.
Experts reckon that if the media is where people discover content, then Google and Facebook are media by that definition. In 2017, the Reuters Digital News Report said over half the readers across the world came across a story not due to an editor, but courtesy an algorithm. “Google is a giant aggregator, working with advanced technology beyond the reach of most media companies,” says Sebabrata Banerjee, a blogger who works with a leading newspaper. And Shamnad Basheer, founder of SpicyIP and managing trustee at IDIA (Increasing Diversity by Increasing Access to Legal Education), says: “They are big media, frighteningly so…big media that has largely escaped regulation.”
Sevanti Ninan, editor of TheHoot.org, a media watchdog (which has been funded by Google as Outlook reported in 2013), offers a more nuanced view. “Google helps content find users interested in it,” and that’s a “huge blessing for niche media”, she feels. “It drives traffic, is a disseminator, and that makes it neither publisher nor platform. YouTube is a platform, and increasingly a really important one, which allows you to start a channel on it, making it a publisher of video content.”
Fish or fowl? Hardly matters. Categories blur, even as you define them. YouTube, for instance, plans to launch its own programming with subscription platforms, like Netflix and Amazon Prime. What matters is that a list of 2017’s top 30 global media brands by Zenith placed Alphabet Inc, which became Google’s parent company in 2016, on top. Facebook came in second. Together, the report said, Google and Facebook accounted for 64 per cent of the growth in global advertising between 2012 and 2016—and that’s where the shoe is beginning to pinch.
Since aggregators are parasitic on everyone else, publishers, the actual content creators, were relying on pieces of this pie being passed around. But trickledown can be an illusory thing—in India as much as in the West. The Washington Post reported late last year that Buzzfeed and Vice were going to miss their 2017 revenue projections. In a recent article detailing their financials for the past five years, Buzzfeed founder Jonah Peretti admitted they couldn’t rely on the aggregators for revenue: “Google and Facebook are taking the vast majority of ad revenue, and paying content creators far too little for the value they deliver to users.”
Tempers are frayed, and the next showdown is coming soon. In February, Chrome will start blocking advertisements it deems “intrusive” on web pages. Since Chrome was estimated to have cornered nearly 42 per cent share of browser use in India by December 2017 (StatCounter data), its self-arrogated power to block ads on media pages accessed through Google (and hence regulated by Google Ads) has not left publishers overjoyed. In an article in The Times of India, Gautam Sinha, CEO of Times Internet Limited, was quoted saying: “Google is effectively regulating the entire digital ad industry, including its competitors—a role no company should have the authority to do.”
In an e-mail response to Outlook, Anant Goenka, executive director of The Indian Express, says premium publishers stopped using intrusive ad formats long ago, but since most smartphones come “pre-installed with Chrome, Google must be less dictatorial in its decision-making”. He says that after publishing firm Axel Springer and many European news organisations complained, EU regulators were “quick to rap Google’s knuckles for precisely such behaviour. I would hate to see Google’s relationship with Indian publishers go down a similar path it has in Europe.”
Experts too feel Google may have overstepped, especially since, as Raghunath points out, Google will have an “even larger share of the ad pie” given Chrome’s marketshare. And besides being “regulated on the media side”, says Basheer, “Google and other big media must be continuously monitored by the Competition Commission for anti-competitive effects…they’ve become too big.” Being dominant is fine, but they shouldn’t be permitted to “abuse this dominance”, he adds. Raghunath concedes that a better user experience is “something we all want”, but says Google deciding on your ads won’t be “an easy pill to swallow…for publishers who have annual commitments from different kinds of advertisers”.
"India needs its own search engine,” declares S. Gurumurthy, co-convenor of the Swadeshi Jagaran Manch, the RSS’s economic wing. A “dictatorial” China used “censorship to contain Google. We have to use anti-competition law like the EU,” he says, pointing out that Google “frames itself as just another technical company, which helps it sidestep scrutiny”.
Besides the immense power that allows it such control, there’s raw money at stake. Alphabet Inc may have diverse revenue streams like the PlayStore, Apps, its cloud platform and Google Fiber (its optical fibre broadband service). However, for years, the bulk of its revenue has come courtesy its proprietory advertising service, AdWords. In 2016, it totted up some 88.7 per cent of $89.5 billion. And Q3 in 2017 saw it at 87.6 per cent—$24 billion out of $27.5 billion—so it’s a stable ratio.
With AdWords, we enter deep, eerie waters. It’s Google’s digital ad service that allows ads to be strategically chosen for you, based on cookies generated from your browser and on keywords determined by the advertisers, and then place them on web pages you visit. Google has got you covered wall to wall—via mail, location history, web activity, what not—so it pretty much knows what you’re a sucker for. This enriched, micro-detailed customer profile is an illicit goldmine for advertisers. Google gets paid when there’s ‘action’ (clicks) on these ads.
Revenue from this source has been falling by minuscule amounts since 2008, but Google still takes home a mammoth 32.8 per cent of a global digital ad industry worth around $200 billion. How does India stack up? The market size was brushing Rs 10,000 crore by December 2017, a joint survey by ASSOCHAM and KPMG found. And the stakes are growing fast.
So, how much do Indian brands have to spend via Google to be seen? Outlook accessed plans charted out for a well-known clothing brand and the Indian arm of a global infotainment channel. Over four weeks, the former intends to spend over Rs 7.5 lakh targeting keywords in Google searches to show image advertisements. Another Rs 2.5 lakh is set aside for Google Display Network. YouTube is a prime target, where it may choose to spend Rs 20 lakh alone on InStream and InDisplay ads for the first week and Rs 10 lakh on InStream ads over the month. (InStream are the six-seconds-before-you-skip ads, which run before a video plays, while InDisplay displays content on YouTube and GDN.) The channel, on the other hand, has a four-phase plan worth Rs 20 lakh, aiming to reach out to over four crore people over 10 weeks: Rs 12 lakh for YouTube, Rs 2.5 lakh for GDN, just over Rs 3 lakh for Facebook and a measly Rs 50,000 for Twitter.
A YouTube primary banner ad
Such spending plans are framed by digital marketers hired by brands, and these worthies are currently making a beeline for YouTube, in effect Google, to home in on the right eyeballs with the magic of algorithms, targeted keywords and search strings. All this, of course, without speaking of the primary banner ad on YouTube, which movers from within the digital marketing industry say goes for anything between Rs 10-20 lakh for a day, and is sold out within days for the entire year. An ad banner on Marine Drive, by comparison, would cost Rs 3-4 crore a month to rent, says an adman: “This is digital real estate; it goes for the same amount in probably 10 days, but reaches out to so many more people.”
No wonder its charm is growing. “YouTube is the third largest channel based on adspend now, after Star Plus and Zee,” says a digital marketing expert, who reckons it tots up some Rs 700-1,000 crore in a year. It’s ruthlessly performance-linked. The likes of Star and Zee have a “streamlined structure with content creators getting their due”, while YouTube has a “very unstructured way to pay out content creators. You only get money when you go viral.”
Another insider bemoans the competition in the sector that has led to advertisers having to bid higher for the same keywords. “Google enjoys a monopoly, hence it has increased the cost of keywords. When I started out, a click used to cost me Rs 17-18. Now, it’s Rs 100 for the same keyword. That’s over five times in four years because the competition in that segment, on that keyword, has ramped up that much. Advertisers are affected because the margin goes for a toss.”
an InDisplay ad pops up while a video is being streamed
The monopoly helps Google in other ways, especially when it decides to become a player in a segment, because it’s placed in a singularly advantageous place to skewer the competition! In June 2017, after a seven-year probe, Google was handed a penalty of $2.8 billion by the EU for a breach of anti-trust rules that related to search results for shopping comparisons. Why? Because Google had “systematically given prominent placement to its own comparison shopping service”. The EU noted that its “rival comparison shopping services are subject to Google’s generic search algorithms, including demotion” and, as a result, “consumers very rarely see rival comparison shopping services in Google’s search results”.
The case began after the founders of Foundem, a price comparison website from Bracknell parish in the UK, accused Google of favouring its own links in searches. In 2006, Shivaun and Adam Raff found that their vertical search engine, Foundem, was wiped off Google. After repeated requests, Foundem, which won The Gadget Show’s award for best price comparison website in 2008, was restored in 2009—only to be barely discoverable on Google (as opposed to searches on Yahoo and Bing).
“In October 2009, we defined search neutrality as the principle that search engine results should be driven by the pursuit of relevance and not skewed for commercial gain,” Shivaun told Outlook over e-mail. Two different search algorithms are not expected to produce similar results, “nor should they”, says Shivaun, but Google’s “universal search mechanism, which systematically promotes Google’s own services, and its increasingly heavy-handed penalty algorithms, which systematically demote or exclude Google’s rivals, are both clear examples of financially motivated discrimination”.
YouTube InStream ads
The nearly decade-long tussle wasn’t easy. “In the end, getting to this point required numerous formal submissions, White papers, panel discussions, op-eds, open letters, as well as countless meetings with regulators, politicians, and journalists across four continents,” says Shivaun. On why she thinks this was a ‘landmark verdict’, she says, “It is no stretch to say the outcome of this case could safeguard the future of competition, innovation and consumer choice on the Internet.”
In August 2015, IT minister Ravi Shankar Prasad told the Lok Sabha in a written reply that the Competition Commission had directed an investigation into four separate cases involving alleged abuse of market dominance by Google. The first, filed in 2012, involved M/s Consim Info (which owns Bharat Matrimony) and consumer group CUTS. Accusations similar to the Foundem case were levelled, with the parties alleging that “Google runs its core business of online search and search advertising in a discriminatory manner, causing harm to advertisers and indirectly to consumers”. Google was “creating an uneven playing field by favouring its own services and of its vertical partners by manipulating the search algorithms,” the complaint said.
Pradeep Mehta, secretary general of CUTS, who admires Google for the “fantastic” services it provides, says the investigation took time and Google delayed matters too—in March 2014, the Competition Commission penalised it to the tune of Rs 1 crore for not cooperating in the investigations. Sources say a Competition Commission order is now expected in weeks and it may have repercussions for Google. It would be the classic instance of an older legal framework evolving to catch up with the ways of a fast-mutating digital world.
Allow you to skip to the content after a few seconds
Taxation is another area many countries are breaking their heads over. On October 25, 2017, the Bangalore bench of the I-T appellate tribunal asked Google to pay taxes on Rs 1,457 crore remitted to Google Ireland between 2007-08 and 2012-13, citing what seemed to be a “clear design to skip the liability by both the assessee as well as GIL (Google Ireland) by having mutual understanding”. The latter appealed to the Karnataka High Court, which asked the tribunal to dispose of the appeal in “an expeditious manner”, on or before this January 31. The tax amounts to a mere Rs 129 crore (of which Google has deposited Rs 70 crore, and has been asked by the court to keep another 20 per cent aside in a Bangalore bank account), but it would set a precedent that can be safely called momentous.
The question relates to the definition of what’s known in business as a ‘permanent establishment’—loosely, “a fixed place of business in a particular jurisdiction that gives rise to income or value-added tax liability”. Can a digital entity like Google, which by definition transcends physical spaces, be circumscribed by laws that related to the good old days of brick and mortar? Conversely, can it be allowed to cream a real physical territory off a few neat thousand crores, manipulating the very space where local (taxable) entities operate, without itself being tax-liable?
Akhilesh Ranjan, principal commissioner of international tax, feels there should be liability, for good reasons. “They are able to render services without a physical presence; Google Ireland need not have an office in India. The issue is how do we tax Google. In all such cases, there is value addition based on market demand and customer base. Google has your data, user data, which has value. Since there is value addition, there should be a tax,” he tells Outlook. In July 2017, Google had a close shave in France with paying $1.3 billion worth of taxes. The core issues were set out in 2013 in the ‘White Paper on digital economy taxation’ by Pierre Collin and Nicolas Colin, then senior officials with the French government. In this ongoing attrition, the law is the Biblical shadow, trying to keep up with the pace of the digital revolution.
In India, one big bone of contention pertained to AdWords, the major source of Google’s profits. In its order, the Bangalore bench of the Income Tax Appellate Tribunal (ITAT) said, “We are unable to persuade ourselves to agree with the reasoning for treating the payment made by the advertisers (to Google) as a business profit and not as a royalty.” Why would ‘business profit’ sound more harmless for Google than ‘royalty’? One, because India’s double taxation treaty with Ireland protects anything Google Ireland may show on its books, even if it is passed on by Google India. Royalty, on the other hand, carries a more loaded meaning. It rests on the assumption that Google India is using a patented technology and intellectual property (AdWord) technically owned by Google Ireland and hence any profit Google India makes using that technology and remits to Google Ireland is seen by Indian authorities as royalty—and hence taxable. Google prefers to see it as “distribution fee”, whereas Indian tax authorities see it fit to be taxed under “section 9(1)(vi) of the I-T Act read with the Indo-Ireland Double Taxation Avoidance Agreement”.
Experts are divided. Ranjan backs the ITAT order, saying Adwords allows for the customisation of ads based on data taken from Indian users. He too contends that intellectual property is being transferred, “which Google Ireland allows”. Prabhu Govindan, managing partner at KPSN Consulting LLP, too says the tribunal “has provided enough facts and legal precedence to back its judgement. By applying the principle of substance over form,” he feels Google’s distribution fee should be seen as royalty.
Girish Vanvari, partner and head of tax at KPMG India, which has ties with Google, disagrees, saying the “appellate order has read beyond the agreement” (service agreement between Google India and Google Ireland). He says the bench is “assuming, concluding contracts”.
Many concur with the idea that the likes of Google are different from other MNCs that have set up shop in India. Basheer says the closer analogy is not a McDonalds franchisee, which would have made the case for royalties and consequent taxation a stronger one. “It’s better to think of Google as a real-estate developer who uses third party agents to attract more people,” he says. “Google AdWords is more like digital real estate. It is digital real estate. Google India is using Google’s trademark (brand name) and other intellectual property only incidentally. Their main purpose is to actively go out and solicit customers who can buy the keyword space.”
India is not the only place getting vexed by this complicated interplay between physical and virtual economic activity. In 2015, the OECD came up with an action plan against ‘Base Erosion and Profit Shifting’ (BEPS), titled ‘Addressing tax challenges in digital economy’. The G20’s concern was that MNCs were placing profits in low-tax jurisdictions (like Ireland). One of the measures suggested was an ‘equalisation levy’ and taxation on the basis of a significant digital presence. This is critically relevant going forward because India too faces the same predicament as France and a host of other countries: Google does not have a ‘permanent establishment’ here despite having offices in Gurgaon, Mumbai, Hyderabad and Bangalore, with “thousands of employees in the country, representing the various aspects of the Google business from engineering to operations”, says a Google spokesperson.
Sure enough, the Finance Bill of 2016, passed in 2017, imposed an equalisation levy (EL) of 6 per cent on the digital ad space. To avoid the double taxation imbroglio, I-T provisions were amended so that the levy was independent of corporate tax legislation. Ranjan feels EL could be looked at—but only as an “interim measure”. Why interim? Because, ultimately, in this era taxation can’t be based only on a “physical basis”, but by quantifying a “significant digital presence”, he says. It’s a fundamental shift he calls for. “We would like to see a change in ‘permanent establishment’ in tax treaties.”
Others have variations on this. Vanvari reckons EL “is not going to go away…only expand its scope”. Govindan feels the I-T department could “consider a lesser tax rate for the business income of foreign companies with no physical presence”. But for now, “something like EL” is a viable beginning, says Ranjan. The demand for it is growing in EU countries like Italy and France. The UK recently brought the Diverted Profit Tax of 25 per cent while Argentina taxes foreign tech companies deriving profits from its territory to the tune of 3 per cent. “Conceptually, many countries are coming around,” says Ranjan.
But how do you actually gauge ‘significant digital presence’ (SDP)? How to map a non-material phenomenon onto a physical territory? Definitions have to be sharpened, made precise. Should it be subscribers, or the volume of user data generated from the country in question? Vanvari reckons getting a precise fix on SDP will be crucial for other reasons too—given the parallel, and even more rapid, rise of technology like crypto-currency. That’s why he feels EL—a sort of bridge between the old and new—won’t go away. “The digital presence will always be in jurisdictions outside India. What you can control is payment to this source,” he says.
Google Ireland office in Dublin
But the conceptual shift can no longer be evaded. “The notion that somebody must be taxed based on some sort of (physical) presence needs a serious relook…people in the digital space are constantly busting borders,” says Basheer. Territoriality won’t work in a landscape where people don’t do business according to “the rigours of rigid borders”, he says. “You are trying to fit a square peg in a round hole. The law is the round hole, and Google et al in the digital space the square pegs. You have to change the shape of the round hole to accommodate the peg...make it more malleable, so to speak.”
The retuning won’t be simple. Govindan cautions that a system based on SDP would be “very subjective and complex to administer”, increasing compliance costs for business. “Also, tax departments of all the countries should be willing to integrate into a common I-T infrastructure,” he elaborates.
Perhaps some things don’t change, and even Google can’t permanently avoid taxes. Tax and competition authorities are on its tail, and a ‘framework’ is in the works. Last August, the government set up the Srikrishna Committee to look at the possibility of a data protection law. In the 240-plus-page White paper that it calls “necessarily lengthy”, the committee may just have homed in on a “game-changer”, according to T. Prashant Reddy, author and assistant professor at NALSAR, Hyderabad.
The ninth chapter of the paper (which was open for public consultation until the final day of 2017) introduces the topic of ‘Data Localisation’—think of it as a new kind of pre-nuptial contract between digital and physical, as the phrase implies. “Data localisation requires companies to store and process data on servers physically located within national borders,” the paper says. “A nation has the prerogative to take measures to protect its interests and its sovereignty, but it must carefully evaluate the advantages and dangers of locally storing data before taking a firm decision on an issue (that) has the potential to cause a major ripple effect across a number of industries,” it adds. That last bit obviously applies to the IT and telecom sectors, and the start-up ecosystem.
“The likes of Google will need to set up data farms in India, and that will change the rules of the game,” says Reddy, since the government does not really have “too much jurisdiction over Google Inc” at present. After localisation, “for all practical purposes, they will need to operate on Indian soil with a physical presence. But does that give the government too much power over Facebook and Google?” Reddy asks. Searching for an epoch-defining power struggle? Ask Google.
Google & The Indian Media
- Star India Rs 10,800cr
Star India consolidated revenue for FY 2016
(Source: The Economic Times)
- Bennett Coleman & Co. Ltd Rs 9,976cr
Bennett Coleman & Co. Ltd, subsidiaries consolidated revenue for FY 2016
(Source: The Hoot)
- Google Rs 7,208.99cr
Google India revenue for FY 2017
- Zee Entertainment Rs 6,434.2cr
Zee Entertainment Enterprises consolidated revenue for FY 2017
(Source: Annual Report)
- Network 18 Media Rs 3471.1cr
Network 18 Media and Investments net income from operations for FY 2017
(Source: Annual Report)
- HT Media Rs 2,681.55cr
HT Media consolidated revenue for FY 2017
(Source: Annual Report)
- ABP Pvt Ltd 1,326cr
ABP Pvt Ltd Consolidated revenue for FY 2016
(Source: Annual Report)
Responses to Outlook’s queries by a Google spokesperson
On the Chrome ‘ad-blocker’: These aren’t new rules for Chrome but rather one way in which Google is supporting an industry-wide standard adopted by publishers as part of Better Ads coalition.
Currently, this standard, the Better Ads Standard, applies to sites in North America (US and Canada) and Europe. Also, this is an ad-filter and not an ad-blocker.
On the CCI investigation into Bharat Matrimony and CUTS vs Google: We continue to cooperate with the investigation and remain convinced that our products are pro-competition, pro-user and in compliance with competition laws of India.
On the ITAT order: The Income Tax Appellate Tribunal (ITAT), after a six-year-long battle with Google India, made a tax demand on Rs 1,457 crore—by holding payments made by Google India to Google Ireland as its reseller of the advertising space as royalty. We filed an appeal and the high court issued a stay order.
We are encouraged by the high court’s stay, pending further hearings, on the Bangalore Income Tax Appellate Tribunal’s ruling, which we believe was a clear departure from previous judgments on the issue and not in line with India’s double taxation avoidance agreements.
On the prospect of ‘data localisation’: We continue to work with the Industry to put forward our views.