Google Money

by DARWIN BOND-GRAHAM

If you google “money,” the search engine called Google, from which that verbification is derived, will tell you that there are 1.12 billion results (as of February 27, 2014). That sounds like a lot of anything, but consider this fact: Google Inc. makes $1.12 billion in profit every 33 days.

Last year approximately $60 billion in revenue flowed through Google, one of Silicon Valley’s tech giants. To put this kind of dollar churn in perspective consider that the state of California’s 2013 budget was $96 billion. Google’s own budget, it’s expenses on sales, marketing, salaries, and R&D was $45 billion, about half that of the largest state in the nation. At this point Google might as well be printing money. Google is sized like a mature blue chip industrial corporation, but it’s still growing like a startup. From 2012 to 2013 Google’s revenue rose 20 percent. It’s net income for 2013 was about $13 billion. That’s cash for the company and its shareholders. Google has so much money it has become something of a problem.

Where to put it all? The G-Men have tucked $58.6 billion into different pockets for safe keeping. Google has $10 billion in cash deposits. But why earn less than inflation when you can invest? Google’s financial engineers have bought $1.5 billion in foreign government bonds. Google owns your city’s debt, and the bonds of your local school district; the company owns $3 billion in municipal bonds. Google owns $7.3 billion in the shares of other corporations, perhaps the company you work for? Google might even own a slice of your mortgage; it holds $7.3 billion in federal agency-backed mortgage securities.

Part of the reason Google has so much cash is because it has come to dominate Silicon Valley’s key industry: advertising. More than 90 percent of Google’s earnings come through selling ads, either directly through its own web sites, or third party web sites.

But advertising is only hyper-profitable because Google has figured out how to dodge the tax man. Google’s effective tax rate was already well below the statutory 35 percent federal corporate rate, but last year it dipped even further, falling from 19.4 percent in 2012 to 15.7 percent in 2013. It’s hard to tell what Google actually forked over to the feds and to the foreign governments where it operates, but Google reports that its tax burden keeps dropping “primarily as a result of proportionately more earnings realized in countries that have lower statutory tax rates,” according to the company’s 2013 annual report. Many of the countries Google is referring to are considered tax havens.

But here too it’s hard to tell which countries specifically are hosting Google’s strategic shell companies, and how much Google is earning overseas. As Jeffrey Gramlich and Janie Whiteaker-Poe, researchers at the University of Maine pointed out in a recent study, Google began omitting information about its overseas subsidiaries in its SEC filings three years ago.

“Google’s 2009 SEC Form 10-K, filed in February 2010, disclosed 117 subsidiaries, 81 of which were located in 38 foreign countries,” note Gramlich and Whiteaker-Poe. “When Google issued its financial statements for the year ended December 31, 2010, its Exhibit 21 listed only two significant subsidiaries.”

So where did 98 percent of Google’s subsidiaries go? Did Google terminate them?

Gramlich and Whiteaker-Poe found that most of them still exist and are registered with authorities overseas, but that they have been purposefully omitted from Google’s SEC filings, likely in an effort to conceal tax planning strategies used to reduce taxes paid to the U.S. government and foreign nations. Google’s most recent filing with the SEC reveals only 3 subsidiaries. Two are in Ireland, and one is in Delaware, both jurisdictions that afford Google secrecy and basement corporate income tax rates.

Darwin Bond-Graham, a contributing editor to CounterPunch, is a sociologist and author who lives and works in Oakland, CA. His essay on economic inequality in the “new” California economy appears in theJuly issue of CounterPunch magazine. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion

 

 

Darwin Bond-Graham is a sociologist and investigative journalist. He is a contributing editor to Counterpunch. His writing appears in the East Bay Express, Village Voice, LA Weekly and other newspapers. He blogs about the political economy of California at http://darwinbondgraham.wordpress.com/

Like What You’ve Read? Support CounterPunch
September 03, 2015
Sal Rodriguez
How California Prison Hunger Strikes Sparked Solitary Confinement Reforms
Lawrence Ware
Leave Michael Vick Alone: the Racism and Misogyny of Football Fans
Dave Lindorff
Is Obama the Worst President Ever?
Vijay Prashad
The Return of Social Democracy?
Jeralynn Bluford
Quantitative Easing for People: Jeremy Corbyn’s Radical Proposal
Paul Craig Roberts
The Rise of the Inhumanes: Barron, Bybee, Yoo and Bradford
Lynn Holland
For the Love of Water: El Salvador’s Mining Ban
Geoff Dutton
Time for Some Anger Management
Jack Rasmus
The New Colonialism: Greece and Ukraine
Norman Pollack
American Jews and the Iran Accord: The Politics of Fear
John Grant
Sorting Through the Bullshit in America
David Macaray
The Unbearable Lightness of Treaties
Chad Nelson
Lessig Uses a Scalpel Where a Machete is Needed
September 02, 2015
Paul Street
Strange Words From St. Bernard and the Sandernistas
Jose Martinez
Houston, We Have a Problem: False Equivalencies on Police Violence
Henry Giroux
Global Capitalism and the Culture of Mad Violence
Ajamu Baraka
Making Black Lives Matter in Riohacha, Colombia
William Edstrom
Wall Street and the Military are Draining Americans High and Dry
David Altheide
The Media Syndrome Between a Glock and a GoPro
Yves Engler
Canada vs. Africa
Ron Jacobs
The League of Empire
Andrew Smolski
Democracy and Privatization in Neoliberal Mexico
Stephen Lendman
Gaza: a Socioeconomic Dead Zone
Norman Pollack
Obama, Flim-Flam Artist: Alaska Offshore Drilling
Binoy Kampmark
Australian Border Force Gore
Ruth Fowler
Ask Not: Lost in the Crowd with Amanda Palmer
Kim Nicolini
Remembering Wes Craven’s The Hills Have Eyes
September 01, 2015
Mike Whitney
Return to Crisis: Things Keep Getting Worse
Michael Schwalbe
The Moral Hazards of Capitalism
Eric Mann
Inside the Civil Rights Movement: a Conversation With Julian Bond
Pam Martens
How Wall Street Parasites Have Devoured Their Hosts, Your Retirement Plan and the U.S. Economy
Jonathan Latham
Growing Doubt: a Scientist’s Experience of GMOs
Fran Shor
Occupy Wall Street and the Sanders Campaign: a Case of Historical Amnesia?
Joe Paff
The Big Trees: Cockburn, Marx and Shostakovich
Randy Blazak
University Administrators Allow Fraternities to Turn Colleges Into Rape Factories
Robert Hunziker
The IPCC Caught in a Pressure Cooker
George Wuerthner
Myths of the Anthropocene Boosters: Truthout’s Misguided Attack on Wilderness and National Park Ideals
Robert Koehler
Sending Your Children Off to Safe Spaces in College
Jesse Jackson
Season of the Insurgents: From Trump to Sanders
August 31, 2015
Michael Hudson
Whitewashing the IMF’s Destructive Role in Greece
Conn Hallinan
Europe’s New Barbarians
Lawrence Ware
George Bush (Still) Doesn’t Care About Black People
Joseph Natoli
Plutocracy, Gentrification and Racial Violence
Franklin Spinney
One Presidential Debate You Won’t Hear: Why It is Time to Adopt a Sensible Grand Strategy
Dave Lindorff
What’s Wrong with Police in America