Telefónica’s chairman challenges tax strategy of Apple and Google

Mr Alierta

We are experiencing a decline in freedom of choice for customers who are “held in closed ecosystems,” that is to say, great monopolies run by global giants such as Google and Apple, which have become actors with unregulated dominance. That is “not good either for customers or for developers or for sustainable development the industry.” In the last few weeks, the first skirmishes against so-called digital ecosystems have erupted. Cesar Alierta, president of Telefónica, had been for months trying to make a personal and public denounce against the so-called digital ecosystems.

He chose to do so at the Mobile World Congress in Barcelona. He not only argued that the sector needs a framework for further development of the digital world, but also to dig up the hatchet against new tech giants that control –in Apple’s case, 92% of the market share of mobile operating systems and, in the case of Google, 90% of the browser market. A control that doesn’t generate any special benefits for the Spanish Treasury, since both companies report losses in Spain, even given that the apple company is the second company in the world with greater profits, and during the period of 2012 broke sales records in our country.

The strategy of the two great monsters is similar: they declared very little income in Spain – Apple even got a tax return-, to concentrate their profits in Ireland, a country with a much lower tax rate.

That mechanism is technically legal for companies that operate in several EU countries. Google pays around 3% for their profits abroad, while Apple pays around 2%. Although it is not an elegant metaphor, an analyst compared this situation in Spain with a brothel where the sex worker doesn’t even get any profit.

Alierta warned, in a clear reference to those living as parasites, that it is not sustainable to invest more in phone subsidies than in networks, nor to pay high taxes while they ask for a quicker implementation of next generation lines.

The question is, movement is shown by moving, as Diogenes de Sinope said. And Telefónica is deploying new networks that are crucial to Internet development. Its new strategy is to strengthen market and users freedom, as shows the company’s support to Firefox OS, a new operating system joined by 18 phone carriers in the world. Telefónica will launch the first terminals with Firefox in the second trimester of 2013 in Spain, Colombia, Brazil and Venezuela.

Customers, in Alierta’s opinion, want an open, safe and transparent Internet. Firefox and Telefónica’s romance can be the solution to that. Let it be!

About the Author

Carlos Díaz Guell
Editor at and, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.

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