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SPECIAL REPORT: Google Facing Tax & ACCC Investigation As Their Hardware Fails To Deliver

They are already under investigation by the Australian tax office for not paying their fair share of taxes, now the Australian Competition and Consumer Commission is moving to investigate Google for their monopolistic practises. Questions are also being raised about their hardware ambitions which are built around products designed to allow Google to listen to people while also accessing their confidential data.

In Australia, nearly all the spending by brands on digital advertising is going to Facebook and Google, leaving the rest of the ­sector to fight over an estimated 15c in the dollar the Australian reported recently. This is akin to all shopping in Australian only going through two stores.

Now Facebook and Google are facing an investigation into the revenues they have siphoned off from journalists after the Turnbull government directed competition tsar Rod Sims to launch an immediate inquiry. Media can reveal.

Melbourne, Australia – May 23, 2016: Close-up view of Google apps on an Android smartphone, including Chrome, Gmail, Maps.

Last week the government sent a directive to the Australian Competition & Consumer Commission to issue the terms of reference for an examination of the impact digital platforms are having on the state of

The ACCC will have the power to obtain information during the inquiry, which aims to make digital platforms more transparent and enables the ACCC to test whether a case can be made for further intervention, or use of its broader enforcement powers Media reports.

The inquiry will submit a preliminary report to Morrison within 12 months and a final report within 18 months.

Media has exclusively obtained the terms of reference provided to the ACCC, including:

  • The extent to which platform service providers are exercising market power in commercial dealings with the creators of journalistic content and advertisers;
  • The impact of platform service providers on the level of choice and quality of news and journalistic content to consumers;
  • The impact of platform service providers on media and advertising markets;
  • The impact of longer term trends, including innovation and technological change, on competition in media and advertising markets; and
  • The impact of information asymmetry between platform service providers, advertisers and consumers and the effect on competition in media and advertising markets.

The inquiry forms part of the government’s broader Broadcast and Content Reform package as part of a measure agreed with the Nick Xenophon Team.

The move, which is said to be the first of its kind anywhere in the wold, was first flagged by Media in May.

Speaking to Media, former crossbench senator Nick Xenophon called for an inquiry into anti-competitive behaviour in the online ad market to examine the roles of Facebook and Google as he negotiated with Communications Minister Mitch Fifield over the media reform bill.

In Australia, media buyers and analysts estimate Facebook’s gross revenue to be about $1 billion and Google’s $3bn despite this the two Companies combined only paid $19.9M in tax last year.

Questions are also being raised about the performance of Google hardware being sold in Australia with Google moving to restrict access to media Companies who question their tax record in Australia.

Its new Pixel 2 phones, released in October have a problem with owners who are being asked to pay a premium price, reporting that images ‘burned in’ on their display screen, they have also reported a bluish tint, periodic clicking sounds and occasionally unresponsive touch commands.

The Company’s new Home Mini smart speaker which Google is spending millions marketing in Australia has been was caught always listening to conversations in a home or office.

Then there was their Wireless ‘Pixel Buds’ which received savage reviews, they were described as having a cheap look and feel, delivering mediocre sound quality, and being difficult to set up and confusing to use.

The Daily Mail in London said that in short, Google is re-learning an old adage in the technology business: Hardware is hard.

Desperate to protect their struggling hardware reputation Google quickly extended the warranty on the Pixel 2 and tweaked software on the devices and its Home Mini in an attempt to fix the issues.

Many consumers have said that they will never buy a Google product again.

Rick Osterloh, the executive in charge of the company’s hardware division admits that the big search Company is having hardware problems.

‘I believe, quite frankly, that Google has a spotlight on it, he said in an interview with The Associated Press.

The company is also currently running a major ad campaign to draw attention to its Google products now on sale at Harvey Norman and JB Hi Fi, there is no mention of the problems and Google PR executives in Australia have not returned 4Square Media calls.

‘Being a software company is an entirely different animal from being a hardware company,’ said technology analyst Jan Dawson of Jackdaw Research.

‘The cultures are very different and there are more moving parts in hardware, so you have to learn along the way.’

Google has to realize a ‘fail fast’ philosophy that worked well for free software products doesn’t work as well for smartphones that cost hundreds of dollars, said analyst Ross Rubin of Reticle Research.

Google prides itself on the intelligence of its search engine, but it’s discovering that even companies brimming with brainpower face a learning curve when venturing into new markets

Software ‘can be more forgiving of that development philosophy,’ he said.

Google’s push into devices, which includes its own Wi-Fi routers and an older line of web-based notebook computers, has become a key strategy for the internet giant.

It sees these gadgets as a way to ensure services such as search, maps, Gmail, and its voice-activated assistant remain prominent as personal computing expands on mobile devices and new smart gizmos in homes.

All those Google services are baked into Android, which powers more than 2 billion devices worldwide – but device makers such as Samsung that use the free software also can make adjustments to highlight their own products instead.

Apple only uses Google’s search engine as a built-in service on iPhones, because Google pays billions of dollars annually for the access.

The Pixel phones and Home speakers also serve as a showcase and data-collection tool for the Google Assistant, its voice-activated digital concierge.

Globally Google sold only 2.8 million of the first-generation model, accounting for about 0.1 percent of the market, according to the research firm International Data Corporation.

Such a low sales volume makes it more difficult to acquire the highest-quality components for hardware, particularly when suppliers make it a priority to meet the demands of market leaders Apple and Samsung.

Desperate to be competitive up against rivals such as Apple and Samsung Google have recently purchased the R&D teams from rival HTC a leading Taiwanese phone Company.

An example of how bad Google is performing in the smartphone market is revealed when one compares Apple had sales of between 230 million and 250 million iPhones during the fiscal year ending in September.

Like the Pixel 2s, the new iPhone X features an OLED screen the big difference is that Google offering has a reported bluish tint and suffer ‘image retention’ that makes it look like something has burned into the screen, by Apple’s own admission.

As part of its effort to catch up to Apple and Samsung, Google recently acquired more expertise in a $1.1 billion deal with device maker HTC that brought in 2,000 more smartphone engineers and certain hardware technologies.

But Edison Investment Research analyst Richard Windsor believes many consumers will balk at paying a premium price for the Pixel 2, given its troubles.’

It appears that the best way to get the most value from Google services is still to use them on another device,’ Windsor said.

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