Google is nuts, Part II

If I'm right in asserting that everything Google does is in the name of data collection, I'm not sure I even want to know what they've got planned with this one.

Google’s first attempt at brewing has resulted in a beer that taps ingredients from all across the globe. They teamed up with Delaware craft brewery Dogfish Head to make “URKontinent,” a Belgian Dubbel style beer with flavors from five different continents.

If you aren’t familiar with Dogfish Head, they are a great brewery that makes kickass beer. They started small, but have grown to be one of the top craft breweries around. Their motto is “off-centered ales for off-centered people,” and they don’t disappoint. Their beers, especially their line of IPAs, are some of the best around.

For URKontinent, various Google employees joined the project basically to coordinate and organize the information gathering. Those ideas were then fed to the brewers at Dogfish Head.

Google grabbed beer ideas from their offices all across the globe, and they also received input from the rest of the online community. The project coordinators used tools like Google moderator to get suggestions and feedback from Googlers across the world.

For what it's worth, I love Dogfish Head beers, and the most likely explanation here is that this was just a bunch of bored beer-loving Googlers in search of a fun project. But maybe, just maybe, Google's up to something here...

[WebProNews]

Google is nuts

Ever wonder why Google does some of the things they do, without requiring you to pay anything? Google Earth, Gmail, Google Maps, Picasa, Google Reader, etc.? The reason, of course, is that just about everything Google does is an exercise in data collection and data mining. That data collection enables them to enhance their core offerings to make them more capable and useful, which allows them to effectively write off any costs associated with the peripheral products as "R&D costs".

Here's one particularly creative example, courtesy of the Marginal Revolution blog.

By 2007, Google knew enough about the structure of queries to be able to release a US-only directory inquiry service called GOOG-411. You dialled 1-800-4664-411 and spoke your question to the robot operator, which parsed it and spoke you back the top eight results, while offering to connect your call. It was free, nifty and widely used, especially because – unprecedentedly for a company that had never spent much on marketing – Google chose to promote it on billboards across California and New York State. People thought it was weird that Google was paying to advertise a product it couldn’t possibly make money from, but by then Google had become known for doing weird and pleasing things...

What was it getting with GOOG-411? It soon became clear that what it was getting were demands for pizza spoken in every accent in the continental United States, along with questions about plumbers in Detroit and countless variations on the pronunciations of ‘Schenectady’, ‘Okefenokee’ and ‘Boca Raton’. GOOG-411, a Google researcher later wrote, was a phoneme-gathering operation, a way of improving voice recognition technology through massive data collection.

Three years later, the service was dropped, but by then Google had launched its Android operating system and had released into the wild an improved search-by-voice service that didn’t require a phone call. You tapped the little microphone icon on your phone’s screen – it was later extended to Blackberries and iPhones – and your speech was transmitted via the mobile internet to Google servers, where it was interpreted using the advanced techniques the GOOG-411 exercise had enabled. The baby had learned to talk.

Well played, Google. Very well played. The author goes on to wonder what might be possible if Google turned its voice recognition software loose on its massive library of YouTube videos, thereby making it possible to create an instant transcript of every video in the YouTube galaxy.

Pretty amazing when you think about it. Also mildly creepy. Just remember, whatever you're doing... Google knows about it.

[Marginal Revolution]

Early Internet Nostalgia

Hat tip to Barry Ritholtz. These are awesome... it's throwback day here on the Crimson Cavalier. Yahoo is my favorite by far. Happy weekend, people.

 

Taibbi on point again

I've written about America's corporations and their aggressive avoidance of paying U.S. taxes before, and I've certainly excerpted the work of Rolling Stone's Matt Taibbi plenty of times as well. Today, those two items came together in a beautiful way, as Taibbi tore apart a potentially overlooked consequence of the so-called "Gang of Six" debt-reduction plan that's been bandied about this week.

At issue is a proposed "corporate tax holiday", a temporary repeal of a tax on repatriated cash from multinational corporations' overseas operations. Under current rules, multinational corporations are exempt from paying U.S. tax on cash that is held by overseas subsidiaries, but they must pay that tax if they attempt to bring the cash back stateside.

Lobbying efforts, however, have insisted that the corporations' inability to bring that cash home has hampered their ability to begin hiring American workers. Similar reasoning led to Congressional passage of a "one-time" tax holiday back in 2004--reasoning that, as Taibbi points out, turned out to be utter bullshit.

For those who don’t know about it, tax repatriation is one of the all-time long cons and also one of the most supremely evil achievements of the Washington lobbying community, which has perhaps told more shameless lies about this one topic than about any other in modern history – which is saying a lot, considering the many absurd things that are said and done by lobbyists in our nation’s capital.

Here’s how it works: the tax laws say that companies can avoid paying taxes as long as they keep their profits overseas. Whenever that money comes back to the U.S., the companies have to pay taxes on it...

Only there’s a catch. In 2004, the corporate lobby got together and major employers like Cisco and Apple and GE begged congress to give them a “one-time” tax holiday, arguing that they would use the savings to create jobs. Congress, shamefully, relented, and a tax holiday was declared. Now companies paid about 5 percent in taxes, instead of 35-40 percent.

Money streamed back into America. But the companies did not use the savings to create jobs. Instead, they mostly just turned it into executive bonuses and ate the extra cash. [Note: many of them also used the cash to increase dividends, simply returning the tax-free cash to shareholders.] Some of those companies promising waves of new hires have already committed to massive layoffs.

It was bad enough when lobbyists managed to pull this trick off once, in 2004. But in one of the worst-kept secrets in Washington, companies immediately started to systematically “offshore” their profits right after the 2004 holiday with the expectation that somewhere down the road, and probably sooner rather than later, they would get another holiday...

I’m shocked there isn’t more of an uproar about this. Could you imagine what the Tea Party would be saying right now if there was a law on the books that allowed immigrants to indefinitely avoid taxes on income sent back to family members in the old country, in Mexico and Venezuela and India?...

As it is, leading members of the Senate are seriously considering giving the most profitable companies in the world a total tax holiday as a reward for their last seven years of systematic tax avoidance.  Hundreds of billions of potential tax dollars would disappear from the Treasury. And there isn’t a peep from anyone, anywhere, on this issue.

We’re seriously talking about defaulting on our debt, and cutting Medicare and Social Security, so that Google can keep paying its current 2.4 percent effective tax rate and GE, a company that received a $140 billion bailout en route to worldwide 2010 profits of $14 billion, can not only keep paying no taxes at all , but receive a $3.2 billion tax credit from the federal government. And nobody appears to give a shit. What the hell is wrong with people? Have we all lost our minds?

I don't usually excerpt at such great length, but Taibbi is almost always worth it. Indeed, he's dead right. There's any number of reasons behind our current budgetary crisis--a couple of long and expensive wars, unwarranted tax cuts to high-net-worth individuals, Medicare Plan D, demographical shifts that have left us with fewer taxpayers and more tax recipients, and the list goes on--but one of the most overlooked items is the ever-declining share of tax revenue paid by our corporations.

Along those lines, Barry Ritholtz passes along a couple of incredibly insightful charts showing the steady decline in corporate taxes paid over the last several decades:

 

The argument, of course, is that lower corporate tax rates help stimulate the overall economy, fueling job growth at home as our largest corporations open up their hiring doors. But with unemployment remaining stubbornly high and large-firm CEO pay soaring to record highs, I think it should be fairly clear where, exactly, this lost tax revenue is ultimately ending up. If you don't tax the corporations, it's just giving another tax cut to the richest Americans, plain and simple.

Trickle-down economics is a scam. Continuing to make cuts to middle-class benefits (like Social Security and Medicare) without addressing such a significant core revenue problem as this is fraudulent. If a corporate tax holiday is indeed passed this summer, shame on the "Gang of Six"--they'd be nothing more than common thieves.

[Rolling Stone]
[The Big Picture]

Fun with Google's "Reading Level"

Google's latest little feature, the "reading level" filter that allows you to segregate your search results into "Basic", "Intermediate", and "Advanced" pages, has killed a lot of time for me. In case you want to know where my blog stacks up against some of the other news sites and blogs out there, have a look:

 

 

 

Wait a minute... Twitter has 1% "Advanced"? What can someone possibly say in 140 characters that could be considered "Advanced"? Oh... cryoballoon ablation treatment... got it.

Damn you autocomplete

Ever since we started texting (and Google searching), autocomplete has become a part of our lives, for better or worse. Whether in the old T9 text entry or the full-keyboard on smart phones (click that second link at your own peril--you might spend an hour on that page), autocomplete (and autocomplete errors) has led to some humorous mixups.

I was amused by this map, which reimagines the states in the USA as defined by their #1 Google autocomplete result. Google autocomplete is always excellent, and once taught me that most of America is terrified of Chinese people. Good stuff. Lot of football on that map.

Yeah, I'm not exactly overwhelming your intellectual side with my posts here today, but it's Friday and things were getting a little heavy on here yesterday (what with all the racism talk and all), so why not lighten up every now and again?

Fun with Google Maps

Google is always creating new things to play around with (Picasa, Google Earth, Google Translate, etc, etc, etc), and Barry Ritholtz over at The Big Picture has discovered a little-known feature within Google Maps that's definitely good for some time-wastin'.

Apparently there is a "real estate" function within Google Maps that allows you to search for available properties in a given neighborhood. One of the filtering parameters is "Foreclosures", which then enables you to see how many foreclosed homes there might be in an area. So, yeah... yikes. Anyone wanna move to Miami?

There's more on Barry's post, and you can go over to Google Maps and kill plenty of time playing around with your own neighborhood (or, if you're into chart porn, just check out Detroit...). Interesting and sort of scary at the same time.


[The Big Picture]

How taxpayers are subsidizing Google--and its stock price

I've written multiple times (most recently here) about my view that government policy--both leading up to and in response to the global recession--has disproportionately benefited the rich over the poor, and more importantly the large business over the small business. As I wrote previously, "Sometimes, as in the case of TARP, this favoritism is clear and intentional. Other times, in the case of Fed-induced dollar debasement, it is more insidious via increasing consumer price inflation."

I also mentioned in this piece that our current tax policy is horribly misguided, and that it is largely to blame for our burgeoning deficit and debt (spending is obviously another huge issue that I've discussed, but there are two sides to any budget deficit). I wrote then that "it is completely ludicrous to spend time chasing after small businesses in search of $17 billion [in tax revenues] that might not exist, when the majority of U.S. companies--many of them large--currently pay no income tax." In that case, I was referring to the so-called 1099 provision in our health care bill, and the disproportionately onerous impact that it would have on small businesses.

Now, Bloomberg has brought to light just how significant the impacts of our bizarre tax policy can be. Jesse Drucker writes,

Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

“It’s remarkable that Google’s effective rate is that low,” said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. “We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.”

The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.

Let's forget for a moment that the techniques Google is using (the "Double Irish"? The "Dutch Sandwich"? Really??) sound a bit like euphemisms for obscure sexual perversions. It is beyond ridiculous that a company like Google should be able to legally avoid taxes for so many years, while individual taxpayers pick up the slack. I mostly like Google as a company, and I don't think they're violating their corporate credo and being evil here--they're just being rational.

But when Google generates massive piles of cash--all of it essentially untaxed--we all pay the difference between their nominal tax rate and their effective tax rate. Furthermore, Google cannot repatriate that cash (and reinvest in our economy) without enduring a significant tax hit. So their only choice is to keep that cash abroad, and use it there instead of here--that means continued foreign hiring, and no uptick in domestic employment. No amount of currency market posturing against China will change that structural flaw.

 

[Click here for interactive graphic]

If we want to close our budget gap and stimulate our economy, finding a creative and rational way to fix this problem is an absolutely essential first step. But our politicians would rather waste their time arguing about Bush tax cuts and individual tax rates, continuing to distract from the main point. The impact of allowing the Bush tax cuts to expire is estimated at $700 billion over 10 years; Google alone avoided $1 billion in tax just last year.

Extrapolate Google's $1 billion to include all of the multinational corporations in the S&P 500 who similarly avoid taxes, and you've got a number that clearly dwarfs the impact of any individual tax policy changes. We may worry that increasing the effective tax on these corporations will change their incentives to hire and invest, but where's the evidence that our current tax policy is actually incentivizing them to invest and to hire? Certainly not in our 17.1% effective unemployment rate.

Bloomberg estimates that the total impact of Google's unpaid taxes has boosted its stock price by nearly $100 per share--about a 20% increase over what it would be absent preferential tax treatment. That increase is subsidized by U.S. taxpayers, and also disproportionately benefits the rich who own GOOG stock over the poor who don't. We need to crack down on this, and we need to do it now.

[Bloomberg]

Some good news for a change

It's been getting a little serious around here lately, so it's time to switch things up a bit. Just to prove that it's not all doom-and-gloom all the time, here comes Google with a very interesting new project.

Internet search engine giant Google is investing in a mammoth project to build an underwater "superhighway for clean energy" that would funnel power from offshore wind farms to 1.9 million homes without overtaxing the already congested mid-Atlantic power grid, the company said.

Google is partnering with Good Energies, an environmentally focused international investment company based in New York, London and Switzerland, and Tokyo-based Marubeni Corp. to finance the project, which the New York Times reported Tuesday could cost $5 billion...

Although the project is outside of Google's normal Internet focus, company officials said in their announcement: "We believe in investing in projects that make good business sense and further the development of renewable energy."

Google has come under some criticism lately among many who question its commitment to its "don't be evil" credo, but this is a refreshing change of pace for them. I think Google is a very interesting, very smart company that isn't afraid to challenge a lot of widely held beliefs about how business should be done. They give away great products (Picasa, Google Voice) for free to support core businesses, and question old paradigms in the process.

Now, they see an opportunity that isn't being taken, and they take a shot, without regard for what their "core business" is. In a world of "that's not my job", it's interesting to see someone step up and say "why can't that be my job?" It'll be interesting to see what happens here, but I think it's at the very least intriguing.

[Washington Post]