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Comment by guelo | Hacker News Reader

If you look at what has happened in China after Google left, how they were able to quickly grow massive web companies, protectionism seems like a no-brainer for every slightly advanced country. Silicon Valley sees the huge first-mover advantages and is moving as fast as possible to move into every liberalized market. But it makes no sense for a country to allow Silicon Valley to take these industries for themselves. This is the fastest growing industry for the next several decades with the best paying jobs. It only makes sense to nurture the local companies and local talent instead of giving it all away to the Americans. Europe is always fretting about how they need to create their own Silicon Valley but it's easy to do, kick out the Americans! You'll have your own Baidu, Tencent and Alibabas in no time.

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> Europe is always fretting about how they need to create their own Silicon Valley but it's easy to do, kick out the Americans! You'll have your own Baidu, Tencent and Alibabas in no time.

People seem to forget that Europe is not a country. Europe does not have a single uniting language. What happens, is that every country starts their own smaller versions and they stay mostly within that country. If they want to move to another country, there's often already a major player there, and they might not have the means to kick them out.

I think the reason that silicon valley is so powerful, is that the initial market is 325 million people who all speak the same language. Once you get the US market, you have the size, name and means to easily start conquering European countries. It's always about scale...

I think this view is one-sided

Despite having many different languages, in some ways Europe is a more homogenous market than the US.

For example, an insurance business can operate freely across Europe with only one small piece of additional paperwork. I think it's actually an A4 piece of paper. In the US they'd have to be regulated separately by nearly every state.

You are unsing a very specific example do draw a very far-reaching conclusion.

The only fact that the there are some 20 different languages makes the EU a much less omogeneous market than the US.

This withouth considering that each country has its own employment policies, social security services, healthcare system, education system, revenue service...

I'm strongly pro-union, but it's far from perfect, or even efficient, in the current state.

> You are unsing a very specific example do draw a very far-reaching conclusion.

No, I don't think "in some ways Europe is a more homogenous market" is far-reaching at all, especially when accompanied by a concrete example.

We need to register a company in each EU country we want to ship stuff to, otherwise we would quickly hit the sales tax limits in each country.

From our perspective the EU common marked is pretty much just a pipe dream. Being able to start a business in one EU country and just automatically have access to all of the 500million EU citizens would be awesome, but right now that not how it works.

Just out of curiosity why do you need to register a company in every country (assuming you are US based since there is no sales tax in the EU anywhere ;) ).

I haven't done it but isn't the thing with the new VAT regulations that you can pay your taxes to one revenue service (and just register with one) and they will divide it according to your sales data (e.g. the customers country)?

Or do you mean that you have to pay VAT at all if you do this? In this case your problem is more political and about the concept of VAT in general. I mean almost any EU country had it for a long time. It sucks that there are huge differences when it comes to the exact amount but the concept itself is nothing new.

>I haven't done it but isn't the thing with the new VAT regulations that you can pay your taxes to one revenue service (and just register with one) and they will divide it according to your sales data

I think that only works if you have limited business, but I'm not sure. I believe the problem is that we're in a country with 25% VAT, but if we want to charge our German customer only 19%, we need to do that via a German company, otherwise we would have to charge them the 25%, leaving us uncompetitive (6% is more than our entire profit for some products).

I'm not sure whether you have the best information available. VAT/GST must be paid depending on the country of the customer, through a form, and doesn't require a local company. The location of the company doesn't matter and we have an EU-wide VAT identifier. http://www.happybootstrapper.com/2014/im-us-whatll-happen-ju...

You're talking about the new VAT rules for "Digital goods & services". Any physical product or non-automated service still falls under the old regime whereby you can sell to other European countries using the VAT rate of the country you are located, but only up till a certain treshold. After that you will need a VAT number in the other countries you are selling in.

Yes, but a VAT number, not a company, you don't have to create 30 subsidiary companies.

>I think that only works if you have limited business //

If you mean VATMOSS then you don't have to be running a Limited Company - individual sellers as of January 2015 have to now account for the tax due in the country of the buyer. This apparently applies to sellers from outside the EU too, if you're selling certain classes of goods (non-personalised intangibles) over the internet to the EU then you're supposed to retain [3 pieces of!] evidence of the locality of the purchaser and deal with that country's tax office to pay the required tax.

The "MOSS" [Mini One-Stop Shop] bit is a system that individual countries in the EU use to send the payments to the countries where the tax is due.

The method you mention works for tangibles or personalised goods. With VATMOSS there is no exemption for SMEs or low-revenue situations or anything.

It can be confusing operating in the EU. Whatever jurisdiction you're operating in, when it's not your own, it feels confusing! In my experience the EU is at the better end of the scale - but you have to bear in mind that it's separate states with ajoining regulations for the "market".

If you think you'll scale the business then it's best to start with a single company registered in a EU country of your choice. Generally, easiest to pick the one you will find easier to deal with, or you think you'll have the most sales in.

The local tax regulations will specify when you have to pay taxes in other EU jurisdictions. There are limited exceptions when you're just getting started. This only means registering for taxes - it's similar to the idea of US company registering to pay local state taxes.

Employing people is different and will require registering for employment taxes in each country.

Any competent business accountancy firm should be able to provide assistance: generally best to work with one which has relationships or offices in the other EU countries you're interested in operating in. If you can't afford that then your local government business department will be more than happy to help (as you are generating tax!): in the UK that's the Department for Business Innovation & Skills [1].

[1] https://www.gov.uk/government/organisations/department-for-b...

Problem is that those standards (GSM was another) isn't solving how to run a business in different countries with different consumers, different rulesets etc.

In very few ways Europe is a homogenous market, and certainly not in the search business or e-commerce.

French search in French, Germans in German, Danes in Danish, Spaniards in Spanish, Italians in Italian, Dutch in Dutch etc. Then, if your local language doesn't give you good results, you default to English.

Online shopping is mostly a local thing with Amazon as the prominent exception. Even in the market for plane tickets local websites dominate, meaning that a French person travelling from Paris to Berlin is likely to use a different website than a German guy travelling from Berlin to France. Again, the exceptions seem to be mostly American.

European countries even have their own payment solutions.

> French search in French, Germans in German, Danes in Danish, Spaniards in Spanish, Italians in Italian, Dutch in Dutch etc. Then, if your local language doesn't give you good results, you default to English.

So how is this different from the current situation with Google dominating the market? Google works in French, German, Dutch, Spanish etc! You only need one company in based one country and they can work in all languages. And if they grow big, they setup offices in different countries, for country specific or language specific searching.

But it doesn't work with Russian or Ukrainian that well. A few reasons:

1. Slavic languages have heavy inflection. If Google doesn't understand all the possible forms of a word, it will give you poor results until you search again by changing your query slightly. 2. Google doesn't understand common synonyms, so it doesn't give results that contain synonyms. 3. Russian websites may not care about google rank as much as Yandex, so they might not even be indexed.

I don't know how, but there are thousands of websites I can find by searching Yandex for a certain thing that will not be on Google. It may be those three things combined, or other factors I didn't think of.

Ha ha. Good one. In theory, yes. In practice, they don't for many reasons. Cross border business is still hella complex for insurance in Europe.

Source: People pay me to do that stuff.

There were many search companies in the start and for a long time all of them did the same, google came and delivered a better product and kept innovation. People came and saw the google homesite with a logo, textfield and a button. This is simple we can make this also without knowing all the stuff behind it.

Search is now a mature industry, it is always better to go for the new places where there are no dominant players. Google biggest competitor is not another search engine but Facebook. This is the ways it is supposed to work.

If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses by protectionism.

I think everyone forgets the innovation in Ad Words which made it possible for small businesses to thrive. One can now get started with 100$ marketing budget while one before needed 10000$.

I agree that protectionism is normally bad, but the reason that it is bad is that it suppresses competition most of the time.

If guelo's argument that Google not being in China fostered more tech companies in China is correct, then removing an initially dominant foreign company with big first mover advantage and economies of scale can actually increase competition in the market.

That said, once the home grown companies are sufficiently mature to compete on a level playing field with already established companies I agree the protectionism should be withdrawn again

For reference, an economist would call this the "infant industries" rationale for protectionism and it is generally considered a reasonable policy tool when done purposefully.

> it is always better to go for the new places where there are no dominant players

It's funny, I've heard several times the total opposite from startup founders ("It's easier to go for a big market and to chunk some % in order to get viable, rather than going on a totally new market in which you'll have to both be better than the competition and convince the clients that's it's actually a promising market")

> If someone offer you a product cheaper than you can make it yourself, take the offer and find something better to do. Everyone looses(sic) by protectionism.

Uh? Protectionism has historically worked exceptionally well to develop your own industry, as a matter of fact, all the big players heavily used protectionism in their time to nurture their industry before being big (England, USA, China, South Korea). You just cannot compete with an on-going industry while starting from scratch, so your industry will never take off.

Protectionism is only good if you're already the best in town & want to be sure that you keep the upper hand, but it helps in no way the under-developed country.

Also, people forget the automobile industry of Japan was beneficiary of protectionism for decades.

Google's search was - for me - much better some years ago than it is now. But now there is no alternative (well, duckduckgo, not yet on googles niveau but getting better).

Don't see the innovation with Ad Words: as _every_ small company can use it, you fight towards the bottom and sometimes against cowards instead for quality which an independent non-ad-financed search engine would much better reveal.

That's true for me too. Many of my Google results are buried in "fresh" blogspam, none of which contains anything either original or interesting.

This may be the result of good search and Sturgeon's law. https://en.wikipedia.org/wiki/Sturgeon%27s_law

If so, the real problem is that Google search is incapable of identifying content by quality. As a result, the more Google searches, the more crap it finds, and the worse the results become.

Refutations of this idle hypothesis welcome ;-)

I think language and writing system also plays a significant role in the emergence of Chinese native web giants. It's not just about Google getting kicked out; they probably would have had a very hard time adjusting their Western product for the local market. (Google tends to think of their products as "universal", and that doesn't quite work in China.)

Look at Russia. They don't have Chinese-style technical or political protections to keep Google out, yet the market is dominated by local players like Yandex and Mail.ru.

Russia does not have political protections? http://www.reuters.com/video/2015/08/06/russia-destroys-seve...

Yes, of course they do, but the mode of operation is very different.

Obviously the Russian government exerts control over Google's Russian operation, but it's not explicit like in China. This has meant Google can continue to operate in Russia without losing face ("do no evil" and all that), whereas it wasn't possible in China.

Your link is about the Russian trade embargo, which is not directly relevant... But it does illustrate the huge difference between Chinese and Russian trade politics. China keeps tight reins internally on content and communications, but wants to ensure the free flow of material imports and exports.

China wouldn't allow an external political disagreement to disturb relations to the extent that Western imports would be banned. At least I can't imagine French cheese being burned by the tonnes in Shanghai...

Of the major economies, Russia is the most directly controlled, more so than China. Putin is a dictator when it comes to most of the economy, he determines everything by fiat. The Russian government seized control, through direct violence or the threat of violence, of nearly every major industry across the whole country. There isn't a single major industry they don't control. You can't do anything of economic consequence without first making a deal with Putin's government.

You can't kick out the Americans without assuming dictatorship-like command powers over the entire EU economic zone. That only functions at all in China - to whatever mediocre extent it is functioning today - because that's a unified market, one country, under one leadership.

Any attempt by Europe to try that, would destroy the European economy. Germany is hyper dependent on exports. The US eats most of its own dog food when it comes to manufacturing, Germany does not. Nearly all of Europe, other than Russia and perhaps Norway, lacks the ability to be truly energy independent today. It's obvious who would win the import / export restriction war.

There's one country capable of being fully self-sustaining across science, innovation, manufacturing, natural resources, technology - that's the US. Europe has barely shown an ability to cooperate even in a poorly functioning manner when it comes to integration, much less of the extreme integration such a command economy system would require. Even the Eurozone experiment has been a disaster for the majority of countries involved. There's no possibility of the kind of extreme integration the kick-the-Americans-out plan would require, ever happening.

Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China).

> Kick the Americans out? Ok, well now BMW, Porsche, and Mercedes are banned in the US. Germany just lost a huge part of its economy (look up the two biggest markets for their vehicles: the US and China).

As someone living in a German city which is a world leading car manufacturing center, I would actually like to see the end of German auto industry. The whole German economic system is geared towards those big car manufacturers, and it's very hard for small businesses and enterpreneurs to navigate through all of that bureaucratic mess created by big German corporations. Letting them fail would actually help making German economy much healthier in the long run.

I think you greatly underestimate how many jobs are dependent on our auto industry. It is not only the cars, big companies like Bosch and a plethora of hidden champions, that dominate their segment but nobody recognizes, would not be possible if it were not for the close connection at home to a world-wide leading industry.

I am not even sure, that Silicon Valley is ahead when it comes to "digital stuff" inside cars. It is my perception at least, that companies like Mercedes or BMW had many of the digital helpers first. I therefor think Germany would be a great place to start a tech-startup apart from the next social network.

Yeah, sure.

You mean besides the extreme bureaucracy, poor funding opportunities, poor exit opportunities.

Germany is probably one of the WORST places for a start-up.

>extreme bureaucracy

As someone doing business in Germany since the age of 17, I would actually like to know, what you mean by that. Of course employment works different here (like generally in Europe), and I also give you that it is much harder for non-Germans, but if you know the language you can generally just call the folks at our IRS and they are happy to help you.

Starting to freelance is literally just filling out a one page online form at the Gewerbeamt, after that do not call them, they call you.

Setting up an entity is a bid harder, but come on, registering an UG or a LTD (in the UK, this is Europe after all, you can register your company pretty much where you want to) is not black magic either. It could be easier, but I do not buy that we are missing opportunities, because you have to google it first.

> poor funding opportunities, poor exit opportunities.

>Germany is probably one of the WORST places for a start-up.

I give you lacking funding opportunity, but the notion seems to be, that early stage funding is pretty okay, mid and later stage rounds seem to be the problem. We do have an exchange in Frankfurt and car companies are buying startups in their space, the problem is more, that there simply are not that many of them.

There is also the possibility to join Rocket, their E-commerce and (locale) marketplaces seem to do just fine, funding-wise.

I think we are pretty okay, even without the short-lived social stuff, that SV creates, which some people call a scheme anyway. What I would like to see more of are SaaS products in many different spaces. I do not think that missing funding or a bureaucracy are the reasons why we do not have more of them. I think the reasons are rooted deeper in society, which is slowly changing over time, thanks David Fincher.

Also: Compared to what? SV or the 192 other countries that exists besides Germany and America?

Dude, I have run companies in the US and DE. So please don't tell me the difference. Your problem: You can't even imagine the difference in the VC scene between the two countries.

Just as a warning, look at what happened to Detroit, when the auto industry left.

Nowadays no first-world country is capable of being fully self-sustaining without suffering immensely - especially the US, which relies heavily on cheap energy with large amounts being imported.

While I agree with your point about self-sustainability, the US now produces almost as much energy as it uses. From the world bank (http://data.worldbank.org/indicator/EG.IMP.CONS.ZS) these are 2013 figures percent of energy use imported:

    Denmark      4
    France      46
    Germany     62
    Italy       77
    Netherlands 10
    Spain       71
    Sweden      29
    Japan       94
    Korea       83

    US          15
    Canada     -73
    Mexico     -19

The US may import crude oil but one of the main exports is refined fuels. We are exporting ~half of what we are importing in July.

http://www.eia.gov/dnav/pet/pet_move_wkly_dc_nus-z00_mbblpd_...

You are maybe half-joking but the only reason it has not happened yet is that the EU is actively promoting free trade. I don't know for other countries but on my case in France, people would happily block or put massive taxes on large American websites to create local equivalents, they only reason it's not done yet is because they can't with the EU. And it's not the United States either, you can't argue that keeping free trade is good for the economy since the general consensus is that free trade is bad and hurting the country.

>promoting free trade

Yes but not because some EU bureaucrats have been born with some innate fetish for free trade. It's because the EU is easily influenced by deep pockets.

At the expense of the citizens. Why not let companies compete?

There is no competition, it's just monopolies. It's been shown over and over that the first-mover advantage on the web is almost insurmountable because of the network effects.

Which is why Google was the first search engine ever, and before that people just banged rocks together in the general vicinity of phone lines, because any prior search engine would have had an insurmountable first-mover advantage that Google could not possibly have overcome?

While I agree with the general point you are making - the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search.

I think we, as technologically included people, tend to overestimate how old the internet is to most people outside of maybe early email usage.

Also the implosion of companies (like Yahoo) is a factor here. If Yahoo hadn't been really stupid they would still be dominant - and it would have been hard to stop them.

Of course people can overtake when the leader throws the lead... but it's luck and also hard.

> [...] the Internet as a whole had not reached a general populace tipping point until after Google was a major player in search.

MySpace vs Facebook happened after Google rose to dominance.

Also, Google Video vs YouTube.

MySpace was at it's largest in 2005 - at that point Google was nearly 40% of online search traffic. It had been a major player for a while - hell it had already had a huge IPO by that point.

I think you forget just how FAST Google blew up. In 1999 they were basically nothing - by 2004 they were the largest search company on the internet.

Facebook wasn't even a thing until 2004 - after the Google IPO. So no, Myspace vs Facebook didn't happen after that.

Also Google Video was just plain crap. It's like comparing Google+ to Facebook, it was never going to last.

I think you forget just how much better at search Google was. Google's replacement will probably be much better at privacy.

No, I don't. It really was amazing and a no-brainer to switch. That said Yahoo could have still stayed ahead - they nearly bought Google after all.

Remember though that accurate results is a clear market winning feature - we've seen that the average user quite simply doesn't care about privacy that much.

Yeap. We're all still using Altavista, MySpace, Hotmail and Livejournal.

While I agree with the sentiment, I would argue that the network effects now are significantly stronger than they were 10-15 years ago. Back then, the internet was still a novelty for many (those who had the internet, anyway). This was before broadband was commonplace, before smartphones, before Facebook and the iPhone were a thing.

The network effect becomes even stronger now, as the Internet crosses the chasm. Grandma won't switch from Facebook soon, unlike her teen techie granddaughter.

Some countries have no problem banning the best technology so that the best local technology can win, even if it's worse, and even if the best technology did nothing wrong. It's easy enough to make up excuses for that after the fact.

It would be nice if at least one such country could just blatantly state their motives up front to be judged on their merits: "We're choosing to prohibit a non-local company to encourage local replacements."

And what exactly is wrong with that? As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood.

There are local monopolies everywhere, even in the USA. And they are protected by the local (city, county, state, federal) legislation that favors local business. Just try coming out of nowhere and starting new water supply business somewhere in Texas (constructed example, but point stays).

As long as the price / performance is not totally off, I'd always rather pay a bit more for a slightly worse service if I know VAT money will stay in my city, tax will be paid in my state, salaries would be paid in the same job market where I am, and the profit would be invested in my neighborhood.

Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?

This leads to nowhere. I could reply: And you pay for the locally laid off people and support the community which now fails necessary means?

Indeed. Also you often are prevented from buying locally. My taxes are spent on foreign trains, ambulances, buses, power stations, you name it.

> Nobody prevents you from buying local right now, so that's a red herring. If you want to force others to do the same, you should pay their increase as well. Are you prepared to do that?

That's what governments and elections are for. People vote, government make it more complicated for foreign companies to compete on the local market. People pay a bit more for for a bit worse service, and tax rate for everyone gets lower because of reduced unemployment benefits and increased tax income. Everyone locally gets it a bit better.

I'm not saying that one or the other option is clearly better. There are many ways in which "fully open", "fully closed" and "somewhere in between" policies can fail or succeed. It's always matter of balance, but favouring local companies is not bad per se.

When I go to vote, I vote for the government and policies that will make my life and life of the members of my community better, not the government that would make the world better in total by making it a bit worse for us. It doesn't work that way.

> That's what governments and elections are for.

Forcing others who disagree with you to go along, yes. That's a very big hammer, and should not be applied lightly. (I'm not saying it should never be applied at all; there are fundamental aspects of society that only seem to work with that pressure applied.)

> People pay a bit more for for a bit worse service, and tax rate for everyone gets lower because of reduced unemployment benefits and increased tax income. Everyone locally gets it a bit better.

"a bit worse" is downplaying it quite a bit; sometimes the result is quite a lot worse. And when you're talking about services with network effects, sometimes the result is "fundamentally not the same service at all". If you're stopping people from participating in the same Internet as everyone else, you could just as easily be slowing your own local economy and breaking opportunities for them to create the next service that'll actually be the best for everyone. And unless you're prepared to make your country completely self-sufficient with no reliance on the outside world, "increased tax income" isn't going to help you when it turns out the services people actually want aren't made in your country and never can be.

As an alternative to dragging others down, if you really want to spend a pile of money boosting your local economy, and you want to do that via government, how about supporting local businesses as they improve, and encouraging them to compete with services provided elsewhere? "Keep up" is always better than "wait up".

> And what exactly is wrong with that?

What is wrong with that is that a local company will have to base their offerings on subpar components, and won't be able to compete externally.

Being upfront about it encourages retaliation.

Everyone wants the benefits of protectionism on their own turf without paying the price of everyone else being protectionist and that at a minimum requires pretending you're not being protectionist.

Short term expense of the citizens. Nurturing local business is a long term benefit strategy.

Protectionism is how every nation on the planet developed. Why are Americans driving South Korean/Japanese cars and not the other way around? Because the south koreans and the japanese imposed large tariffs on car imports and the US did not. Their car companies had free range on their own turf. Which gave them time and money to develop.

Silicon valley is not giving the outside world any chance of competing.

The US practices a huge amount of protectionism as well.

The reason that the Americans are driving Japanese cars is that they were built in the US (which happens because of the protectionism). Ford doesn't build cars in Japan. The end result is good for most people (consumers get more choice, jobs are still in the country).

Yes and those japanese companies developed in their home turf and became strong enough to compete in the world market. The japanese government nurtured their industry. When it comes to internet based businesses this is not done. The end result is silicon valley dominating everyone else because that's where it all started and where the most money right now is.

You're forgetting the bailouts for the American auto industry and the ghost town known as Detroit. Protectionism stagnates technological development because of the artificially stymied competition.

Once the major players from hyper-competitive markets inevitably enter the protected market, then they outperform the resident industry there. Protectionism props up non-competitive markets, which is disruptive for citizens when they fall down.

That's a good point.

The auto industry might not be the best place for where you want to apply protectionism. But one pretty good usage is when the local industry is in its infancy.

It's pretty well accepted that the IMF forcing so many African countries to drop agriculture-related tariffs has been among the biggest failures of modern economics.

Indeed, also see https://en.m.wikipedia.org/w/index.php?title=KC-X&redirect=n...

>Why are Americans driving South Korean/Japanese cars and not the other way around?

They care about consumer freedom, that's why. What you are implying is that competition can never work and that people with a head start should be regulated away.

It screws the consumer and there is no proof it works best in the long run. France is super protectionist but they aren't doing so well. In many cases, it just has knock on effects that make other industries uncompetitive. Can't buy the best engines, therefore we can't compete in any market that requires good engines, etc.

American trade laws do not hold consumer freedom sacred. America has lots of protectionist policies - including a related one on trucks: http://www.npr.org/sections/money/2015/06/12/414029929/episo...

The US is one of the less protectionist countries in the world.

The fact is that we live in a kafkan place where everybody seems to think that letting consumers choose what they want to buy hurts them, that delivering goods make a country rich, but receiving payment makes it poorer, and that a government picking winners on every market is the best way to ensure competition.

You'll certainly see several protectionist policies at the US, what is extremely annoying, because they claim to be a completely open country. But the US is still one of the less protectionist ones.

By what metric are you claiming the US is less protectionist than most other nations? We have a lot of farm subsidies and tariffs and limitations in imports, and I have never heard any claim that the US somehow does significantly less than other nations.

Interesting, that kind of data is much easier to get than I expected.

From the Word Bank data, there were 40 countries with lower median tariffs than the US, 4 tied with it, 71 with higher tariffs, and 98 without data in 2013.

Between the countries with lower tariffs there are extremely rich ones, fiscal paradises, EU countries (that have zero tariffs between themselves), and 4 poor ones.

Between the countries with higher tariffs there are basically the poor countries, and Australia. I don't think I've seen any other rich country there.

So, yes, the US is within the countries with lower tariffs. But also yes, every other country that you'll think of has probably lower tariffs than you.

>Protectionism is how every nation on the planet developed

You must be joking. Countries with open markets develop way faster than protectionist countries. If mercantilism is so good then why are the Asian Tigers doing so well and communist countries doing so bad?

Protectionism is not synonymous with communism. Most capitalistic countries - including the US - practices protectionism in a variety of ways.

What does communism have to do with anything? Protectionism is exactly how the Asian Tigers developed their economies. You don't have to take it from me, read it from a prominent South Korean economist: http://www.amazon.com/Things-They-Dont-About-Capitalism/dp/1...

"Why not let companies compete?"

foreign company tax avoidance?

"Technology giant Google last year paid $11.7 million in corporate tax to Australian government coffers, on revenue of $438.7m and profits of $58m." ~ http://www.theaustralian.com.au/business/media/google-admits...

"All" the research and development was done abroad, not in Australia. The products were created abroad, so you can't expect the full added value to reside in Australia...

The thing with taxes like VAT is that they are supposed to apply fully to the end product, no matter where it was made. This is made to prevent tax evasion schemes.

20% corporate tax rate. What's the problem?

It think you'll find the "customers over workers" mentality doesn't fly so well in most European countries as it does in the US.

You got your priorities backwards. Good jobs are more scarce than iphones, and more important for the well-being of people.

That's a double edge sword. I live in Canada and I've been in a position where rules which I suspect were meant to slow down american companies moving in too fast into Canada actually prevented me from having access to markets to sell into.

For example, during the mobile apps gold rush. I had a finished Android app ready to go for almost a year waiting for the "Android Market" (Now the "Play Store") to allow Canadian sellers. I could not sell even in my own country (at least not with any visibility) while my American competitors could accumulate a huge head start. I had to wait for Google to jump through the Canadian regulatory hoops to allow Canadian sellers into their store. It was frustrating as hell.

The other problem is that new technologies often evolve from an ecosystem of other new technologies. If we only have late access to Netflix or Uber or self driving cars, it becomes difficult to be competitive in the technologies surrounding these technological shifts. If you're last to experience newer technologies on a daily basis, you're also last in a position to evaluate and predict where they are going which gives you a significant business disadvantage.

In order to build on top of the leading edge you have to have good access to the leading edge wherever it may originate from.

> kick out the Americans

How? Great firewall of Europe? Or what exactly are you proposing?

> How? Great firewall of Europe? Or what exactly are you proposing?

Forcing them to follow basic rules of fairness is usually enough to keep them out.

"Basic rules of fairness" is meaningless crap that roughly translates to, "we aren't as good so we will keep passing regulations in favor of locals until it's insane for anyone else to try."

Frankly, it wouldn't be that surprising if net neutrality started getting violated in Europe by protectionism laws.

I have family in Germany who get their internet through Deutsche Telekom. When visiting I've found its faster to watch YouTube via a VPN through Switzerland than directly through Deutsche Telekom. While this doesn't prove anything it sure does feel like they already violate net neutrality when it comes to YouTube

More probably this is routing issue. Connection between Deutsche Telekom and Youtube servers is more busy than connections between DT -> Swiss server -> Youtube.

DTAG (Deutsche Telekom AG) essentially does the exact same with YouTube that Verizon did with Netflix: They refuse to peer with them at all.

ALL traffic from DTAG users first runs to a Level3 datacenter in New York, and from there goes to other users.

While all other German ISPs have a peering node at DECIX

To add, when you're asking DTAG to peer, they determine the location where they set up the peering point with you. That's typically somewhere out of nowhere, so you also have to rent the pipe that brings your data there - from them, obviously.

Additionally, they overcharge a lot for the last mile infrastructure for other ISPs, so in my region some other ISPs started building their own last mile infrastructure and peering with Telia to get access to TAT-14 (and thereby allowing them to peer better with US providers).

(TAT-14 is a transatlantic cable owned by DTAG and Telia)

Do you have a source for this assertion?

Take https://netzpolitik.org/2015/telekom-am-internetknoten-de-ci... for example.

It’s common knowledge in the industry by now that the DTAG uses their 40 million users as leverage to force companies to directly peer with them (and pay for peering).

DTAG benefits from inertia, being the offspring of the public post/telecom monopoly they started with a 100% customer base.

As for the issue at hand (YT being slow), like a sibling post states, that's because they refuse to peer at DECIX where everybody else is. They even tried to frame the NSA scandals as "IT companies, be responsible, keep user data in German networks and peer with us directly (on our terms, which will be expensive for you - they 'forgot' to mention that in the press releases)".

The best way to make DTAG more customer friendly (both upstream and downstream) is to move somewhere else.

Luckily in cities you have 5+ ISPs to choose from (some of them DTAG resellers, but still an improvement), and even on the country side it's typically at least 3.

We see "fairness" as "fairness for the customer". Jesus said "justice in favour of the poor". If it's just, saying it's in favour of someone ahead of the judgement is ridiculously biased.

However, if we granted more fairness to the companies, we wouldn't have more or better companies. We'd just be invaded by huge US companies, because they're just better and move faster. So, yes, we have to start with smaller actors who just rely on the openness of the markets of dominant actors: We couldn't build Apple but we rely on their Appstore to have fair rules, we couldn't build Amazon EC2 but our companies rely on the openness of the EC2 service, we couldn't build Windows but we rely on Microsoft publishing its API. And this API documentation is exactly the subject of the $2bn fine that Microsoft received from EU in 2003.

I'm sorry, perhaps US performs too well, but we need open APIs in Europe. From the fines I've seen, the decisions aren't generic protectionism, they're focused on keeping free market so we can have some local startups too.

That might keep out the euros and pounds they pay to employees there: forced liquidation of Google's physical European presences is not a good outcome for anyone. But it wouldn't keep out their products. It just means a lot of job losses and higher latencies on page loads as they get served from US datacenters instead of EU datacenters.

A $6bn penalty (and the promise of more unless you restrict your business a lot) may come a long way.

On the other hand, the article indicates that Microsoft is quite active in the whole investigation, and they're not exactly a European company either...

> what has happened in China after Google left, how they were able to quickly grow massive web companies

My two cents:

1. Baidu has more market share than Google before Google left. 2. Google's chinese processing was bad before Kaifulee, but now Google's Chinese NLP is way better than rest of the world.

This would appear to be an argument in favor of trans-national trade deals that stop nationalist protectionism.

China already had massive web companies before Google entered the market - including Baidu. China's move wasn't so much protectionism as it was censorship.

I would hate for Google to leave the UK. The aggregated lost productivity would, presumably, be massive! And I'm part of that aggregate.

If the EU, or UK want to improve their tech chops, they should allocate more resources to the brightest of their respective populations.

If the UK scrapped the war on drugs and gave the billions which are saved/earned through taxation to people who tested as high IQ (say > 139) to invest in STEM activities, what would happen?

I'm not in the set of high-IQ individuals which I propose giving additional resources to; but it's clear in a positive sum game I would benefit greatly from their invention (creation of new products/services) and innovation (improvements of current products/services).

Unfortunately, there's a recent fetish for equal outcome for all (vs. even equal opportunity). As soon as there's equal output from all: that'll makes sense!

No Americans are forcing you to use our services. If you have a problem then don't use them it's that simple. You're able to boycott anything on the Internet.

I'm tired of Anti-American sentiment when your governments are in bed with ours. American companies weren't the only ones sharing data. German and Belgium telecoms were in bed with spy agencies and not just with the Five Eyes. In public Merkle was outraged but her spy agency was just as much to blame.

This is a global problem not just a U.S. and EU one.

I don't see any anti-American sentiment in the OP's message. He's just making an economic argument that may or may not be correct.

>kick out the Americans!

Anytime someone wants to kick me out I take offense. He's talking about kicking out all American companies and making their own tools as a replacement. How is that not Anti-American?

Protectionism and xenophobia are different things.

Can you explain any of your answers? If it was protectionism why was the US the only country listed?

Because the US is the only country that is relevant in this context. None of the major software or web services in use in Europe come from Russia or Nigeria or Australia so there is nothing for trade protections to protect against.

The majority of the problem is about the US and the NSA.

What about Chinese spying? Or the internet propaganda firms in Russia? The UK arguably has the worst domestic spying in the Western world. Rules need to be made on a global scale similar to the ICBM restrictions during the Cold War.

These are not NSA issues its a global issue. What are the ROE for cyber attacks? There are much deeper issues beside the NSA reading my gmail, which I dont mind.

What I do mind is undermining technologies that are supposed to protect us from 3rd parties (criminals and governments alike).

> What about Chinese spying?

Absolutely a huge concern going forward but right now they don't have anywhere near the reach of the US.

> Or the internet propaganda firms in Russia?

On a completely different scale from the US.

> The UK arguably

Their domestic spying is just as atrocious but internationally they are just tools of the NSA.

When one actor is 10x the size of all other actors combined globally it isn't out of line to put the majority of the scrutiny on them and the companies they have deep influence on.

That did not happen because Google left. Google was never even close to beating baidu.

Europe is not equipped to go toe to toe with the Americans. Europe has found a great niche in glomming on to US power and will have a precipitous fall if their actions try to match their rhetoric.

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