Hussein Kanji on Google Inc. (GOOGL)’s problems in Germany


Hussein Kanji, a partner at Hoxton Ventures, talks to Olivia Sterns of Bloomberg Television’s “The Pulse”, about Google Inc. (NASDAQ:GOOGL)’s footsteps into Germany. They talk about Google Inc. (NASDAQ:GOOGL)’s initiative to help startups in the country, and the issues it faces due to the new regulations within the European Union.

Hussein Kanji on Google Inc. (GOOGL) in Germany

Kanji feels that Germany is not quite the technological hub that everyone is hoping it would be, because of the fact that there are very few technological startups from Germany. Few of the most successful tech entrepreneurs are basically those who copy other business strategies and implement them as their own, he says, referring to the Samwer brothers. But Kanji reasons out that Germany has bigger problems than this.

“The bigger problem that Germany has is it just doesn’t have very much in the way of venture capital; it’s about a fifth the size of venture capital per GDP per capita as compared to the U.S.”

A more risk averse culture in Germany could possibly be the reason he feels. By Google Inc. (NASDAQ:GOOGL) involving in Germany’s economy, there could be positive results for startups, as the ‘Silicon Valley’ way of doing business could become more predominant.

Moving on to the European Union – Google fiasco that happened around a month ago, Sterns asks Kanji his opinion on the regulations the EU is posting on Google Inc. (NASDAQ:GOOGL) and its comparisons with the similar way by which they were gunning Microsoft Corporation (NASDAQ:MSFT) around a decade ago, with the intentions of breaking it down. Kanji feels that Google Inc. (NASDAQ:GOOGL) has market power that is advantageous to everybody and provides good services, without harming consumers. The EU has good intentions too, but Kanji feels that its regulators do a shoddy work in implementing it. He refers to the cookie directive when he says this. He feels that it was a good thing to do as it protected the individual’s privacy. But now users are bombarded with pop ups on every site when they access them, asking for their consent.

“The EU is a progressive force, but the implementation is actually quite poor. This right to be forgotten is again a good thing in concept, but it is a little bit harder to implement.”

He says that Google Inc. (NASDAQ:GOOGL) is overwhelmed with the number of requests it has received. Anti-social and law-breakers are using this to erase their data off the search engine, and this is not so good. The EU has received a lot of flak over this problem. While it wants such information to be available on the search engine for public utility, it also wants people to have the right to be forgotten, and this has been implemented very ineffectively. Google Inc. (NASDAQ:GOOGL) has received  close to 41,000 such requests within the first few days of this ruling, and Kanji feels it is good, as well as bad, because certain people would want themselves to be removed from the index, and others won’t. As for the consumers, he feels it’s more of a nuance; an unsolvable factor. He feels that in principle, people should be able to get forgotten, buy yet; the ethics of the situation is unclear.

The discussion moves on to the cultural mistrust which Google Inc. (NASDAQ:GOOGL) faces in Europe, as opposed to its status in the U.S.A. Kanji feels that this probably could be because Google Inc. (NASDAQ:GOOGL) has not been very much receptive to the European economy because of serious tax considerations.

“These companies optimize for making sure that their P&Ls look healthy. And I think Google does that.”

He cites Starbucks Corporation (NASDAQ:SBUX) as another example of a company considering tax optimization over market expansion.

Kanji finishes by explaining why Europe is not seeing many individuals in the venture-capital scenario. He feels that building a company in a fragmented economy such as Europe was difficult around 10 years ago and that global distribution platforms are nonexistent. But now such factors have changed with great companies such as Spotify and Soundcloud emerging. But again the problem of resource is emerging now, as the people who invest money in such ventures look towards profits rather than development, and ultimately the only financial contribution comes from such sources like the European Union Investment Bank. Even though things are getting better, a capital gap still exists.

Disclosure: None

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