A government effort to get Big Tech to pay up is hitting companies' wallets — and other businesses could be hit next.
What happened: Google plans to implement a 2.5% surcharge on ads served in Canada, starting Oct. 1. Customers were informed Thursday in emails viewed by Peak Tech, and Google confirmed the policy in a statement.
- It’s not clear how many companies and websites are impacted by the surcharge, but it’s estimated that 90% of the world’s large online publishers use Google’s ad server.
Catch-up: The surcharge is a response to the digital services tax (DST). Enacted in June, tech companies with more than $1.1 billion in global annual revenue will have any Canadian earnings over $20 million taxed at 3%.
What they’re saying: Making tech companies contribute to Canada’s economy seems like a fair goal, but some believe the government has gone about it the wrong way. Chuck Lapointe, CEO of Narcity Media Group, says this is another example of the government overestimating the leverage it has on Big Tech, resulting in small businesses “footing the bill.”
- Another example is the Online News Act, which was meant to force tech companies to share the huge portion of ad revenue they take from publishers, but Meta blocked news instead.
- A research brief from the Media Ecosystem Observatory found that Canadian outlets have lost 43% of their social media engagement since Meta’s ban, with local outlets hit hardest.
Why it matters: Opponents of DST worried that companies like Amazon, Netflix, and Apple would pass the cost on to consumers. But Google’s new policy shows how any big company could also apply it to B2B services — with advertisers getting the first taste of what could come to a cybersecurity or cloud storage bill.
Correction: An earlier version of this story stated that Google would be charging digital publishers the new DST surcharge. The surcharge applies to advertisers, not publishers, and the story has been updated.