GAFAM is the acronym for the giants of the Web ( Google, Apple, Facebook, Amazon and Microsoft ) which are the five major US firms (founded between the last quarter of the twentieth century and the beginning of the twenty-first century) that dominate the digital market, sometimes also called the Big Five, or « The Five ».
This acronym corresponds to the initial acronym GAFA, to which the M signifying Microsoft has been added.
Although in some sectors a part of the five companies may be in direct competition, they offer globally different products or services while presenting some features in common that deserve to be united under the same acronym : by their size, they are particularly influential on the American and European Internet on the economic, political and social levels and are regularly subject to tax criticism or prosecution, abuse of dominant position and non-respect of the privacy of Internet users.
Other parts of the world have their own local giants, like Russia with Yandex and VKontakte1 or China with BATX, an acronym referring to Baidu, Alibaba, Tencent and Xiaomi.
GAFAM has a lot of influence in the Western world. In 2017, the GAFAs together spend a record $ 50 million in lobbying the US government (Google 18 million, Amazon nearly 13 million, Facebook 11.5 million and Apple 7 million) 4. Microsoft spends $ 8.5 million, a stable amount compared to previous years5. In Europe, Microsoft and Google are among the US companies that spend the most on lobbying the European Commission (respectively, 4.5 to nearly 5 million euros annually for the first and 5.5 million in 2016 for the second) 6.7.
In terms of content circulation, this high concentration of actors creates an oligopolistic dynamic because the digital activity revolves around a very limited number of platforms. This movement can be seen from the beginning of the 2000s.88 These actors, soon « giant », occupy an important position in their sectors of activity. For example, the landscape of search engines has grown from a few dozen players at the beginning of the Web to a structured market almost all around three players (Google, Yahoo, Bing). Their influence is, however, more limited in authoritarian countries where networks are controlled by the state and where they often control their own Internet giants like Yandex for Russia or BATX for China, a country where Apple and Microsoft however are present by bowing to the censorship of the government. Google, which had withdrawn from China in 2010, plans since 2017 a return to this market of more than 770 million Internet users, with a censored version of its search engine9.
This influence is perceptible in several sectors of activity. Benoît Epron and Marcello Vitali-Rosati speak of an oligopoly with fringes: they conceive a market structured around and captured in large part by a small number of major actors, surrounded by a large number of more minor actors sharing a share very limited market8.
GAFAM’s place among the companies with the largest market capitalizations
In 2017, according to the BrandZ ranking, which measures the value of brands, GAFAM ranks first in the top five; Google in front of Apple, Microsoft, Amazon and finally Facebook13. The combined value of the parent company of Google (Alphabet) and Apple is greater than that of the entire CAC 40 and with its reserves, Apple could buy the two largest companies in the French stock index (LVMH and Total) 13.
GAFAM’s market capitalization and cash flow are equivalent to the gross domestic product of Germany and Sweden, respectively, and in 2016 the five companies spend nearly US $ 60 billion on research and development.
The business model or strategy of most GAFAMs implies that they collect a considerable amount of data from Internet users or users of their products, which regularly puts them under fire from criticisms of privacy. .
Thus, on 25 May 2018, on the same day as the entry into force of the general data protection regulation, the Austrian association noyb.eu (none of your business) lodges four appeals before as many European authorities control: in Germany in front of the Hamburg Commissioner for Data Protection and Freedom of Information (HmbDfDI) against WhatsApp (Facebook), in Austria at DSB against Facebook, in Belgium at APD against Instagram (Facebook) and in France at the CNIL against Android (Google).
Three days later and on behalf of 12,000 people, the French association La Quadrature du Net filed a complaint about seven services or subsidiaries of GAFAM (Google Search, YouTube and Gmail for Google, iOS for Apple, Facebook, Amazon and LinkedIn for Microsoft) to stop companies from tracking advertising and behavioral analysis of Internet users.
The associations blame the five companies for not complying with the EU regulation, a point of view shared by an analysis of the Norwegian Consumer Council.
In California, the « California Consumer Privacy Act » is a bill launched from December 2017 that aims to prohibit companies (whatever they are) from selling data from internet users. Many companies oppose the project and then finance a move to make it fail: Google and Facebook pay $ 200,000 each; Amazon and Microsoft $ 195,000 each21. Embroiled in the Cambridge Analytica scandal, Facebook withdraws from the opposition to the bill and Microsoft is accused of hypocrisy while the company supports on one hand the European regulation of the protection of the private life but opposes a similar law in California.
Taxation and Competition
GAFAM, like all companies in the digital sector, can have many customers in relation to the number of employees. This allows them to make substantial profits. Moreover, as multinationals, they have the legal means to almost completely escape the tax on profits by practicing the tax optimization of repatriating profits in fiscally advantageous countries.
These two phenomena thus enable them to generate considerable profits32. According to the report of Moody’s published in 2017, Apple has 231 billion US dollars placed in tax havens, Microsoft about 130 billion US and Alphabet (Google) 51 billion USD33. According to BFM TV, in 2017, Google paid 14 million euros in taxes in France, Apple 19 million, Amazon 8 million (on its logistics business) and Facebook, 1.9 million.
In 2016 and after six years of investigation, Google pays more than 171 million euros to the UK tax under an agreement to close an investigation into tax arrears spanning a decade. The following year, in the same context, the company pays more than 300 million euros to the Italian tax authorities48. In France, Google is accused of aggravated tax evasion and in May 2016, the national financial prosecutor’s office searches the Paris offices of the company while the tax authorities claim more than one billion euros49. Finally, on the basis of a legal uncertainty concerning the notion of « permanent establishment », the Paris Administrative Court gives reason to Google, which will not have to pay the arrears claimed50. In 2016, Alphabet (Google’s parent company) transfers 15.9 billion euros from the Netherlands to Bermuda51.
EU Commissioner for Competition Margrethe Vestager imposes two fines on Google for abuse of dominant position. The first, in June 2017 and amounting to 2.42 billion euros, aims to condemn the manipulation by Google of the results of its search engine that promotes its own product, Google Shopping52. In 2018, the company is fined 4.34 billion euros while it forces manufacturers of Android devices to preinstall its Google Chrome browser and ensure that queries are directed to it. Google is also condemned to pay manufacturers and operators to preinstall the Google search engine on their devices52. The company is appealing both convictions.
In July 2018, a Mozilla engineer demonstrates that Google Chrome is favored on YouTube while full loading pages of the new interface of the site owned by Google is five times slower with Firefox and Microsoft Edge than the browser Google.
According to a study by Oxfam America on the tax evasion of the largest US companies between 2008 and 2014; Apple, Microsoft, IBM, Cisco and Google have transferred more than $ 450 billion to tax havens, of which $ 181 billion is for Apple alone54.
In 2016, Apple is condemned to repay 13 billion euros to Ireland, while for more than ten years, the country has taxed the company at rates between 0.005% and 1% of its profit, which represents State tax assistance according to the European Commission while the average rate in the EU is 21% 55. In 2018, according to a report from the alternative left to the European Parliament, not only has Ireland not put an end to Apple’s tax avoidance practices, but the company continues to benefit from highly attractive tax rates on the world. the whole territory of the European Union56.
In December 2017, Apple sued the association ATTAC, which peacefully demonstrated in one of its stores in Paris to denounce the tax evasion practiced by the company57. Apple is unsuccessful in its application by the court of first instance and must pay 2,000 euros to ATTAC for legal costs.
A tax reform adopted in the United States in 2017 allows US companies to pay a reduced tax when it repatriates their cash in the country, which Apple will pay a tax of 38 billion dollars ( the amount of the repatriated sum is not disclosed) 59.
In France, the competition authority raided the Paris headquarters of the company in June 2013 following a complaint of abuse of dominant position of eBizcuss, a reseller of Apple products (« Apple Premium Reseller »), then in judicial liquidation and criticizes Apple for promoting the supply of its own stores « Apple stores » when marketing new products60. In 2017, a dozen companies, including Spotify and Deezer, write to the European Commission to denounce the anticompetitive practices of Apple and Google61 which take the form of « Restricting access to or interaction with consumers, biased rankings and search results, lack of clarity, unbalanced terms and conditions, and preference for their vertically integrated services. » «
On February 5, 2019, the French tax authorities and Apple find a compromise for a backlog of taxes due over the period 2008-2007. The two sides negotiated an agreement worth 500 million euros.
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In 2017, Facebook paid 1.9 million euros in taxes in France, under a reported turnover of 55.9 million euros. L’Express magazine estimates real turnover at around € 800 million if « the activity carried out in France [was] not invoiced from Ireland » 63. In 2012, nearly $ 700 million of its revenue outside the United States is transferred to the Cayman Islands64. In 2016, the US tax administration, which suspects Facebook of tax fraud, is suing the company to force it to send documents that can be used to establish the amount of an estimated $ 3 billion to $ 5 billion recovery65. The following year, Facebook promises in future to be more transparent and declare, by 2019, some of its income where they are actually generated and not only in Ireland where the corporate tax rate is 12.5% (as against more than 33% in France) 66.
At the hearing of Mark Zuckerberg before the US Congress in connection with the Cambridge Analytica scandal, Senator Lindsey Graham raises the issue of Facebook’s monopoly in these terms: « If I am tired of Facebook, which social network can I I register? I’m talking about your real competitors. Do not you think you have a monopoly? « . Mark Zuckerberg will reply that he « certainly does not have that impression » 67.
At the same hearing, Mark Zuckerberg made an important statement about the status of his social network: « I agree that we are responsible for the content. » This statement made on April 11, 2018 before the United States Congress, significantly changes the status of this social network, which was recognized, prior to this paradigm shift, as a host « and so not to be responsible for the content published by its users « . As a host, Facebook was not responsible for the content posted by users, unless the unlawful nature of the content was reported to them. The French daily Le Monde says that « the question of whether Facebook is responsible for content (photos, videos, writings) is crucial for rights holders. » By this declaration, Facebook becomes a media like the other publishers and more precisely a digital publisher.
In 2012, the French tax authorities claimed the company 198 million euros in arrears and penalties for reporting abroad income earned in France; a dispute settled in 2018 by an amicable agreement and the amount will remain secret while in Italy, and in a similar context, Amazon spends 100 million euros69. Between 2006 and 2014, Amazon benefits from an agreement with Luxembourg that allows it to largely escape the corporate tax in Europe; agreement Judged illegal by the European Commissioner for Competition who is the company to pay 250 million euros to the Grand Duchy70. At the end of 2014, the scandal LuxLeaks encourages Luxembourg not to renew the agreement and for its part, Amazon creates subsidiaries in each country where it operates, in order to pay its taxes effectively where it realizes its profits70,71. However, according to a report by SyndexNote 3, the French branch paid less than two million euros in income tax for 2015, while its turnover reached one billion euros and the 252 million which the company deducted for external services represents the equivalent of its commercial margin.
At the end of 2014, Microsoft settled a tax adjustment in France of more than € 72.4 million, of which € 16.4 million in the context of an amicable agreement with the tax authorities72.
The company charges for its services from its European headquarters in Ireland, a country with a favorable tax rate, even if its services are rendered in a third country by what Microsoft then considers as a mere subsidiary acting as a commercial agent. However, this arrangement is not considered valid by the French tax authorities and in 2017, it claims 600 million euros to Microsoft France for tax due in the context of its sale of space activities. advertising in its Bing73 search engine.
Moreover, since the 1990s, the history of Microsoft is tainted by lawsuits against him for abuse of dominant position and anticompetitive practices, to the point that the company is close to dismantling in the years 200074. Several US states, the department of the United States Justice, potential competitors and later the European Commission, blame Microsoft for imposing Windows on computer manufacturers as well as for linking the use of the operating system to its own home-based software like Reader Windows Media and Web Browser74. In this context, the European Commission fined Microsoft more than 497 million euros in 2004, including for tying75. In 2013, the company is again sentenced in Europe to a fine, this time of 561 million euros, for having removed from Windows 7 the selection screen to choose a default browser, possibly other than that of Microsoft