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Google is making big changes to its online advertising

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Google is set to increase the cost of ads on its eponymous search engine as it looks to cover the expense of new digital services taxes.

The online giant has revealed that from November 1, advertising prices will be rising 2% in the UK, and 5% in Austria and Turkey following the introduction of new levies.

Several European governments have brought in charges against US-based tech giants including Google in order to check supposed dominance of the online space and claim back some returns on the huge revenues made by such companies.

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“The Regulatory Operating Costs are being added due to significant increases in the complexity and cost of complying with regulations in Turkey. In Austria and the United Kingdom, the digital services tax (DST) fee is driven by the new digital services tax in these countries," Google said in a statement.

Customers in the UK could face millions of pounds in extra spending on Google ads, which are also shown on YouTube, however the potential returns from such exposure could make extra costs worthwhile.

The UK introduced its Digital Services Tax in July 2019, targeting search engines and social media platforms, with the likes of Amazon, Facebook and Twitter also affected alongside Google, which reported £1.6bn in revenues last year. 

The tax, which came into force on April 1, charges 2% on revenues over £25m generated in the UK for companies that make over £500m in worldwide sales, with the government hoping it will eventually bring in around £500 million every year.

“Digital service taxes increase the cost of digital advertising,” a Google spokeswoman told the Guardian. “Typically, these kinds of cost increases are borne by customers and like other companies affected by this tax, we will be adding a fee to our invoices, from November. We will continue to pay all the taxes due in the UK, and to encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.”

Amazon has already announced it will also be raising seller fees in the UK by a similar 2% margin in order to cover the costs of the tax.

Via The Guardian