Facebook and Google unlikely to leave over local server issue

19:05 | 01/06/2018

Facebook and Google are not likely to leave Vietnam over the issue of installing servers in the country as they are making bank on Vietnamese users’ demand for their services.

facebook and google unlikely to leave over local server issue
Google and Facebook may be reluctant to withdraw from their lucrative operations in Vietnam. Photo: vtc.vn

vtc.vn quoted Nguyen Phan Anh, Master of Economic Law, as saying that the two famous technology brands would never give up the Vietnamese market, which is one of their most potential markets.

“Despite the requirement that Facebook and Google installed servers in Vietnam may result in friction at first, I do not think the firms would leave Vietnam over it,” Anh affirmed.

Data released by We Are Social stated that as of July last year, Vietnam ranked seventh among the countries with the highest number of Facebook users with 64 million. In particular, more than 60 per cent of Vietnamese users are teenagers and young people.

Facebook and Google dodging Vietnamese taxmen since 2016

Meanwhile, Google is the go-to searching tool of the entire world, not just Vietnam.

“Surveys by international organisations show that Vietnam remains in the top 20 countries with the highest number of internet users. Therefore, foreign firms like Facebook and Google will not easily leave the market,” Anh explained.

According to the Department of Broadcasting and Electronic Information, Facebook and Google in 2017 accounted for 80 per cent of the online advertising market in Vietnam.

Currently, data about Facebook and Google’s 2016 and 2017 revenue in Vietnam has yet to be officially announced, but data from 2015 released by Vinalink show that Facebook led the online advertising market in Vietnam with the revenue of VND3 trillion ($132.1 million), followed by Google with VND2.2 trillion ($96.9 million).

In the same year, the rest of the VND1.9 trillion ($83.7 million) market lay in the hands of domestic advertising companies, including Admicro, Adtima, Coc Coc, and others. These numbers show a huge imbalance between foreign and domestic firms.

Anh also stipulated that requiring foreign firms to establish representative offices and install servers in Vietnam will benefit the Vietnamese economy because the firms would need to invest locally, creating jobs for Vietnamese people. Similarly, domestic firms would also receive significant investments from foreign firms.

On the other hand, in case the foreign firms withdraw from Vietnam over the requirement, despite the initial difficulties, the gap will likely be quickly filled by domestic technology firms.

Therefore, the worry that Facebook and Google’s withdrawal from the domestic market would reduce the GDP growth by 1.7 per cent and FDI inflows by 3.1 per cent (numbers put forward by the Vietnam Digital Communications Association) may be unreasonable.

Maybe the government should take firmer measures to effectively control the business of the two technology giants as well as put a stop to their year-long tax dodging.

Van Anh

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