BERLIN (Reuters) – A group of leading German travel start-ups appealed to U.S. tech giant Google on Thursday to offer them easier terms on paying for advertising to help them ride out the coronavirus pandemic that has devastated their business.
FILE PHOTO: A coach of German mobility platform FlixBus that runs bus and train services, arrives at a bus depot in Munich, southern Germany, August 22, 2019. REUTERS/Michael Dalder
The letter, signed by eight CEOs, won support from the German government amid concern that taxpayer money invested by a new state fund to prop up struggling start-ups could end up flowing to the world’s top search engine.
“Google has been a strong partner for us in better times, but … our trust in them is shaken,” said Johannes Reck, CEO of GetYourGuide, which offers online bookings for walking tours and museum visits.
“We hope we can work with them on a clearer policy that does the right thing for consumers and Google’s partners.”
The letter, addressed to Google’s Chief Business Officer Phillip Schindler, complained that the Alphabet (GOOGL.O) subsidiary was “selectively enforcing strict payment terms” on larger partners in the travel and transportation industry.
It called for Google to immediately pause the enforcement of payments on companies receiving state aid, and enact a consistent policy on refunds or credits for ads related to bookings that had to be cancelled due to the pandemic.
It also urged Google to offer a flexible way to restructure and postpone payment terms for advertising services and other fees incurred in the first quarter of 2020.
“We expect that Google, one of the most profitable companies in the world, shows the same solidarity as others,” Germany’s point person for the digital economy, Thomas Jarzombek, told Reuters.
“I am particularly concerned that Google is giving deferments in some cases but not in others. This shouldn’t lead to unfair outcomes.”
Jarzombek spoke after unveiling a state programme that will invest 2 billion euros ($2.2 billion) in German startups, working mainly with venture capital funds to ensure that funding rounds for promising companies succeed.
Google said in response that it was working to help small- and medium-sized business partners protect their businesses.
“This includes an $800 million financial support package for organizations, including $340 million advertising credits for our small- and medium-sized business customers,” a Google spokesperson said.
A drop in Google ad sales steadied in April, Alphabet said on Tuesday as it reported first-quarter revenues of $41.2 billion, triggering a strong rally in its stock.
In Europe, meanwhile, travel companies account for many of the 14% of venture-backed companies that are at the greatest risk of failing, according to a recent analysis by Dealroom.com.
The letter was also signed by the bosses of Dreamlines, Flixbus, Homelike, HomeToGo, Omio, Tourlane and Trivago (TVAGy.F).
Reporting by Douglas Busvine;Editing by Elaine Hardcastle