Pissing Away Taxpayer Euros

This sums up nicely (hat tip to Marc Andreessen) exactly what is wrong with the incestuous relationship between business and government in Europe… not to mention the fact that beaurocrats persist in their belief that they are responsible for innovation.

The European Union on Thursday authorized Germany to give $165 million for research on Internet search-engine technologies that could someday challenge U.S. search giant Google Inc.

Actually, that last point deserves additional commentary because in the past what would have happened is that Germany would have created a government funded, government run group to lead this research but in this case they are giving money to large companies instead.

Rather than create the conditions for innovation in the private sector, like reducing taxes and implementing labor law changes, the EU continues to believe that it is responsible for delivering innovation to the European economy, whatever that means.

I have so many problems with this effort that it’s hard to know where to start. How about the fact that a competitive search initiative is never going to come from any of these companies? Does anyone really see SAP or Siemens delivering a "Google killer"?

It’s not that they are technically incapable, in fact SAP has a pretty nice enterprise search engine called T-Rex, but let’s face the fact that these companies exist to solve different problems for different customers. Ironically, try finding out anything about Trex on SAP’s site… maybe SAP should devote some of the $165m to developing a better search tool for SAP.com? (great, I’m gonna be there tomorrow and somebody is bound to bring up my rant!)

Next up would be the fact that this isn’t a science problem anymore than Google is a search business. The core technology may be search but the business itself is all about advertising. Better search won’t beat Google, as my previous post today points out. Google’s business works because the search is "good enough" and paired with a revolutionary advertising disruption that they didn’t even develop.

Here’s another complaint I have about this, SAP just racked up another quarter of pretty impressive profits on growing revenues. Why should $165 million of European taxpayer money go to SAP (and Bertelsmann and Siemens and Thomson) when they could easily fund this research themselves if they identified a compelling business case for doing so? It should not and European taxpayers should be just as outraged by that as American taxpayers were when Exxon was getting tax breaks.

I won’t pretend to know everything about what EU governments should do to increase capital investment and R&D spending, but it does strike me as rather obvious that labor law reform for tech companies, and tax policy reform are two places to focus attention. This intiative to create a better search technology with almost a quarter billion dollars of taxpayer money is going to result in nothing, nada, zip, zero, and the fact that the money is going to companies flush with cash is simply outrageous.