Yahoo Finance Coronavirus: German travel startups ask Google to share the burden
The coronavirus pandemic has hit startups hard, and travel startups in particular, with pre-booked trips and tours all suddenly cancelled as travel bans and lockdowns from March brought most of the world to a total standstill.
Many German travel startups, like GetYourGuide and Tourlane, immediately refunded customers for the trips and experiences they now could not take. Then the companies, who have had to put hundreds of staff on short-time hours, hunkered down to figure out how to ride out a year likely without much or any revenue.
Now these travel firms have a bone to pick with Google (GOOG), whom they say has refused to show any flexibility in terms of restructuring their ad payments from the first quarter. They accuse the tech giant of not showing solidarity by helping shoulder the immediate economic impact from the crisis.
In a letter from the German Startups Association to Google’s Chief Business Officer seen by Yahoo Finance UK, the heads of the country’s eight biggest travel startups, including unicorns GetYourGuide and Flixbus, appeal to Google to throw them a lifeline.
“By selectively enforcing strict payment terms on larger partners — especially from the travel & transportation industry — for its services provided to market those products, Google is opting out of sharing the responsibility to do right by consumers,” German Startups Association president Christian Miele writes in the letter.
He writes that the startups made a big contribution to Google being the leading player in the digital economy, noting that the eight startups represent more than $80m (£63.9m) in ad revenues for Google in the first quarter of 2020 — and appeals to the tech giant to “demonstrate the solidarity necessary to navigate us all through this challenging time.”
Google parent Alphabet last week reported a 13% growth in first-quarter revenue to $41.16 billion, but also suffered a “significant slowdown” in Google ad revenues in March.
Specifically, the travel startups want Google to allow them to restructure or postpone payment terms for ad services incurred in the first quarter of 2020, and March in particular. They also want Google to stop insisting on payments from companies that have received taxpayer-funded government aid from the German government.
Google did not respond specifically to a request for comment on the startups’ letter. “Our travel partners are facing unprecedented challenges and we’re working with partners to help protect their businesses, including helping them surface their cancellation policies in our travel search products and expanding our ‘pay per stay’ pilot earlier this month to all hotel ads partners globally to shift the cancellation risk from our partners to us,” a Google spokesperson told Yahoo Finance UK via email.
Miele would prefer to see flexible payments however, since the companies he represents all acted in their own customers’ interests.
"Despite doing the right thing in issuing refunds for holidays cancelled by coronavirus, the companies represented by the German Startups Association have not been offered a penny of credit from Google toward their advertising bills.” Miele said. “Instead of paying us lip service by touting support packages, Google should offer a consistent and flexible repayment policy toward its partners."
GetYourGuide chief executive Johannes Reck said that when his company asked Google for a discount for all the cancelled March bookings, or if they could have the repayments deferred or restructured, Google said no and insisted on being paid within thirty days.
"We want Google to recognise that it played an active part in our customers' trip planning, and to take a participatory role in the refunds we had to issue for those trips, rather than excusing itself from responsibility,” Reck said. “We're not even asking for full debt forgiveness; we just want a way to restructure our payments according to a policy that is consistent and fair."
Government aid ‘flows to Google’
In his letter to Google, Miele points out that many start-ups are now going to be reliant on German government aid to stay solvent during the crisis, and “badly-needed funding will flow into Google’s coffers on the backs of taxpayers in Germany and around the world.”
As part of its more than €600bn economic stabilisation fund, the German government allocated €400bn to guarantee loans to companies from the KfW state development bank
Christian Lindner, head of the Free Democrats (FDP) had a go at Google last week, saying that the company, which has no problems and keeps making profit, is “showing its character.”
“Google acts like a monopolist who defines the rules himself and who doesn't have to fear competition," Lindner told Bild newspaper.
