SAN FRANCISCO: Google told US regulators that it could spend as much as $30bn of its offshore cash reserves on buying foreign companies or technology rights, it emerged on Wednesday.
In responses to questions from the US Securities and Exchange Commission, the Internet titan said that the bulk of the money it is amassing outside the country is likely to be spent on acquisitions.
Google told regulators in a letter that “it is reasonable to forecast” that it needs from $20bn to $30bn of its foreign earnings to pay to companies or technology in the years ahead.
“We continue to expect substantial use of our offshore earnings for acquisitions as our global business has expanded into other product offerings like mobile devices where our competitors and business partners are no longer primarily US based multinationals,” Google said in the letter, which was dated December of 2013.
Google said acquisitions would be a part of its overall growth strategy, and that the trend was for the sizes of deals to get bigger.
Silicon Valley analyst Rob Enderle of Enderle Group did not expect Google to go on an international buying binge any time soon, reasoning that the company may actually be keeping cash abroad to avoid getting slammed by taxes in the United States.
“The real reason companies retain capital overseas is not to buy startups, it is to avoid taxes,” Enderle said, noting that other tech giants including Apple and Microsoft are in similar positions. “Every company that has a multi-national position really has a problem bringing capital back here.”
Last year, Google spent about $1.4bn on more than 20 strategic deals, including the $1bn acquisition of Israel-based Waze.
Google wrote that it tried to buy another foreign firm, which it did not name, in a deal that could have been valued between $4bn and $5bn.
A year earlier Google spent $12.4bn to buy Motorola Mobility, which it is now selling to Lenovo at a fraction of that price. Google told the SEC that about half of its revenue came from outside the US as of the end of last year.
Google also told regulators that it envisions that one day that digital ads along the lines of those seen on smartphones or tablets will begin popping up on once ‘dumb’ devices such as thermostats, eyewear, watches, and appliances being made smart with computer chips and Internet connections.
“We expect the definition of ‘mobile’ to continue to evolve as more and more ‘smart’ devices gain traction in the market,” Google said.
“Our expectation is that users will be using our services and viewing our ads on an increasingly wide diversity of devices in the future, and thus our advertising systems are becoming increasingly device-agnostic.”
Meanwhile, the US Product Safety Commission issued a recall notice for 440,000 smoke and carbon monoxide alarms by Nest, a tech-driven start-up acquired by Google earlier this year.
Nest in April disclosed that a “wave” feature that lets people disable alert sounds by flailing their arms could also accidentally be triggered by other gestures.
The Google-owned company offered refunds and released software disabling the feature.
The recall notice formalises that owners of the approximately 440,000 Nest detectors sold can get refunds instead of rendering the Internet-connected alarms safe with software updates. AFP