14 DAY TRIAL // Many companies in the United States have money stashed away in offshore accounts, and Google is no different. The company has admitted that it has between $20 billion (€14.6 billion) and $30 billion (€21.9 billion) outside the United States, which will be used to make overseas acquisitions.
The revelation was made in a letter it sent to the Securities and Exchanges Commission (SEC) and is dated back in December, although it has just been published. The SEC wanted to know more details about how Google was planning to reinvest these funds into its foreign subsidiaries.
Google refrained from paining a timeframe for when it would spend the huge reserve on acquiring foreign businesses, but justified its existence nonetheless. It even explained that in 2012, half of its revenues were earned in markets outside the United States.
More interesting, however, is the fact that Google was close to signing a costly deal that would have lowered the company’s stash by up to $5 billion (€3.65 billion). The name of the company that Google was going to acquire is not revealed in the file, but had it gone through, it would have been one of the biggest purchases for the company.
Google did point out that it spent $1.4 billion (€1 billion) on 20 acquisitions in 2013. The purchase of the Israeli social mapping startup Waze accounted for most of this sum. These deals were funded by Google’s cumulative “indefinitely reinvested non-US earnings.” This means that it comes from cash that does not return to the United States, something that tech companies, Google included, have come under fire for.
The Internet giant mentions that the sum stored in overseas accounts will only grow, just like the rhythm in which Google funds them. Back in 2010, the company had some $18 billion (€13.13 billion), while in 2012, it grew to $33 billion (€24.08 billion).
“We anticipate that any annual incremental growth in the cumulative indefinitely reinvested non-U.S. earnings from year to year will continue to scale at a consistent rate with our overall needs to support continued expansion plans in future years,” reads the file submitted with the SEC.
Despite the criticism, the money Google has in offshore accounts isn’t just sitting there. The company has used plenty of it for investments in its US business, such as the acquisition of Motorola Mobility.
Google’s foreign subsidiaries had reserves of $34.5 billion (€25.17 billion) in March, out of the total of $59.5 billion (€43.4 billion).