Google in Croatia: Five Years Later, a Change in Course

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Five years after entering the Croatian market, Google in Croatia is preparing for a big turnaround. So far, the American company has only imported into Croatia. It started by selling its advertising services to the Croatian Tourist Board (HTZ) and marketing agencies, continued by selling its office services in the cloud, and selling content from the Google Play store, enabling us to buy Android apps, games, movies and music. This year, Google established co-operation with PBZ and thus entered the Croatian payment market. In the meantime, Google has also collected a lot of information about Croatia, from creating digital maps to offering bus and trams schedules in Zagreb in real time via Google Maps, reports on December 19, 2018.

In these cases, Google in Croatia has only sold services and products that were developed outside. However, no later than the end of next year, the IT giant will support Croatian exports for the first time. Joško Mrndže, the director of Google for the Adriatic region, who was also the first director of Google’s office in Croatia, said the next service they would launch in the Croatian market would be Merchant account.

He did not specify when exactly the service would be presented in Croatia. However, given the pace at which Google is expanding in the Croatian market, it is expected that this will happen no later than the end of next year. Having a Merchant account is a prerequisite for Croatian software producers to make money on Android apps, and to be able to sell their apps in the Google Play store directly from Croatia. For now, businesses and companies from Croatia can only give their apps for free; they cannot charge for them directly from Croatia.

Google Play is the largest software store in the world. Apps are being purchased there for Android mobile phones which, according to the Global Report Mobile Market for 2017, are used by more than 2.3 billion users. This year, it is expected that Android will get 300 million new users. This is one of the main reasons why high-tech players from Croatia are currently opening companies abroad.

The fact that they cannot use the Google Merchant account from Croatia is one of the reasons why the company behind the most popular Croatian mobile app with 100 million users, Photomath, has its HQ abroad. That is why the largest Croatian developer of mobile games, Nanobit, was forced to open a company in Budapest three years ago.

Damir Sabol, the founder of Photomath, points out that this used to be a significant problem. “It does not mean so much to us now because we are selling it through our US company, but it was a major obstacle because we could not sell it from Croatia,” he says. He adds that others from the IT industry were also forced to set up companies outside of Croatia and says he does not know what prevented Google from enabling Merchant Accounts for companies from Croatia previously.

Luka Abrus, CEO of Five, one of the largest Croatian mobile app producers, says that they mostly work for international clients, so the issue is not a problem for them. “When we do projects for ourselves, we do it through an American company,” says Abrus. Tomislav Car, director of Infinum, the largest mobile app company in Croatia, says that the Google service will help a lot when it becomes available. “Until now, people mostly opened companies in Hungary and the United States. I do not know why Google did not make Merchant accounts available to companies in Croatia. I guess we are not large enough market, so it took time for them to come here,” says Car.

Tomislav Gojević, the head of development at Nanobit, says that the growth of companies such as Nanobit and Photomath shows that this is no longer the case. “It would make it easier for Nanobit to do business because it would cost us less if we did not have to open a business abroad to work with Google. We will have to consider another factor – avoiding double taxation with the US. If that were to happen, we would probably bring the Google Play business back to the parent company,” Gojević concludes.

More news on the IT industry in Croatia can be found in our Business section.

Translated from Poslovni List (reported by Bernard Ivezić).


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