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On Tuesday, the European Court of Justice delivered significant blows to Apple and Google, marking key victories in the EU’s efforts to regulate major tech giants. These decisions represent a substantial triumph for the EU’s competition chief, Margrethe Vestager, who has faced several legal setbacks in recent years.
Key Rulings:
- Apple’s €13 Billion Tax Bill:
- The court ruled that Apple must pay €13 billion ($14.3 billion) in back taxes to Ireland. This decision ends a long-running legal dispute regarding Apple’s tax arrangements in Ireland, which were deemed as unlawful state aid.
- The EU had previously accused Ireland of allowing Apple to significantly underpay taxes, with the company’s effective tax rate falling from 1% in 2003 to 0.005% by 2014.
- Google’s €2.4 Billion Fine:
- The court upheld a €2.4 billion fine against Google for abusing its dominant market position by favoring its own comparison shopping service over rivals.
- This fine, imposed in 2017, was part of a broader series of competition cases targeting Google, which has faced multiple record penalties totaling around €8 billion between 2017 and 2019.
Reactions:
- Margrethe Vestager: The outgoing competition chief celebrated the rulings as a “big win for European citizens and for tax justice.” She expressed relief and an emotional reaction to the court’s decision, highlighting the importance of upholding competition and tax fairness.
- Apple: The company expressed disappointment, stating it would face up to a $10 billion earnings hit, though this amount is relatively small compared to its overall revenue. Apple has insisted there was no special deal and that it pays all taxes owed.
- Google: The tech giant also voiced disappointment, noting that it had already made changes to comply with EU regulations since the 2017 decision. Google faces ongoing scrutiny both in Europe and the US, where it is involved in separate antitrust trials.
Implications:
- For the EU: These rulings reinforce the bloc’s commitment to regulating tech giants and ensure that multinational companies are held accountable for tax avoidance and competitive practices. Vestager’s successes mark a notable turn in her otherwise challenging tenure.
- For Tech Giants: Both Apple and Google face substantial financial and operational repercussions. The rulings also reflect ongoing global efforts to address concerns about the power and influence of major technology companies.
Looking Ahead:
- For Google: The company is set to face another significant ruling next week related to a smaller fine and continues to deal with regulatory challenges in the US regarding its advertising practices.
- For Apple: The company will need to navigate the financial and reputational impact of the court’s decision while addressing ongoing scrutiny over its tax practices.
These rulings are likely to influence future regulatory actions and shape the broader landscape of global tech industry oversight.