The European Union has dealt a severe blow to tech giants Apple and Google
In recent days, two of the world's most powerful technology companies, Apple and Google, have suffered significant legal defeats from the European Union. The Court of Justice of the European Union (ECJ) ruled against both companies, underlining the EU's hardline stance against big tech firms. The decisions are final and the companies can no longer appeal. Moreover, the move signals that regulations aimed at curbing the power of tech giants in Europe are gaining momentum.
Apple must pay €13 billion in taxes
In 2016, the European Commission ruled that Apple $AAPL+3.7% received illegal tax benefits of €13 billion from the Irish government. The Commission claimed that Ireland allowed Apple to benefit from two tax treaties that reduced the company's tax burden to a whopping 0.005% in 2014. This was deemed to constitute unlawful state aid, which is prohibited under EU rules.
Apple
AAPLApple defended the decision, arguing that it always pays all the taxes it owes and that there is no special agreement between it and the Irish government. In 2020, a lower EU court backed Apple, ruling that the Commission had failed to sufficiently prove that Apple had an unfair advantage. But now, in 2023, the CJEU has overturned that decision and upheld the European Commission's original verdict.
Margrethe Vestager, the European Commissioner for Competition, called the decision "a major victory for European citizens and tax justice". For Apple, however, this result means a loss and the company has expressed its disappointment, having already paid more than $20 billion in taxes in the United States on these profits.
Google lost the fight 2.4 billion euros
In a parallel case, which also shows the EU's tight regulation of big tech companies, Google $GOOG+1.5%suffered a similarly bitter defeat. The Court of Justice rejected Google's appeal against a €2.4 billion fine the firm received for abusing its dominant position in the online search market. Google was punished for favouring its own price comparison service over competitors, which harmed other firms and consumers in Europe.
Alphabet
GOOGDespite the changes Google made in 2017 to comply with the European Commission's requirements, these steps were not enough to overturn the fine. In response to the verdict, Google said it was disappointed with the decision and stressed that the changes had brought billions of clicks to competing comparison services.
A new era of regulation of tech giants
The ECJ's rulings against Apple and Google represent a significant milestone in the European Union's long-standing efforts to curb the power of big tech firms. Margrethe Vestager, who has campaigned for fair competition in the EU for two terms, has become the leading face of this campaign. Her work has led to several landmark decisions and the introduction of new laws such as the Digital Market Act, which came into force last year. This law obliges technology companies not to favour their own services over competitors and aims to create a more level playing field in the market.
In doing so, the EU has not only imposed historic fines, but also set the framework for future regulations to ensure that technology markets operate more fairly and protect the interests of consumers and smaller firms.
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