The European Court of Justice has slapped US tech giants Apple and Google with big fines in two separate cases. Both companies must pay billions after years of legal battle with the European Commission (EC). Apple’s case involves 13 billion euros in taxes that the company must repay to Ireland, while Google will be fined 2.4 billion euros for anti-competitive practices.
Apple received undue tax breaks from the Irish government through various subsidiaries for years, so it barely paid taxes on its European profits. The European Commission saw this as illegal state aid. Although Apple and the Irish government (which had made the construction possible) previously appealed and were proven right, the European Court of Justice has ruled in a final judgment that Apple must repay this amount. The amount involved is 13 billion euros, reports Reuters. Whether Ireland will receive this amount reluctantly is not stated.
Unfair advantage
In the case against Google, the court ruled that the company unfairly favored its own service, Google Shopping, in search results, putting competitors at a disadvantage. This already led to a 2.4 billion euro fine in 2017, which Google tried to challenge. However, Google’s appeal has now been rejected, leaving the fine standing.
Both rulings strengthen the European Union’s image as a strict regulator of the (U.S.) tech sector. However, the lengthy legal proceedings raise questions about the effectiveness of the European regulatory system, growls The New York Times. In any case, the rulings are a significant victory for European antitrust Commissioner Margrethe Vestager, whose term ends in November.
Tip: European competitiveness under pressure due to overly strict and complex policies
Apple believes the company’s revenues are now being taxed twice. According to the company, the issue is not that it would not want to pay taxes, but to which country Apple should pay its taxes. According to Apple, that is the United States. “The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the U.S.,” according to the company in response.
Big tech under fire
Google also regrets the ruling in its own case. “This judgment relates to a very specific set of facts. We made changes back in 2017 to comply with the European Commission’s decision,” a spokesperson said. With that reasoning, the court disagreed. No further appeal is possible against the rulings: they are now truly final.
Over the past decade, Google has received 8.25 billion euros in antitrust fines from the EC. The company has challenged two rulings regarding its mobile OS Android and ad service AdSense and is now awaiting the rulings in these cases. The company is also fighting antitrust complaints from the EU that may mean Google has to sell some of its lucrative advertising business.
Google is also under fire in its home market of America. Just this week, the U.S. Department of Justice began a major case against Google for allegedly monopolizing the online advertising market there as well. If the judge agrees with the DA in this case, it might mean that the company may have to split up its operations over there as well.
Read more: U.S. DOJ is gunning for Google: what would a breakup mean?