The news confirms that the air in Europe is changing and that for the giants of the Internet the road is now uphill. In recent days the Court of Justice of the European Union has taken two very impactful decisions on competition and taxation.
Ten years after the beginning of the legal battle, it has in fact confirmed the decision of the European Antitrust Authority of 2016acknowledging that Ireland had given Apple an illegal aid of 13 billion euros. In effect, the highest court in the EU has validated the decision that requires Apple to pay the Irish tax authorities a significant sum in back taxes, which Ireland itself seemed reluctant to claim.
Another victory for the EU Court also on the Google front, with the definitive confirmation of a fine of 2.4 billion for abuse of a dominant position in the product comparison front. This is one of the episodes of the long tug of war between Brussels and the digital giants made in the USA (including Facebook, Microsoft, X).
These decisions mark two important chapters in the ongoing battle between the EU and big tech companies. for greater transparency and fair competition in the European single market, challenging the favourable tax arrangements that some multinationals enjoy in certain Member States. In other words, leopard-skin taxation, based on the convenience of the Internet giants, has been soundly rejected by European judges.
The Apple affair was about tax benefits that Ireland had granted to the group from 1991 to 2014. The European Commission, since 2016, argued that the two advance tax agreements in favor of two Apple subsidiaries, with registered office in Ireland but tax residence in the United States, constituted state aid. According to Brussels, the Irish authorities had excluded from the subsidiaries’ tax base the profits deriving from intellectual property licenses, claiming that the management of these licenses was in the United States. This allowed Apple not to include these profits in the balance sheet of the Irish subsidiaries, obtaining tax benefits of 13 billion euros. The Commission had therefore annulled these tax agreements, but the Dublin government had appealed to the EU General Court which, in 2020, had ruled in favor of Apple, inflicting a defeat on the Commission. The Court had ruled that the existence of a selective advantage for Apple’s Irish subsidiaries had not been demonstrated. However, the Commission challenged this decision and the Court of Justice of the EU upheld the appeal in recent days, overturning the previous verdict and annulling the General Court’s ruling. As a result, Ireland is obliged to recover from Apple the aid granted through the two tax agreements.
Instead, as regards Google, the European Commission has obtained confirmation of its 2017 decision to impose a fine of €2.4 billion for “abusing its dominant position on several national Internet search markets by favoring its own product comparison service over that of its competitors.” The case revolves around the Google Shopping service. Already in 2021, the EU General Court had confirmed the decision at first instance. Specifically, the Commission accuses Google of having favored, on its general search results page, the results of its own product comparison service over those of competing product comparison services.
But the matter is far from closed.. A new chapter is opening for Google in Brussels with the entry into force of the Digital Markets Act (DMA). The Mountain View company could have to face further sanctions and pay billions in compensation to various comparators who, over the years, claim to have lost 90% of their market.
The recent rulings of the Court of Justice of the European Union certainly provide important food for thought on tax justice and the regulation of multinationals. As the Vice President of the European Commission, Margrethe Vestager, has underlined, these decisions represent a significant victory for European citizens and for the principle of tax justice.
These verdicts underline the importance of transparency and accountability. in the management of tax policies. Ensuring that tax measures are fair and compliant with European rules is essential to maintain trust in the tax system and ensure that all companies, large and small, operate on an equal footing. The Court reiterated that the European Commission has the task of supervising the application of tax rules, making sure that there is no discrimination or market distortion. Multinationals must now comply with EU rules and not take advantage of special tax advantages that distort market conditions. This is to prevent discriminatory tax practices and promote a fairer and more competitive economic environment.
So, after several decades of substantial anarchyduring which the web giants have acted undisturbed, pocketing exorbitant revenues, the regulatory circle is tightening around them and this should herald a rebalancing of resources in the digital economy, capable of valorizing small and medium-sized players and protecting economic and idea pluralism on the Internet. Transparency, competition, fiscal justice and pluralism are the fundamental pillars to ensure balanced and responsible digital development.
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EU Court Delivers Blow to Tech Giants: Apple and Google Face Billions in Fines
In a significant blow to tech giants, the European Union’s highest court has upheld two major decisions that could have far-reaching implications for the industry. The Court of Justice of the European Union has confirmed a fine of €2.4 billion against Google for abusing its dominant position in the product comparison market, while also ruling that Apple must pay €13 billion in back taxes to Ireland.
Apple’s Tax Battle
The Apple case dates back to 2016, when the European Commission accused Ireland of granting illegal tax benefits to the tech giant. The Commission argued that two advance tax agreements between Ireland and Apple subsidiaries, with registered offices in Ireland but tax residence in the United States, constituted state aid. The agreements allowed Apple to exclude profits from intellectual property licenses from its tax base, resulting in a tax benefit of €13 billion.
After a long and winding legal battle, the Court of Justice of the European Union has finally ruled in favor of the Commission, upholding the decision that Ireland must recover the aid granted to Apple through the two tax agreements.
Google’s Anti-Competitive Practices
The Google case revolves around the company’s product comparison service, Google Shopping. The European Commission accused Google of favoring its own product comparison service over those of its competitors, abusing its dominant position on several national Internet search markets. The Commission imposed a fine of €2.4 billion in 2017, which has now been confirmed by the Court of Justice of the European Union.
The Digital Markets Act (DMA) and Its Implications
The Google case is far from closed, as the company may face further sanctions and compensation claims under the Digital Markets Act (DMA). The DMA, which came into effect in 2023, aims to regulate digital markets and ensure fair competition. Google may have to pay billions in compensation to comparators who claim to have lost 90% of their market share due to the company’s anti-competitive practices.
Implications for Big Tech
These rulings mark a significant victory for European citizens and the principle of tax justice. They underscore the importance of transparency and accountability in the management of tax policies, ensuring that all companies operate on an equal footing. The decisions also highlight the need for multinationals to comply with EU rules and avoid taking advantage of special tax advantages that distort market conditions.
As the Vice President of the European Commission, Margrethe Vestager, has emphasized, these decisions represent a significant step forward in the ongoing battle between the EU and big tech companies. They demonstrate the EU’s commitment to fair competition and tax justice, and serve as a warning to tech giants that they must comply with European rules.
What’s Next?
The implications of these rulings will be far-reaching and could have significant consequences for big tech companies operating in the European Union. As the EU continues to push for greater transparency and fair competition, tech giants will need to adapt to the changing regulatory landscape. With the DMA set to come into effect, companies like Google, Apple, and others will need to re-examine their business practices and ensure they comply with EU rules.
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European Union Delivers Multi-Billion Dollar Blows to Apple and Google
In a significant development, the European Court of Justice (ECJ) has delivered two major blows to tech giants Apple and Google, upholding multi-billion dollar fines against them. The rulings mark a significant victory for the European Union’s efforts to promote fair competition and tax justice in the single market.
Apple’s Tax Battle
The ECJ has validated the European Commission’s decision that Ireland granted Apple an illegal aid of €13 billion between 1991 and 2014. The Commission had argued that the two advance tax agreements in favor of two Apple subsidiaries, with registered office in Ireland but tax residence in the United States, constituted state aid. The Irish authorities had excluded from the subsidiaries’ tax base the profits deriving from intellectual property licenses, claiming that the management of these licenses was in the United States. This allowed Apple not to include these profits in the balance sheet of the Irish subsidiaries, obtaining tax benefits of €13 billion.
The ECJ’s ruling overturns a previous verdict by the EU General Court in 2020, which had ruled in favor of Apple. The latest decision means that Ireland is now obliged to recover from Apple the aid granted through the two tax agreements.[[[1]][[[2]][[[3]]
Google’s Antitrust Fine
The ECJ has also upheld a €2.4 billion fine against Google for abusing its dominant position in the product comparison market. The Commission had accused Google of favoring its own product comparison service over that of its competitors on its general search results page. The case revolves around the Google Shopping service, and the ECJ’s ruling confirms the Commission’s 2017 decision.
This is not the end of Google’s troubles, as a new chapter is opening for the company in Brussels with the entry into force of the Digital Markets Act (DMA). Google could face further sanctions and pay billions in compensation to various comparators who, over the years, claim to have lost 90% of their market.[[[1]][[[2]][[[3]]
Implications and Significance
These rulings mark two important chapters in the ongoing battle between the EU and big tech companies. They highlight the importance of transparency and accountability in the management of tax policies and the need for fair competition in the European single market. The EU’s efforts to challenge the favorable tax arrangements that some multinationals enjoy in certain Member States are a significant step towards promoting tax justice and leveling the playing field for all businesses.
As Vice President of the European Commission, Margrethe Vestager, has underlined, these decisions represent a significant victory for European citizens and for the principle of tax justice. The rulings are a clear message to tech giants and other multinationals that the EU will not tolerate unfair competition and tax practices that distort the market.
the ECJ’s rulings against Apple and Google are a significant development in the ongoing battle between the EU and big tech companies. They demonstrate the EU’s commitment to promoting fair competition, tax justice, and transparency in the single market. As the EU continues to grapple with the challenges of regulating multinationals, these rulings are an important step in the right direction.
