It’s a bad day for big tech companies in the European Union. After rejecting Google’s appeal of a $2.7 billion antitrust fine, Europe’s highest court ruled that Apple must return its €13 billion ($14.4 billion) Irish tax break, which was deemed illegal by the EU Commission in 2016.
This decision by the European Court overturned an earlier ruling by a lower court in 2020 in favor of Apple. “[This ruling] confirms the European Commission’s 2016 decision: Ireland provided unlawful assistance to Apple, which Ireland must recover,” the judges wrote.
In a statement to the Financial Times, Apple said the EU was “trying to change the rules retroactively and ignore that, as required by international tax law, our income was already subject to taxes in the US.”
Apple’s effective tax rate for revenue earned in Europe was 1 percent on European profits and in 2014 it was as low as .005 percent. Because the deal gave Apple a “significant advantage” over the competition, the EU Commission ordered it to pay back the “illegal state aid” over a ten-year period before launching an investigation into its tax practices.
The decision comes after a series of setbacks for the European Commission against US corporations. Last year, the ECJ ruled that Amazon did not have to pay €250 million ($276 million) in back taxes to Luxembourg and lost a similar case against Starbucks in the Netherlands. So despite the EU’s win today, these decisions could impact future EU cases against big tech around tax havens in different member states.
Google and Apple are having a bad day. The tech giants are facing a new investigation into their mobile ecosystems from the UK’s Competition and Markets Authority (CMA) and growing pressure to adopt a new app store initiative in India.
Let’s start with the investigation, which comes a day after the CMA named a former Amazon executive as its interim chair. The CMA is investigating whether Apple and Google’s mobile ecosystems should have strategic market status (SMS) and thus be subjected to more regulation and pro-competition directives.
However, they are not entirely clear on exactly which aspects are being investigated. This new designation derives from the UK’s Digital Markets, Competition and Consumers (DMCC) Act, which came into force on January 1. Google is also the subject of the first SMS investigation, which was launched earlier this month and focused on potential antitrust practices around the company’s search services.
The CMA’s SMS investigation could last up to nine months, with comments currently being accepted on the investigation and potential intervention in both cases.