Apple and Google have been ordered to pay astronomical fines after losing lawsuits challenging the European Union's (EU) penalty impositions. As a result of this ruling, Apple and Google find themselves at a disadvantage in a series of ongoing lawsuits. Consequently, regulations on big tech (large information technology companies) are expected to intensify.
According to foreign media including The Wall Street Journal (WSJ) on the 10th (local time), the Court of Justice of the European Union (ECJ), the EU's highest court, upheld the 2016 decision by the EU Commission that Apple received illegal corporate tax benefits from the Irish government.
Previously, in 2016, the EU Commission imposed a record fine of 14.3 billion euros (approximately 21.2 trillion won) on Apple, stating that Ireland violated EU state aid rules by granting benefits to Apple, resulting in Apple paying significantly less tax. Apple appealed this decision. Later, in 2020, the EU General Court ruled in favor of Apple, stating there was insufficient evidence that Apple received tax benefits from the Irish government, but the ECJ overturned this ruling.
With no further appeals possible, Apple is now facing the payment of the astronomical 14.3 billion euro tax fine. This amount is roughly three-quarters of Apple's net profit of $21.45 billion for the second quarter (April to June). Apple stated, "This case is not about how much tax we pay, but about which government we pay tax to," adding, "We have always paid all taxes in every place where we operate our business, and there were no special arrangements."
On the same day, the ECJ also upheld the 2017 EU Commission ruling that Google violated antitrust laws by prioritizing and placing its own comparison shopping service. Google is required to pay a fine of 2.4 billion euros (3.5 trillion won). Google responded by stating, "(We) made changes in 2017 to comply with the EU Commission's demands, and this approach has worked successfully."
The Wall Street Journal (WSJ) described the ECJ ruling as "a victory for EU competition authorities aiming to curb abuses of power by big tech." In particular, Margrethe Vestager, the EU's Executive Vice President in charge of competition policy, received significant credit. She is known for imposing fines on big tech for antitrust violations and has earned nicknames such as "Tax Lady" and "The Grim Reaper of Silicon Valley."
With the EU's highest court siding with the Commission, Apple and Google are expected to face unfavorable situations in other lawsuits against the Commission.
In March, Apple was fined 1.84 billion euros for engaging in "unfair practices" by abusing its market dominance in the music streaming application market, blocking consumers from accessing cheaper subscription services, and has filed a lawsuit. Google was fined 4.34 billion euros in 2018 for violating antitrust laws to strengthen its Android operating system, and in 2019, it was fined 1.49 billion euros for unfair practices in the digital advertising market, with lawsuits ongoing.
Apple and Google are also facing lawsuits in the United States. Google lost a lawsuit filed by the U.S. Department of Justice last month on the 5th in a Washington D.C. court for maintaining an illegal monopoly in the online search market. Additionally, starting from the 9th, the Department of Justice filed a lawsuit alleging antitrust violations by blocking competition through acquisitions of related companies in the online advertising market, and the trial has begun. Apple is also facing an antitrust lawsuit filed by the U.S. Department of Justice in March, claiming that the "Apple ecosystem" stifles innovation and forces consumers to pay high costs.
Depending on the final court rulings, both Google and Apple could face not only fines but also situations requiring business divestitures or sales.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
