The European Court of Justice ruled that Apple (NASDAQ: AAPL) earned €13 billion in illegal tax breaks from Ireland. The court also upheld a significant fine imposed on Alphabet (NASDAQ: GOOG), Google’s parent firm (NASDAQ: GOOGL).
Europe’s highest court recently delivered a significant blow to Apple and Google. Silicon Valley tech behemoths had been disputing the European Union’s heavy penalty. However, the court’s most recent verdicts force Apple to pay €13 billion ($14.4 billion) for improper tax benefits earned in Ireland, while Google must pay €2.4 billion ($2.7 billion) for antitrust violations. These judgments represent a significant blow for both firms in their ongoing legal disputes with the EU.
Vestager, who is about to leave the Brussels-based European Commission after two terms, named Apple and Alphabet Inc.’s Google her major priorities when she took office in 2014. The Apple ruling was by far the most significant in her decade-long tax fairness campaign, which has also targeted Amazon.com Inc. and carmaker Stellantis NV’s Fiat. Vestager has stated that preferential tax breaks for large businesses are illegal state aid prohibited in the EU.
Margrethe Vestager, the European Competition Commissioner known for her efforts against major digital corporations, hailed the recent decision as a significant victory for European residents and tax justice. On X (previously Twitter), she stated that Ireland is now forced to reclaim up to 13 billion euros in unpaid taxes.
Today is a huge win for European citizens and tax justice.
— Margrethe Vestager (@vestager) September 10, 2024
👉In its final judgment, @EUCourtPress confirms @EU_Commission 2016 decision: Ireland granted illegal aid to @Apple.
Ireland now has to release up to 13 billion euros of unpaid taxes.
On Tuesday, Google expressed unhappiness with the court’s judgment. A spokesman stated that the corporation altered its processes in 2017. They highlighted that this strategy has been successful for over seven years, resulting in billions of clicks to over 800 comparison shopping firms. “We are disappointed with today’s decision as previously the general court reviewed the facts and categorically annulled this case,” a representative for Apple explained. In premarket trade at 7 a.m. New York Times, Apple shares fell 1.1% to $218.50.
The EU’s General Court later overturned the verdict in 2020, which ruled that the Commission had not demonstrated that Apple had obtained a “selective advantage” in Ireland. The General Court further stated that the Commission’s rationale relied on an incorrect understanding of “normal taxation” in Irish law.
However, the Court of Justice overturned that decision, stating that the General Court had “erred.”
The EU has introduced additional laws to regulate the digital sector since it first imposed these fines, most notably the Digital Markets Act (DMA). The idea of this legislation is to limit the power of large IT businesses. The EU declared in June, shortly after the DMA passed earlier this year, that Apple was in breach of its regulations and that it must change its App Store policies or risk fines. Furthermore, the EU’s decision favoring Spotify in a protracted legal battle with Apple in March highlights the regulatory pressure on Big Tech.
Over the past decade, Google has received €8.25 billion in fines from the EU, including penalties for its Android mobile operating system and AdSense advertising service. These penalties are part of the EU’s larger attempts to control Big Tech and create fair competition. Google has appealed these rulings and is awaiting final conclusions on its appeals. The ongoing legal battles show the EU’s strict antitrust policies and commitment to limiting the market dominance of major technological giants.
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