Google and Apple face billions in penalties after losing EU appeals

By Adam Satariano and Jenny Gross

London: The European Union’s highest court on Tuesday delivered a major victory in the bloc’s yearslong campaign to regulate the technology industry, ruling against Apple and Google in two landmark legal cases.

The decisions, issued by the Court of Justice of the European Union, were seen as an important test of efforts in Europe to clamp down on the world’s largest technology companies. Apple and Google have been frequent targets for EU regulators, and the companies have battled the cases for years.

In the Apple case, the court sided with a European Union order from 2016 for Ireland to collect 13 billion euros, worth about $14.4 billion today, in unpaid taxes from the company. Regulators determined that Apple had struck illegal deals with the Irish government that allowed the company to pay virtually nothing in taxes on its European business in some years.

Apple won an earlier decision to strike down the order, a ruling that the European Commission, the EU’s executive branch, appealed to the Court of Justice. As the case winded its way through the appeals process, the 13 billion euros were placed in an escrow account. The money will now be released to Ireland, a sizable injection to the country’s treasury.

Apple said the decision effectively allowed the European Union to impose a double tax on company income that is already taxed in the United States.

“This case has never been about how much tax we pay, but which government we are required to pay it to,” Apple said in a statement on Tuesday. “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 US.”

In the Google case, the court agreed with the commission’s 2017 decision to fine the company 2.4 billion euros for giving preferential treatment in Google search results to its own price-comparison shopping service over rival offerings. Google lost an appeal in 2021.

Google said Tuesday in a statement that it was “disappointed” by the ruling, but that it had already adjusted its products to comply with the 2017 decision, including new designs to steer consumers to rival shopping price-comparison websites. Some competitors have complained Google’s changes have not gone far enough.

“Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services,” Google said in the statement.

When the European Union penalized Apple and Google, the cases represented a major shift in how the tech industry was regulated. Until then, governments around the world had largely taken a hands-off approach to tech oversight as Apple, Google, Amazon and Facebook — now renamed Meta — ballooned in size and remade how people live, work, shop and communicate.

The cases helped establish the European Union and its antitrust chief, Margrethe Vestager, as the world’s most aggressive tech industry watchdog. Other countries have followed Europe’s lead to intensify scrutiny of the sector’s business practices, particularly in the United States.

Yet years later, the cases have also come to symbolize the grinding pace of the EU regulatory system and have raised broader questions about whether authorities can keep up with the rapidly evolving tech sector.

The two cases address different legal issues. The Google case is largely about antitrust law, while the Apple case centers on the European Union’s ability to intervene in areas of tax policy in one of its member nations.

Vestager cheered the court decisions at a news conference on Tuesday in Brussels. She said she was so surprised by the Apple decision that she cried because the commission had lost the earlier appeal. She added that the Google case should be remembered for starting a new era of antitrust law for the digital economy, providing a model for other regulators.

“This case marked a pivotal shift in how digital companies were regulated and also perceived,” she said. “Before this case, the prevailing belief was that digital companies should be left to operate freely.”

The Apple case put Ireland in the unusual position of reluctantly collecting 13 billion euros from the tech giant. The Irish government said in a statement on Tuesday that it did not give Apple preferential tax treatment, but noted that it had already made changes to its tax laws.

“The Apple case involved an issue that is now of historical relevance only,” the government said.

Apple and Google are facing additional legal scrutiny on both sides of the Atlantic. This week, Google landed in US federal court on antitrust charges brought by the Justice Department, which accused the company of abusing its dominance in the digital advertising sector. Last month, a federal judge ruled in a separate case that Google was a monopolist in internet search because it had rigged the search engine market. In December, a federal jury said Google’s management of the Google Play app store had also broken antitrust laws.

Apple also faces a Justice Department antitrust lawsuit over its iPhone policies.

In Europe, Google is appealing two other antitrust cases in addition to the shopping case. In 2018, regulators fined Google 4.34 billion euros for breaking antitrust laws to bolster its Android operating system. In 2019, the company was fined 1.49 billion euros for unfair business practices in the digital advertising market.

Apple is also facing EU charges related to its management of the app store and policies in the music streaming market.

The European Union’s protracted appeals process has drawn criticism from consumer rights groups and rival businesses that argue the slow pace has helped the two technology giants to solidify their dominant market positions.

The European Union is trying to speed up its handling of competition cases. In 2022, the bloc passed a law called the Digital Markets Act, which gives regulators broader authority to fine large tech platforms and force them to change business practices.