Google loses the appeal against EU and gets €2.42 billion penalty

EU court wins over big tech companies and demands billions of euros in fines

Several antitrust cases have been brought against big tech companies in the European Union. These cases concern whether these companies use their power to limit competition unfairly. Many times, Google, Apple, Meta, or any other big company has been accused of abusing power and not following particular rules.

For example, the EU fined Google billions of euros for using its search engine to promote its services over those of competitors. Similarly, Apple has been investigated for how it runs its App Store, with claims that it charges high fees and limits other companies from offering their apps fairly.

The EU wants to ensure these companies follow the rules and allow fair competition in the market. Unfortunately for Google and Apple, the EU has now won against them and demanded billions of euros in antitrust and tax cases^[1].

Google has lost another attempt to reverse the European Commission's 2017 decision that found its shopping comparison service violated competition laws. This led to Google's parent company, Alphabet, being fined a then-record €2.42 billion (about $2.7 billion now) and requiring changes in how it runs the service.

The tech giant has filed many other appeals against the Commission's antitrust decisions. Google lost another major appeal when the EU court confirmed the bloc's 4,34 billion euro antitrust fine related to how the big tech company operates the Android mobile platform.

Google lost the appeal against the EU's decision

Google challenged this ruling, and in November 2021, the General Court of the European Union mainly rejected Google’s appeal. The court agreed that Google unfairly favored its own shopping service over competitors in search results, which was against competition rules. This upheld the Commission's fine^[2].

However, the court did not agree that Google’s actions had a broader anticompetitive impact on the overall market for general search services, and this part of the decision was overturned. Google made a second appeal to the Court of Justice of the EU (CJEU), the EU’s top court, which recently issued another unfavorable ruling for Google.

The CJEU supported the General Court's view, stating that, given the market dynamics and the specifics of this case, Google's actions were discriminatory and did not reflect fair market competition. At a press conference on Tuesday, the EU’s competition head, Margrethe Vestager, called this case a milestone in how regulatory bodies handle big technology companies. She noted it as one of the first major antitrust actions against a significant digital company, marking a crucial change in digital firms' regulation and public perception.

"Going forward, the Commission will, of course, make sure that the principle enshrined in this judgment — which is now final — is upheld to the benefits of all European consumers."

M. Vestager further explained that the CJEU's decision reaffirms that a dominant company's preferential treatment of its services can violate Article 9(2) of the European treaty. She emphasized that while dominant companies, like all companies, are free to innovate, they must compete based on the value of their innovations and not rely on their existing market dominance.

Apple now owes 15 billion dollars

On Tuesday, the court made another big decision favoring the European Commission. This ruling involves Apple and ties back to a 2016 decision where the EU found that Apple benefited from illegal tax breaks in Ireland between 1991 and 2014. As a result, Apple was required to pay billions more in taxes^[3].

By September 2018, Apple had already sent the EU $15 billion in back taxes and penalties, which were held in a special account while legal challenges played out. However, in July 2020, Apple and Ireland won an appeal when the General Court overturned the EU’s decision. The European Commission appealed this ruling, and on Tuesday, the CJEU overturned the General Court’s decision. They found that Ireland did give Apple illegal financial help, which the country now has to recover.

Apple and Ireland can only appeal this latest decision on very specific legal grounds. Apple spokesperson Tom Parker, shared the company’s disappointment with the decision. Commenting to TechCrunch, Apple argued that this case wasn’t about unpaid taxes but about which country they should pay taxes to. Apple also accused the EU of trying to change the rules after the fact.

"This case has never been about how much tax we pay, but which government we should pay it to," Apple said in the statement. "We always pay all the taxes we owe in every country where we operate. There was never a special deal. Apple is proud to contribute to growth and innovation in Europe and around the world, and we’re one of the largest taxpayers globally. The European Commission is trying to change the rules retroactively, even though our income has already been taxed in the US, as required by international tax laws. We are disappointed with today’s decision, especially since the General Court previously ruled in our favor."

M. Vestager, the EU’s competition chief, expressed both joy and surprise at the victory, admitting that she had prepared herself for a possible defeat. "I had prepared to put on a brave face if we lost," she said. "But winning brought me to tears because it’s important. It’s important to show European taxpayers that, sometimes, tax justice is served."

She also mentioned that the EU has ongoing cases against other tech giants like Amazon, and Facebook, stating, "These are some of the most admired and valuable companies in the world, yet they are frequent customers of ours in court. If there’s a message here, it’s that it’s better to comply with the rules from the start." These fines might not be the only ones.