Apple and Google Lose EU Appeals, Face Billions in Penalties

The European Union’s highest court ruled against Apple and Google on Tuesday in two landmark legal cases, delivering a major victory for the bloc’s efforts to regulate the technology industry, and leaving the tech giants facing billions in tax bills and penalties.

The New York Times reports that the Court of Justice of the European Union ruled against Apple and Google in two separate cases on Tuesday. The decisions, which have been years in the making, are seen as a crucial test of the EU’s efforts to clamp down on the world’s largest technology companies.

In the Apple case, the court upheld a 2016 European Union order for Ireland to collect €13 billion (approximately $14.4 billion) in unpaid taxes from the company. EU regulators had determined that Apple had entered into illegal deals with the Irish government, allowing the company to pay virtually no taxes on its European business in some years. Although Apple had initially won a decision to strike down the order, the European Commission appealed the ruling to the Court of Justice. The €13 billion, which had been placed in an escrow account during the appeals process, will now be released to Ireland.

Apple expressed disappointment with the decision, arguing that it effectively allows the European Union to impose a double tax on company income that has already been taxed in the United States. The company stated, “This case has never been about how much tax we pay, but which government we are required to pay it to.”

In the Google case, the court agreed with the commission’s 2017 decision to fine the company €2.4 billion ($2.6 billion) for giving preferential treatment in Google search results to its own price-comparison shopping service over rival offerings. Google had lost an appeal in 2021 and stated that it was “disappointed” by the ruling. However, the company noted 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.

The Apple and Google cases represented a major shift in how the tech industry was regulated when the European Union first penalized the companies. Until then, governments worldwide had largely taken a hands-off approach to tech oversight as companies like Apple, Google, Amazon, and Facebook (now Meta) grew exponentially and transformed 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, with other countries following Europe’s lead in intensifying scrutiny of the sector’s business practices.

However, the cases have also highlighted the slow pace of the EU regulatory system, raising questions about whether authorities can keep up with the rapidly evolving tech sector. The two cases address different legal issues, with the Google case focusing on antitrust law and the Apple case centering on the European Union’s ability to intervene in tax policy matters within its member nations.

Margrethe Vestager celebrated the court decisions, noting that the Google case should be remembered for starting a new era of antitrust law for the digital economy and providing a model for other regulators. She emphasized that the case marked a pivotal shift in how digital companies were regulated and perceived, challenging the prevailing belief that they should be left to operate freely.

Both Apple and Google are facing additional legal scrutiny in the United States and Europe. Google is currently in U.S. federal court on antitrust charges brought by the Justice Department, while Apple faces a separate Justice Department antitrust lawsuit over its iPhone policies. In Europe, Google is appealing two other antitrust cases, and Apple is 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, arguing that the slow pace has helped the two technology giants solidify their dominant market positions. In an effort to speed up its handling of competition cases, the bloc passed the Digital Markets Act in 2022, giving regulators broader authority to fine large tech platforms and force them to change business practices.