The European Commission scored two big wins against major U.S. tech companies on Tuesday, Sept. 10. Both Apple and Google will have to pay billions of euros after nearly a decade of fighting in EU courts.
Apple lost its final appeal to avoid paying $14.34 billion in back taxes to Ireland. The European Court of Justice ruled the iPhone-maker received too sweet of a deal to make Ireland its European headquarters.
The ruling stems from a practice known as a “Double Irish” scheme.
For U.S. companies that operate in multiple countries, it was a way for them to shield non-U.S. profits from U.S. corporate tax. But they didn’t pay much in Ireland either; the money would get funneled from Ireland to a tax haven.
The tax loophole was used by Ireland to attract major tech companies to its shores for European headquarters. After pressure from the EU and U.S., Ireland was forced to close the loophole in 2014. However, existing companies like Apple were grandfathered in and could take advantage of the law until 2020.
In 2016, the European Commission ruled Ireland provided illegal state aid to Apple by not collecting 13 billion euros in taxes from 2004 to 2014.
“No one did anything wrong here and we need to stand together,” Apple CEO Tim Cook told the Irish Independent back in 2016. “Ireland is being picked on and this is unacceptable.”
Cook also called claims made by European Competition Commissioner Margrethe Vestager that the company only paid 0.005% in taxes “total political crap.” He said the company paid $400 million in taxes in 2014, making Apple the highest taxpayer in Ireland that year.
Eight years later, Vestager said winning the final appeal against Apple made her cry.
“Today marks a step forward and it’s encouraging,” Vestager said Tuesday. “It’s encouraging for us to do more. The commission will continue its work on harmful tax competition and aggressive tax planning, both in terms of legislative proposals but also enforcement.”
Other major multinational companies, like Amazon and Starbucks, have avoided paying back taxes, unlike Apple. But the commission’s case against Ireland and Apple proved stronger after getting documents where Irish officials were upfront about just how good of a deal they gave Apple.
The Luxembourg-based court also upheld a $2.7 billion antitrust fine against Google on the same day, giving the commission its second victory in 24 hours.
The Google fine has been in limbo since it was levied back in 2017. At the time, the commission accused Google of giving prominent placement to its own comparison shopping service and burying its rivals in the same results. Google had a 90% market share for search in the EU when the case first started.
“The Google shopping case is a landmark in the history of regulatory actions against Big Tech companies,” Vestager said. “It was one of the first significant antitrust cases brought by a competition agency against a major digital company. And I think this case marked a pivotal shift in how digital companies were regulated and also perceived.”
“In essence, the Google shopping case was a catalyst for change, inspiring a more vigilant and proactive approach to regulating Big Tech and of course, ensuring also a fairer digital marketplace,” she added.
Google is a frequent target of the competition committee and has been fined more than 8 billion euros in the last 10 years. Google is still waiting for final rulings on challenges to cases involving the Android operating system for mobile phones and its advertising platform.
Google also has antitrust concerns to deal with in the U.S. In a trial that started Monday, Sept. 9, over its advertising practices, the Department of Justice argued, “Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”
