Apple shares fall before session open after EU court ruling

The European Union’s highest court dealt a major blow to tech giants Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) on Tuesday, upholding multibillion-dollar fines in two separate cases. The rulings, which end years of legal battles, mark a major victory for the EU’s ongoing efforts to regulate big tech companies.

EU’s highest court delivers legal defeats to Apple and Google

In a case against Apple, the European Court of Justice ordered the company to repay about $14.35 billion in back taxes to Ireland. The court confirmed that Ireland had granted Apple illegal tax benefits for almost two decades, during which the company allegedly paid less than 1% tax on its European profits. The decision overturns an earlier appeal won by Apple, ending a case that dates back to a 2016 EU decision.

Meanwhile, Google faces a $2.65 billion fine for violating antitrust rules under a 2017 European Commission decision. The court upheld the fine, finding that Google had abused its dominant position in search results by giving preferential treatment to its own shopping services over its competitors. The court found Google’s practices to be discriminatory.

Google shares up slightly, Apple falls in pre-market trading

The rulings had an immediate impact on the stock market. In pre-market trading at 7:44 a.m. ET on September 10, 2024, Alphabet Inc. (GOOG) shares were slightly higher at $149.73, up 0.13% from its previous close. However, Apple Inc. (AAPL) shares saw a bigger impact, falling 1.24% to $218.16 in pre-market trading.

The legal setbacks could have far-reaching consequences for the tech industry. Other companies may have to reconsider their European tax strategies and how they present their services in search results. EU antitrust chief Margrethe Vestager said the Commission would continue its efforts to combat harmful tax competition, suggesting continued scrutiny of tech giants operating in Europe.

Despite the legal challenges, both companies maintain strong financial positions. Alphabet boasts a market capitalization of $1.835 trillion and an annualized return of 6.37%, while Apple has a market capitalization of $3.359 trillion with a more impressive annualized return of 15.18%.

Disclaimer: The author does not own or have a position in any of the securities discussed in the article.

About the author

Tim Fries is the co-founder of The Tokenist. He holds a BS in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim was a senior associate in the investment team at RW Baird’s US Private Equity practice and is a co-founder of Protective Technologies Capital, an investment firm specializing in sensor, protection and control solutions.