Google and Apple lose legal battle with EU, owe billions of dollars in fines and taxes

LONDON — Google lost its latest bid to overturn an antitrust fine imposed by the European Union after the bloc’s top court ruled against it Tuesday in a case that involved a huge fine and ushered in an era of heightened scrutiny of big tech companies.

The European Union’s highest court has rejected Google’s appeal against a €2.4 billion ($2.7 billion) fine imposed by the European Commission, the 27-nation competition watchdog, for violating antitrust rules over its price comparison service.

Also on Tuesday, Apple lost a case seeking to repay 13 billion euros ($14.34 billion) in back taxes to Ireland, after the European Court of Justice issued a separate decision backing the Commission in a case over illegal state aid to global corporations.

Both companies have exhausted their appeals in cases that date back a decade. Together, the court rulings are a victory for EU Commissioner Margrethe Vestager, who is due to step down next month after 10 years as the commission’s top competition watchdog.

Experts say the rulings show how emboldened regulators have become since the first cases were brought.

One takeaway from the Apple decision is “a sense that EU authorities and courts are prepared to use their (collective) power to bring big tech companies to heel if necessary,” Alex Haffner, a competition partner at law firm Fladgate, said in an email.

Google’s ruling “reflects the growing confidence with which competition regulators around the world are addressing perceived abuses by big tech companies,” said Gareth Mills, a partner at law firm Charles Russell Speechlys. The court’s willingness “to support the legal reasoning and the level of the fine will undoubtedly further embolden competition regulators.”

The fine for shopping violations was one of three hefty antitrust penalties levied against Google by the commission, which penalized the Silicon Valley giant in 2017 for unfairly directing users to its own Google Shopping service rather than those of competitors.

“We are disappointed with the Court’s decision, which addresses a very specific set of facts,” Google said in a brief statement.

The company said it had made the changes to comply with the commission’s ruling that required it to treat competitors equally. It began holding auctions for shopping search listings that it would bid on alongside other comparison shopping services.

“Our approach has proven successful for over seven years and has generated billions of clicks for over 800 comparison shopping sites,” Google said.

European consumer organisation BEUC welcomed the court’s decision, saying it showed that EU competition law “still has a huge impact” on digital markets.

“It’s a good result for all European consumers at the end of the day,” CEO Agustín Reyna said in an interview. “It means that many smaller companies or competitors will be able to use different price comparison sites. They don’t have to rely on Google to reach customers.”

Google is still appealing two other EU antitrust cases: a 2018 fine of €4.125 billion ($4.55 billion) relating to its Android operating system and a 2019 fine of €1.49 billion ($1.64 billion) for its AdSense advertising platform.

Despite the sums of money involved, the adverse rulings will leave a small financial hole for the world’s richest and most profitable companies. The combined bill of €15.4 billion ($17 billion) for Apple and Google’s parent company Alphabet is 0.3% of their combined market value of €4.73 trillion ($5.2 trillion).

Apple’s share price fell slightly late Tuesday afternoon, while Alphabet’s shares rose 1%, indicating that investors were not concerned about events in Europe.

The three cases heralded an increased effort by regulators around the world to crack down on the tech industry. The EU has since launched more investigations into big tech companies and developed a new law to prevent them from dominating online markets, known as the Digital Markets Act.

European Commissioner and Executive Vice-President Margrethe Vestager said the retail case was one of the first attempts to regulate digital activities and had inspired similar actions around the world.

“The case was symbolic because it showed that even the most powerful technology companies can be held accountable. No one is above the law,” Vestager told a news conference in Brussels.

Vestager said the commission will continue to open competition cases even as it enforces the Digital Markets Act. The DMA is a sweeping set of rules that forces Google and other tech giants to give consumers more choice by following a set of dos and don’ts.

Google now faces pressure from the EU and the UK over its lucrative digital advertising business, which are conducting separate investigations, and from the US, where the Justice Department is suing the company in federal court over its alleged dominance of the ad technology market.

Apple’s latest attempt to avoid paying Irish taxes failed after the Supreme Court upheld a lower court ruling against the company in a dispute dating back to 2016.

Vestager, who admitted she was prepared for defeat, called it a landmark victory for “tax justice.”

It was a surprise victory for the commission, which had previously hit out at Amazon, Starbucks and Fiat over tax rulings that were later overturned on appeal. They were part of an EU effort to crack down on “sweet deals” that allow companies to pay little or no tax, in a fight that has underscored the debate about whether multinationals are paying their fair share around the world.

The case sparked outrage at Apple, with CEO Tim Cook calling it “total political crap.” Then-President Donald Trump slammed Vestager, who had led a campaign to eradicate special tax treaties and crack down on big American tech companies, calling her a “tax lady” who “really hates the U.S..”

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Associated Press journalists in Brussels contributed to this report: Raf Casert and Mark Carlson.