Tech companies of a certain size have long expected an easy ride from authorities, and for good reason. They always got it. Apple Inc. for years abused loopholes to pay virtually zero tax in the European Union while generating record profits there, thanks to special treatment from Ireland, where it bases its European headquarters. Alphabet Inc.’s Google for years was able to entrench its dominance in search thanks to the special treatment the company gave its own shopping service over competitors.
Now Google and Apple are getting slapped for those blatantly unfair advantages. The EU is forcing Apple to pay €13 billion ($14.4 billion) in back taxes to the Irish government, and Google to pay a €2.4 billion fine for rigging its platform. For both, it’s the end of the line on appeals. Of course, the payments are just a cost of doing business — pocket change, really — and the companies can pat their lawyers on the back for dragging the cases out in court for years with endless appeals.
But the era of protracted cases is fading. The EU is transitioning to a period where its trust busters can be quicker and, as much as you can use the word to describe regulators, nimble, harnessing a more efficient legal framework to combat anticompetitive behavior from the likes of Alphabet, Apple, Meta Platforms Inc., Amazon.com Inc., Microsoft Corp. and Nvidia Corp.
Until now, regulators had to be clever about how they used old, outdated rules to pursue their court cases. It’s why proceedings took so long to play out. The European Commission based Apple’s Irish tax case on a violation of the EU State aid rules, which typically concern subsidies or grants. Legally, “it was a very creative approach,” says Anne Witt, a professor at EDHEC Business School's Augmented Law Institute. At the heart of the case was figuring out how to prove Ireland was giving Apple selective aid, which was also technically challenging to calculate, Witt adds.
But from this year onward, Europe’s authorities have a whizzy new tool, a regulatory innovation as meaningful to antitrust policy as ChatGPT was to generative artificial intelligence. It’s the Digital Markets Act (DMA), a law that large tech platforms had to start complying with in March. With any luck, the EU won’t be caught on the back foot quite as much, chasing after wrongdoing with investigations that run longer than it takes to put a child through school.
