EU cracks down on Big Tech with fines to Apple, Google

Apple (AAPL) has suffered a significant setback, losing a longfought legal battle with European Commission regulators over its tax practices in Ireland. The European Union's top court has ordered the tech giant to pay nearly €13 billion euros (equivalent to $14.3 billion in USD) in back taxes to Ireland. This landmark ruling comes just after Apple's launch of its new iPhone 16 lineup on Monday, September 9.

Additionally, Alphabet's Google (GOOG, GOOGL) lost an antitrust battle in the EU for prioritizing it's own price comparison shopping services against it's competitors. This resulted in a €2.4 billion euro ($2.64 billion) fine.

To discuss the potential impact of this decision on the tech giants, Needham senior media and internet analyst Laura Martin joins Morning Brief.

Martin suggests that the EU's actions against tech giants are motivated by a desire to generate revenue from their activities within the region to support its economies, dubbing it as "the hidden agenda of the EU." Martin criticizes Apple's previous tax strategy, calling it "a fool's errand" that the company operated without paying taxes in the region, adding that "now the EU has nothing to lose."

The EU now is "just going to fine these large companies in order to pay for their social programs," she tells Yahoo Finance.

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This post was written by Angel Smith

Video Transcript

Welcome back to morning brief brought to you by Invesco A crackdown on big tech the European Union ruling against Apple and Google in two landmark legal cases this morning for Apple, the court sided with an EU order from 2016 determining that the company had struck illegal deals with the Irish government that allowed it to pay virtually nothing in taxes on its European businesses.

Now for Google, the court agreed that the company gave preferential treatment and search results to its own price comparison shopping service over its rivals, both companies facing billions of dollars in penalties.

Needham senior media and Internet analyst Laura Martin joins us now to discuss this further.

Laura, it's great to see you here this morning and thanks for taking the time.

Let's start with Apple specifically here.

I mean, this cork Ireland business has has really come into focus over a couple of years now.

We remember back to the repatriation that the Trump Administration was looking to put forward and how that business came into focus.

So what ultimately does this net out for perhaps the type of fines that are gonna impact the financials for apple here from your purview.

Well, I think the check just got served.

These are socialist governments where the largest US bank companies that have trillions of dollars of market cap didn't pay any taxes.

And these companies want their share to pay for their economies.

So, um, they're going to basically find these companies the amount they should have paid tax based on their European revenue.

I mean, I think that's the hidden agenda of the EU is to get some money for the EU from all the revenue that came back to these US companies over the last decade since they started operating.

So do you think that this is part of a broader referendum on US based companies operating in the EU that we're seeing come forward here and a broader trend?

I do.

I think that it was a fool's errand that these large tech companies didn't pay some tax figure out a way to pay some tax rather than trying to pay no tax, because now the EU has nothing to lose if the if these large companies have been paying billions of dollars of tax every year, maybe not the full tax rate, um which in socialist government is much higher than ours in the US, but some tax rate they would have something to lose by taking these companies to court.

But these companies now are going to just find these these large companies in order to pay for their social programmes.