Margrethe Vestager, ekonomi- och inrikesminister Danmark. Nordiska rådets session i Köpenhamn 2011 Foto: Johannes Jansson/norden.org

The EU’s rocky relationship with American tech companies

It’s total political crap.” In an interview with the Irish Independent, Apple CEO Tim Cook did not try to mask his anger. Just two days before, the European Union Commissioner for Competition Margrethe Vestager had announced a €13 billion fine for Apple Inc., declaring that the company had been given an unfair tax deal by the Irish government.

The penalty was a result of an European investigation, which concluded that Apple was allowed to pay a much lower tax rate than what Ireland’s official corporate tax policy should have dictated. This tax deal may have incentivised Apple to base their European operations in Ireland, which would have benefitted Ireland’s own economy and employment rates.

However, Tim Cook strongly refuted the Commission’s findings. In an aggressively-worded public letter posted onto Apple’s website, Cook wrote: “This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals.”

This is not the first time that Margrethe Vestager and her staff at the European Commission have been at the centre of controversy. Vestager is quickly becoming a superstar politician and is often praised for her efficacy. She became the EU Commissioner for Competition in 2014 after a successful career in Danish politics. She is supposedly the inspiration for Birgitte Nyborg in the Danish political TV drama Borgen.

Yet, in her new role, there does seem to be a trend to her work: companies she has challenged include Apple, Google, Amazon and Facebook. While the Commission has often been tough on American technology firms there is now speculation that the EU Commission is investigating these American giants of consumer technology with a particularly focused gaze. Even since the Apple tax ruling Vestager has announced that she is taking a look at how Facebook is handling Whatsapp customer data after Facebook’s purchase of the popular messaging application.

These actions are part of the core role of the Commission and its need to police competition. It is charged with maintaining an open marketplace in which no single player has an unfair advantage over its competitors. For example, Google has come under EU scrutiny for the way it prioritises its own services within the results of a Google search. When a user searches to buy something using Google, Google will automatically embed Google’s own price comparison tools into the results page, while comparisons from other companies are concealed behind links. Therefore, the EU argued that Google abused its position as the creator of Search to drive customers to use Google’s own services above other available tools. This logic was criticised by some for being out of touch with the commercial realities of the internet. But in a press release, Vestager argued back: “Google has come up with many innovative products that have made a difference to our lives. But that doesn’t give Google the right to deny other companies the chance to compete and innovate.”

However, many are calling foul to the EU’s recent actions and are decrying them as being contaminated with a strong political motive. Some political analysts have argued that by going after these large multinational corporations, the EU is using populist measures to try and relieve the anti-EU feeling that is brewing on the continent. Other spectators criticise the actions as having a particular anti-US sentiment, seeing these movements as efforts to punish American technology companies in order to try and foster a new European technology scene. Apple’s tax ruling in particular has angered US politicians, though confusingly Vestager says that she was tipped off about Apple’s tax arrangement by the U.S. Senate.

Amongst all these tensions, the EU Commission shows no signs of slowing down. But with both Ireland and Apple looking to repeal Vestager’s recent ruling, it is clear that the Commission is going to have to face these oppositions head-on.

Image: Johannes Jansson

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