From “Tech Giants Face New Rules in Europe, Backed by Huge Fines” ($) in Wednesday’s Wall Street Journal:
The European Union’s executive arm proposed two bills Tuesday—one focused on illegal content, the other on anticompetitive behavior—that would empower regulators in some cases to levy fines of up to 6% or 10% of annual world-wide revenue, or break up big tech companies to stop certain competitive abuses…
Together, the two strands of legislation amount to the biggest potential expansion of global tech regulation in years…
[Skipping section on the Digital Services Act, which wouldn’t be Apple’s main concern.]
The other EU bill, the Digital Markets Act, would pre-emptively ban certain behavior by what it deems to be gatekeepers—defined as companies with European revenue of at least 6.5 billion euros, equivalent to about $7.9 billion, or a market capitalization of at least 65 billion euros (some $79 billion), and which serve more than 10,000 active business customers and 45 million active end users in the bloc.
Such companies could, for instance, be blocked under the bill from tying the ability to access one of their services to purchasing for another core service from the gatekeeper. The law would also create other obligations toward smaller firms and end users, such as offering price transparency for online advertisers and allowing data portability for end users.
My take: The $79 billion cut-off is risible for a company like Apple, which is capitalized at $2 trillion. On the other hand, 10% of $274 billion (Apple’s fiscal 2020 revenue) is nothing to laugh at.
I hope the EU executive team, think more creatively to figure out reasonable ways to earn revenue from Apple.
IMO, this is simply a set of punitive taxes written against mainly US multinational companies. I’ll bet these thresholds were written so that most EU companies would be excluded. As usual, EU doing a cash grab instead of creating viable business competition to stimulate their economies. Taxation without representation but then again, what does the EU know about constitutionality?
Also, for perspective, a $27.45B fine would be about 40% of Apple’s 2020 $68.64B European revenue.
I am in agreement with the philosophy behind the VAT, as I’ve always been against taxing the goose that lays golden eggs.
I am 100% against the attempts by the EU to tax defined corporations that are (by definition) all US-based. None of these initiatives would have surfaced had it not been a perception that the FAANG is/was exploiting European tax codes.
The FAANG did not write those codes, EU governments did, and now they aren’t happy with the way they are being used. EU attempts to “fix” what they perceive as “exploits” by US firms have spilled over, in typical government excess, into punitive rules that harm the beneficiaries of their own making.
Maybe the UK has the right idea after all.
“The ruling is an especially stinging defeat for Vestager, who has campaigned for years to root out special tax deals and better regulate the power of the big U.S. tech companies, including Google, Amazon and Facebook. Trump has referred to her as the “tax lady” who “really hates the U.S.”
Despite the setback, she vowed to carry on the fight. “The Commission will continue to look at aggressive tax planning measures under EU state aid rules to assess whether they result in illegal state aid,” she said.”
https://techxplore.com/news/2020-07-apple-eu-court-case-billion.html
Right now this gets her some good headlines. We’ll see what actually passes and how much it gets watered down by the courts. I can’t believe the courts would go along with fines based on WW revenue. That sounds like empty rhetoric.
At the very least, the courts should force the EU to pay for all of Apple’s incurred legal expenses on this case, not to mention the slander of Apple’s good name and reputation.