Tech Giants Win Regulatory Case in EU, But Tax Clouds Loom

Big Tech has won a major battle with European regulators, but the war is far from over.

On Thursday, Meta, Google, and TikTok successfully argued that individual European countries can’t cook up their own laws for large digital platforms. Simultaneously, however, Big Tech peer Apple suffered a setback in a case that, if it loses, could leave it on the hook for $14 billion in back taxes.

Open Tax Season

The court fight for Meta, Google, and TikTok hinged on an Austrian law from 2021 which required tech platforms to delete hate speech or else face hefty fines of $10 million. The platforms argued that since their European businesses were headquartered in Ireland, Austria couldn’t enforce a domestic law against them — and the EU’s highest court agreed. It’s a tempered win for the platforms, staving off the possibility of individual countries passing laws that become thorns in their sides, but also leaving them on the hook for possible content moderation fines in the wake of the EU enacting overarching legislation in 2021 for Big Tech platforms with the Digital Services Act.

But Apple’s court setback is potentially more worrying to Big Tech, as the FAANG giants have historically enjoyed low tax rates thanks to Ireland’s extremely welcoming stance on foreign multinationals setting up shop there:

• Commissioner Margrethe Vestager brought the case against Apple in 2016, arguing that the company received unfairly advantageous tax status in Ireland, amounting to state aid. In 2020, an EU court said Vestager’s argument was legally flawed, a major win for Apple at the time.
• Now, however, an advocate-general in a higher European court has said that ruling was legally flawed, and that Vestager’s case against Apple should be allowed to proceed.

The Irish Fear an Exit: Tech giants aren’t the only ones on edge: Ireland’s finance minister told the Financial Times: “It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple.” For a country that just started its own sovereign wealth fund, any ruling that might make it less attractive to big, cash-rich tech firms is bad news.