EU to fine Meta over anti-competitive practices

Facebook’s owner company, Meta, is bracing for a substantial fine from the European Union, according to sources familiar with the matter. The penalty stems from allegations that Meta is leveraging its dominance in social networking to stifle competition in the classified advertising sector. The company’s practice of linking its free Marketplace service with Facebook has raised concerns among the EU regulators, who view this strategy as an attempt to edge out rivals.

The decision is expected as soon as next month, and it could be one of the final significant moves overseen by the EU’s current competition chief, Margrethe Vestager, before her departure. The investigation into Meta’s business practices marks a continuation of the EU’s broader efforts to crack down on the monopolistic behaviour of tech giants.

Currently, neither Meta nor the EU regulators have commented on the looming decision. However, this case could signal a more stringent approach to maintaining a level playing field in the digital marketplace, where tech companies have long held considerable power. The ruling could have substantial financial and operational consequences for Meta, potentially setting the tone for future regulatory actions in the tech industry.

Intel’s $1.91 billion Polish investment gets EU approval

The European Commission has approved Poland’s plan to provide Intel with more than 7.4 billion zlotys ($1.91 billion) in state aid to support the development of a new chip assembly and testing plant. This significant investment aligns with the EU’s Chips Act, which aims to increase Europe’s share of the global chip market to 20% by 2030. Intel intends to invest up to $4.6 billion in the facility near Wroclaw, Poland, and it is expected to boost economic growth and technological advancement in the region.

Poland’s Deputy Prime Minister Krzysztof Gawkowski confirmed that the aid package would span 2024-2026, while additional legislation is required before finalising the deal. The government expects the process to be completed by the end of this year, enabling construction to begin soon after. This investment represents the largest of its kind in Poland in decades, promising to strengthen its economy and technological sector.

Meanwhile, Intel is also pursuing a $33 billion chip manufacturing project in Germany, but this venture has faced delays. Despite Intel’s ongoing cost-cutting efforts, Polish officials remain confident that their country’s investment plans with Intel will proceed as scheduled. This partnership is seen as a critical step toward securing Poland’s role in the global semiconductor supply chain and attracting further high-tech investments.

Elon Musk’s X may sidestep EU’s big tech regulations

Elon Musk’s social media platform, X, is likely to avoid being subjected to the EU’s stringent new tech regulations aimed at curbing the power of Big Tech. The company is expected to fall outside the scope of the Digital Markets Act (DMA), which imposes strict rules on firms that act as key intermediaries between businesses and consumers.

The European Commission investigated X in May, exploring whether the platform met the criteria to be classified as a ‘gatekeeper’ under the DMA. To qualify, a company must have over 45 million active users and a market capitalisation of at least €75 billion. Gatekeepers must open their messaging apps to rival services, allow users more control over pre-installed apps, and avoid giving preferential treatment to their products.

X has argued that it does not serve as a critical gateway between businesses and consumers, distancing itself from the obligations set by the DMA. While the investigation remains ongoing, the Commission has not provided further comment on its findings.

However, X faces more pressing issues under the EU’s newly implemented Digital Services Act (DSA), which requires large platforms to actively combat harmful or illegal content or face significant fines—up to 6% of their global turnover. X is under scrutiny as part of several ongoing investigations related to its compliance with the DSA.

EU scrutinises Google over AI model data use

Ireland’s Data Protection Commission (DPC), the leading privacy watchdog for many US tech firms in the EU, is investigating Google’s handling of user data. The inquiry will examine whether Google sufficiently protected the personal information of the EU citizens before using it to develop its advanced AI model, Pathways Language Model 2 (PaLM 2). The investigation is part of a broader effort by the DPC, working alongside other EU regulators to ensure compliance with data protection laws, especially in developing AI technologies.

Why does this matter?

The investigation is the fruit of growing concerns in the EU over how tech giants handle personal data, particularly in the context of AI, which relies heavily on large datasets. The DPC’s inquiry into Google’s data practices follows a recent agreement by social media platform X (formerly known as Twitter) not to use personal data from the EU users for AI training without first offering them the option to withdraw consent.

EU court rules against Apple’s tax deal and Google’s market practices

In a significant victory for European regulators, the EU’s top court upheld rulings against Apple and Google, marking key moments in the ongoing battle against Big Tech. Margrethe Vestager, the EU’s antitrust chief, has been at the forefront of efforts to challenge multinational companies benefiting from tax deals and engaging in anti-competitive behaviour. On Tuesday, the courts sided with her in two major cases involving Apple’s tax deal with Ireland and Google’s market practices.

The Apple case, which dates back to 2016, revolved around 13 billion euros ($14.4 billion) in back taxes. The European Commission argued that Apple’s arrangement with Ireland allowed the tech giant to pay an artificially low tax rate, at times as low as 0.005%. The Luxembourg-based Court of Justice agreed, confirming that Apple had received unlawful state aid and Ireland must recover the amount. Apple expressed disappointment, arguing that its income had already been taxed in the US and that the EU was attempting to change the rules retroactively.

Ireland, too, had challenged the ruling despite benefiting from the corporate taxes of large tech companies. The country’s low tax rates had attracted giants like Apple to establish European headquarters there. However, in a shift that signals broader changes in global tax policy, Ireland has since agreed to align with new international tax standards, even though its multinational tax take continues to grow.

On the same day, the European Court also ruled against Google in a separate antitrust case. In 2017, the European Commission fined Google 2.42 billion euros for abusing its market dominance by promoting its shopping service over smaller European rivals. Google appealed the decision but was met with a firm rejection. The court ruled that Google’s practices were discriminatory and did not constitute fair competition on the merits. Google, like Apple, voiced disappointment with the decision, though it claimed to have changed its business practices since the original ruling.

The ruling adds to the 8.25 billion euros in antitrust fines Google has accumulated in Europe over the past decade. The company continues to face scrutiny, with ongoing cases related to its Android operating system and AdSense advertising platform and an investigation that could lead to selling parts of its adtech business.

Why does this matter?

The decisions against Apple and Google reflect a broader movement within Europe to challenge the power of Big Tech. These cases are part of a growing trend where governments seek to hold multinational companies accountable for their tax practices and market behaviours. Other major corporations, such as IKEA and Nike, are also under investigation for their tax arrangements as regulators across the globe attempt to reshape the corporate landscape and foster a fairer competitive environment.

Google loses appeal over €2.42 billion EU fine

Google has lost its appeal against a €2.42 billion fine imposed by the EU over antitrust violations. The European Commission initially penalised Google in 2017 for giving its price comparison service an unfair advantage over smaller competitors. Despite challenging the decision, the Luxembourg-based Court of Justice of the EU upheld the ruling, emphasising that while dominance is not illegal, its abuse to hinder competition is prohibited.

The fine is part of a larger pattern for Google, which has faced fines totalling €8.25 billion over the last decade for various antitrust violations. Two additional cases involving Google’s Android system and AdSense are still pending decision. At the same time, a separate investigation threatens to force the tech giant to sell off part of its advertising technology.

The ruling highlights the EU’s firm stance on competition as regulators continue to scrutinise the practices of dominant tech companies like Google.

Apple loses €13 billion EU tax case

Apple has lost its battle with the European Union over a €13 billion tax payment dispute, marking a major win for the EU regulators. The European Commission initially ordered the payment in 2016, accusing Apple of benefiting from favourable Irish tax rulings that significantly reduced its tax obligations. These sweetheart deals allowed Apple to pay as little as 0.005% tax in 2014.

Apple and Ireland challenged the decision, arguing that the ruling defied logic, especially since Ireland’s low tax rates were instrumental in attracting major tech firms. However, the Court of Justice of the EU upheld the Commission’s order, declaring that Ireland had provided Apple with illegal state aid, which now must be repaid.

Apple expressed disappointment, accusing the EU of retroactively changing tax laws and arguing that its income had already been taxed in the US. The final and non-appealable ruling is a significant step in the EU’s efforts to clamp down on favourable tax deals for multinational corporations.

Google’s new proposals under EU antitrust review

European Union regulators will gather feedback next week on Google’s latest proposals to comply with competition rules aimed at curbing the dominance of Big Tech. The process could determine whether formal charges will be brought against the company.

The European Commission initiated an investigation in March to examine whether Google unfairly favours its own vertical search services, including Google Shopping, Flights, and Hotels, over rivals. Competitors have raised concerns that Google has not fully complied with the EU’s Digital Markets Act (DMA), which seeks to level the playing field for smaller competitors.

In response, Google has offered a proposal that would display a separate box for competitors below its product listings in search results. It also suggested adding two adjacent boxes to show intermediaries alongside direct suppliers like airlines and hotels. Regulators will hold workshops in September to hear from stakeholders, though Google will not participate.

Failure to address the regulators’ concerns could result in formal charges and a potential fine of up to 10% of Google’s global annual turnover. Google stated that it will continue to engage with the European Commission and the industry in the coming months.

Telecom giants urge European policymakers to enhance digital competitiveness through improved connectivity

Ericsson, Nokia, and Vodafone have united in a call to action for European policymakers to enhance digital competitiveness through advanced connectivity and digitalisation. They argue that achieving a true Digital Single Market is essential for fostering innovation and ensuring Europe can compete globally. The following initiative emphasises the need for coherent implementation of existing regulations and the avoidance of unnecessary regulatory burdens that could hinder the rapid deployment of digital infrastructure.

Ericsson, Nokia, and Vodafone highlight the importance of incentivising investment in advanced connectivity solutions, such as 5G and future 6G technologies. They stress that a modernised regulatory framework is crucial for maintaining healthy telecom operators capable of making substantial investments in infrastructure. This includes advocating for longer spectrum licenses and harmonised rules across the EU member states, facilitating a more robust telecommunications landscape.

Ericsson, Nokia, and Vodafone also propose that policymakers differentiate between business-to-business (B2B) and consumer-facing technologies when crafting regulations. Tailoring regulations to these sectors’ specific needs and operational structures will help create a more level playing field and address market failures effectively. This distinction is vital for fostering an environment where trusted companies can thrive and innovate.

Ericsson, Nokia, and Vodafone highlight the need for Europe to prepare for emerging technologies like quantum computing and AI. They advocate for policies encouraging experimentation and attracting private investment, ensuring Europe can leverage these advancements while addressing security challenges.

EU chipmakers push for ‘Chips Act 2.0’ and quicker support measures

Europe’s leading computer chip industry group, ESIA, has urged the European Union to accelerate aid and introduce a revamped ‘Chips Act 2.0’ to support the sector. The group, which represents key chipmakers like Infineon, STMicroelectronics, and ASML, also called for the appointment of a dedicated ‘Chips Envoy’ to oversee the bloc’s semiconductor strategy.

The first EU Chips Act, launched in April 2023, aimed to boost Europe’s global chip market share to 20% by 2030. Despite several major projects, including a €10 billion TSMC plant in Dresden and a €30 billion Intel project in Magdeburg, the industry is not on track to meet the goal. Delays and the absence of timely aid have raised concerns, particularly around Intel’s ambitious project.

The ESIA is calling for a more streamlined aid process and fewer export restrictions to bolster the sector. While the group acknowledges the need for security, it advocates for a more proactive approach that focuses on incentives rather than defensive trade policies. Recent restrictions on ASML’s high-tech exports to China exemplify the challenges the industry faces.

Amid these obstacles, Europe’s chip sector is seeking strong leadership and faster policy implementation to compete globally. The success of upcoming projects and the timely rollout of ‘Chips Act 2.0’ are seen as vital for Europe’s future in semiconductor manufacturing.