EU

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.

EU to make Europe the most connected continent by 2030

The EU aims to make Europe the most connected region by 2030 as part of its Digital Decade framework. The project focuses on enhancing connectivity, digital skills, and public services to ensure all citizens benefit from the digital transition.

A central element of this strategy is the WiFi4EU initiative, which provides free Wi-Fi access in public spaces like parks and libraries. With over 90,000 access points established, this initiative has improved internet access, especially in remote areas such as Patmos, Greece, and Guadeloupe, enhancing connectivity for residents and visitors alike.

To achieve its connectivity goals, the EU has set targets for high-speed internet access for all households by 2025 and gigabit connectivity by 2030. The deployment of advanced fibre and 5G networks is crucial for fostering economic growth and innovation, supported by the Connecting Europe Facility (CEF Digital), which funds strategic infrastructure projects.

Moreover, the EU’s initiatives promote digital inclusion by empowering citizens and businesses. The initiatives include developing digital skills and supporting small and medium-sized enterprises (SMEs) adopting digital technologies. Together, these efforts aim to create a digitally resilient society, driving economic growth and improving the quality of life for all European citizens.

Apple to update browser and app settings in EU

Apple is set to make significant changes to how users in the European Union select default apps and browsers on their devices, responding to pressure from regulators under the new Digital Markets Act (DMA). Starting later this year, iPhone and iPad users will be able to choose a default browser from a ‘choice screen’ when they first open Safari. This screen will display a randomly ordered list of 12 browsers, allowing users to easily download and set their preferred option.

These updates come after criticism that Apple’s initial response to the DMA, implemented in March, did not fully comply with the new regulations. In addition to browser choices, Apple will introduce a dedicated section for setting default apps for functions like messaging, phone calls, and password management. The company will also allow users to delete more pre-installed Apple apps, such as App Store, Messages, and Safari, leaving only the Settings and Phone apps as non-deletable.

Apple has been in discussions with the European Commission and believes these updates will address regulatory concerns. The Commission, however, will continue to monitor the situation to ensure the changes meet the objectives of the DMA and will decide on further action as necessary.

Trump’s NATO threats boost EU defence technology startups’ investments

The potential return of Donald Trump to the White House has sparked a surge in investments in the EU defence technology startups. Industry leaders and investors attribute this trend to Trump’s threats to withdraw the US from NATO and his insistence that allies increase their defence budgets. These facts and ongoing global tensions have pushed military spending to a record $2.4 trillion in 2023.

In response, Europe has seen significant initiatives to bolster its defence capabilities. In June, the NATO Innovation Fund (NIF) announced partnerships with venture capital firms and defence startups across Europe, backed by $1.1 billion to enhance continental security. Similarly, the EU unveiled its first defence industrial strategy earlier this year, committing over $1 billion towards military innovation.

Prominent investors have noted that Trump’s unpredictable foreign policy has driven the EU states to invest more in their defence, fostering growth in robotics, drones, and quantum computing. Munich-based Vsquared Ventures, a leading deep-tech investor, emphasised that the urgency created by Trump’s rhetoric has accelerated investments in these areas.

Why does this matter?

While Russia’s invasion of Ukraine remains the primary driver of increased defence spending, Trump’s approach has also led to a shift in Europe, where leaders are seeking greater self-sufficiency in defence. These circumstances have resulted in a 16% rise in defence and security spending across Europe in 2023, with further investments expected as concerns over future US support persist.

Despite a broader downturn in venture capital funding, investments in defence technology startups have remained relatively resilient, with only a modest decline compared to other sectors. The EU companies like Quantum Systems and ARX Robotics have directly benefited from this shift as governments prioritise strengthening their military capabilities in light of global uncertainties.