EU Archives | Page 50 of 59 | Digital Watch Observatory

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.

EU probes subsidy advantage of Chinese electric vehicle

As a part of its ongoing investigation, the European Commission has imposed a final duty of 36.3% on imported electric vehicles manufactured in China. Some specified companies who have cooperated with the EU in the process of the investigation will, however, be subjected to a reduced tariff rate of 21.3%.

The EU launched the investigation in October 2023 against the backdrop of a witnessed spike in low-cost electric vehicle export from China to the EU and is expected to conclude by November this year. It seeks to examine whether Chinese clean tech products are dumping subsidised goods in the EU market and if Chinese-owned entities operating within the EU avail of any other unfair subsidy advantages.

The final duty needs further approval from EU’s 27 countries and will take effect unless a majority of 15 countries representing 65% of the EU population vote against it. These duties are expected to be confirmed by 30 October and typically last for five years. Meanwhile, talks between Europe and China could also lead to a compromise to mitigate or avoid the tariffs altogether.

Europe’s digital strategy targets MENA region

The European Union is deepening its involvement in the Middle East and North Africa (MENA) region, with a particular focus on digital transformation. Ursula von der Leyen, recently re-elected as European Commission president, has outlined plans to establish a portfolio dedicated to the Mediterranean, which will address investment, partnerships, and economic stability. This initiative follows significant financial support for countries like Egypt and Lebanon, aiming to stabilise these nations and bolster EU-MENA relations through the Southern Neighbourhood partnership.

A key element of the EU’s strategy is advancing digital infrastructure across the region. Projects like the MEDUSA Submarine Cable, which aims to connect several MENA countries with high-speed internet, exemplify Europe’s commitment to digital development. With over 4.5 million students expected to benefit from increased connectivity, the EU is prioritising educational and economic growth in the region. However, significant digital divides still exist, particularly between urban and rural areas and along gender lines, underscoring the need for expanded efforts.

Europe’s digital investments are expected to yield considerable benefits, including access to a skilled ICT workforce and strengthened political influence in the region. By supporting digital transformation, the EU aims to stabilise the MENA region economically, reduce irregular migration, and counter external influences such as China’s Belt and Road Initiative. Furthermore, digital advancements are seen as crucial in enhancing climate resilience, particularly through technologies like smart grids.

To fully realise these goals, the EU must expand its digital programmes and improve coordination with Southern Neighbourhood countries. Initiatives focusing on digital skills, entrepreneurship, and infrastructure need broader implementation to ensure inclusive growth. Enhanced data analysis and reporting on digital development are also essential for effectively targeting resources and measuring progress. The EU’s commitment to integrating digital elements into its broader strategy for the Mediterranean could serve as a blueprint for future cooperation in the region.

EU nations divided over regulation of high-risk 5G telecom suppliers

The EU is facing a significant divide among its member states regarding the regulation of high-risk telecom suppliers, particularly Huawei and ZTE, in the context of 5G network infrastructure. Eleven of the 27 EU countries have enacted legal measures to restrict these suppliers following the European Commission’s adoption of the 5G Cybersecurity Toolbox in 2020.

The following divide reflects varying levels of concern about national security, economic interests, and diplomatic relations. Scepticism surrounding Huawei and ZTE intensified in 2018 when numerous countries, including the US and Japan, began excluding these companies from public tenders due to allegations of espionage and their ties to the Chinese government.

Sweden was among the first EU nations to ban Huawei, mandating the removal of its equipment from 5G networks by 1 January 2025. Despite Huawei’s denials of wrongdoing, distrust persists within the EU. Responses to these security concerns vary significantly. Germany has announced that components from Huawei and ZTE must be removed from its 5G core networks by the end of 2026, aligning with its National Security Strategy.

In contrast, Italy has taken a more cautious approach, evaluating cases involving Huawei individually. Despite signing a 5G security declaration with the US, Slovenia rejected a bill to exclude high-risk manufacturers, indicating a more lenient stance.