And so, another iPhone launch has come and gone. Apple did announce some notable stuff: A new camera control button on the iPhone, a bigger Apple Watch, new AirPods Pro that can supposedly act as a “clinical grade” hearing aid. But there were no huge surprises.
In fact, I’m quite happy to have last year’s iPhone 15 Pro rather than this year’s iPhone 16 Pro, as the newer model’s telephoto lens has a 5x zoom while the 15 Pro has a 3x lens, which I find generally more useful for portraiture and street photography.
Overall, yesterday’s event seems to have been in line with what Wall Street was expecting, as Apple’s share price ended the day pretty much flat. But today it’s down, and that has nothing to do with the iPhone 16.
Rather, it’s because Apple has to pay Ireland €13 billion ($14.4 billion) in back taxes.
In 2016, the European Union’s competition directorate decided that Ireland had granted Apple a sweetheart tax deal that let the company pay an effective corporate tax rate as low as 0.05% on its European profits. Like most Big Tech firms, Apple’s EU base is in Ireland, which offers comparatively generous tax terms and light-touch regulation. The Commission found Dublin gave Apple an even sweeter tax deal than usual to preserve thousands of jobs in the country—and that this special treatment amounted to illegal, market-distorting state aid that needed to be paid back.
Four years later, Apple’s appeal to the EU’s General Court, which handles appeals of decisions by the Commission, proved successful. The Commission’s ruling was overturned, with the General Court finding that it hadn’t proven Ireland gave Apple a particular advantage over its peers. Vestager had gone out on a limb by trying to apply antitrust law to a tax matter—“total political crap,” as Apple CEO Tim Cook called it at the time—and it looked like she had indeed gone too far.
But the Commission then appealed to the Court of Justice of the EU, which is the bloc’s highest court. And today the Court of Justice gave antitrust commissioner Margrethe Vestager what she wanted: an overturning of the General Court’s 2020 ruling, and confirmation that she got it right the first time. Apple must pay that €13 billion and Ireland, which has fiercely resisted claiming that vast pile of cash, has to take it. (The cash has been sitting in escrow for years.)
“Today is a big win for European citizens and for tax justice,” Vestager said.
And that wasn’t the only thing to put a spring in Vestager’s step today. The Court of Justice also upheld the €2.4 billion fine that her department levied on Google in 2017, for favoring its own comparison shopping service in its regular search results by downranking rivals when the user searched for clothes or washing machines.
Google is still appealing the other two big fines it subsequently received in the EU (€1.5 billion for AdSense for Search abuses, and €5 billion for Android abuses), but today's decision is another huge win for Vestager.
The Google Shopping case was where she originally made her name, by successfully reviving a fight that her predecessor, Joaquín Almunia, had all but surrendered. And the Apple-Ireland case is where she gained international notoriety—partly because of the massive sum involved, and partly because it prompted former U.S. President Donald Trump to refer to her as the EU’s “tax lady.” Now her combative and boundary-pushing approach has been vindicated in both cases. Both Google and Apple said they were "disappointed" by today's decisions.
Vestager is about to step down as competition commissioner. The liberal Dane no longer has enough political support back home, so Denmark has proposed someone else to be its representative in the Commission. We’ll only find out next week who the EU’s new antitrust chief will be. But for Vestager, this is one heck of a way to go out.
More news below.
David Meyer
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