EU Looks to Rein In Alleged Excesses of U.S. Tech Giants

European officials are pushing regulations and investigations aimed at altering the behavior of a cadre of U.S. internet superpowers

The EU-Apple tax case represents a new water mark in the bloc’s efforts to rein in alleged excesses of American tech giants.
The EU-Apple tax case represents a new water mark in the bloc’s efforts to rein in alleged excesses of American tech giants. PHOTO:REUTERS

PARIS–Apple’s tax bill is just the beginning.

The European Union’s decision Tuesday that Apple Inc. owes roughly €13 billion ($14.5 billion) in what it calls uncollected taxes over a decade, represents a new high-water mark in the bloc’s efforts to rein in alleged excesses of American tech giants.

But it is also just the first shot in what is expected to be a busy autumn for European officials, who are pushing forward a raft of regulations and investigations aimed at altering the behavior of a cadre of U.S.-based internet superpowers. The moves are being taken by a host of players—from EU regulators in Brussels to a bevy of national authorities across the continent. They are targeting areas ranging from personal privacy to anti-competition issues.

In coming weeks, EU bodies plan to debate new telecom rules that could expand to cover services like WhatsApp, proposed legislation to push news aggregators to pay newspapers for showing snippets of content, and potential audiovisual rules that would force companies like Netflix Inc. to finance European movies.

At the same time, authorities in capitals like Brussels, Paris and Berlin are pursuing investigations involving big companies like Alphabet Inc.’s Google, Amazon.com Inc. and Facebook Inc., related to alleged tax avoidance, anticompetitive behavior and privacy concerns.
“It’s an avalanche coming,” said James Waterworth, vice president for Europe at the U.S.-based Computer & Communications Industry Association, a lobby group that represents Amazon, Facebook, Google and Netflix. “There’s a political sense from some camps that these big, extraterritorial companies are getting away with things that need to be addressed.”

Such lobby firms argue that tech companies bring economic benefits, promote innovation and boost competition. They have been gearing themselves up in Brussels and across Europe to influence the rule-making.

Mr. Waterworth says the specific complaints against U.S. tech firms don’t stand up to scrutiny. The companies themselves have all launched vigorous defenses, underscored by Apple’s response Tuesday to the EU’s tax clawback decision. Apple executives denied vigorously they had avoided paying taxes and condemned Brussels’ decision as a money grab.

The proposals and investigations are the latest broadsides against big tech firms that some European politicians and consumer advocates argue squelch competition and take advantage of consumers dependent on their services. European officials reject the idea that their enforcement actions, or new rules, are motivated by the nationality of their targets, saying that their goal is to make sure European markets remain open to competitors with fair protections for consumers.

But some U.S. tech executives still say they think they are being singled out.

“More and more of these battles manifest themselves as the disrupters meet the disrupted,” said John Higgins, head of Digital Europe, a Brussels-based lobby group representing companies including Google and Apple.

Privacy is a particularly intense battlefield. Less than a year after voting in strict new privacy law, the EU plans this autumn to propose updates to its communications-privacy directive. The update could potentially extend rules now covering phone companies–like anonymizing location data once no longer needed for billing–to online-communications providers.

At the national level, France’s privacy watchdog is locked in a fight with Google over how broadly the search engine must apply Europe’s “right to be forgotten.” Several privacy regulators across Europe say they are looking into WhatsApp’s announcement that it will start sharing some user data with parent-company Facebook –just one of several probes the social network faces.

Competition law will also be a hot topic. Google is set as early as next month to respond to the EU’s formal charges that it has abused the market power of its Android mobile operating system to promote its own search engine and browser, one of several charges it is fighting.

Other probes are ongoing: the EU is investigating Amazon’s conduct in the e-book business, and France’s Autorite de la Concurrence is investigating the online ad industry.

On the tax front, apart from Apple, the EU is looking at an alleged sweetheart tax deal for Amazon in Luxembourg, a charge it denies. And Google is facing tax probes in Spain, Italy and France over claims–which it denies–that it should have declared more profit and paid more taxes in those countries.

Write to Sam Schechner at sam.schechner@wsj.com

http://www.wsj.com/articles/eu-looks-to-rein-in-alleged-excesses-of-u-s-tech-giants-1472662113

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