For US tech giants, laws could bite harder in Europe

For US tech behemoths like Google and Facebook, Europe can be both a blessing and a curse.

The region and its 500 million consumers represent one of the companies’ most important overseas markets. And in cities like Lisbon, Portugal, and Ljubljana, Slovenia, people often can’t get enough YouTube videos, Amazon purchases and Twitter messages.

Yet policymakers in the 28-member EU have also become some of the most ardent critics of how Silicon Valley companies dominate much of the digital world. The criticisms include the companies’ perceived failure to pay local taxes and their collection of reams of personal information.

These tensions took centrestage in 2016: Apple was ordered to pay 13 billion euros (Dh50 billion), in back taxes to the Irish government; Google was accused of unfairly favouring some of its digital services over those of rivals; and Uber was prohibited from operating some of its ride-booking services in the region. The companies deny wrongdoing.

The next 12 months are shaping up to be potentially even more painful. Many of the investigations that started in 2016 will be decided in the coming year. If Silicon Valley companies lose the battles, they could be forced to change how they operate not only in Europe, but also farther afield.

Here is what awaits:

* Google is facing three sets of antitrust charges in Europe related to some of its search services and Android, its popular smartphone operating system.

The first set of charges — linked to accusations that Google unfairly promoted its shopping product over those of rivals — could be decided by early spring and might lead to a fine of up to 10 per cent of the company’s global revenue, or about $7.5 billion (though most penalties are significantly less).

The company has repeatedly denied that it favours its own services over those of others, and it is spending close to a half-billion dollars across Europe to endear itself to locals. Any appeal of the decision would take years.

Google’s European woes also extend to taxes, and French officials will most likely decide if the company must pay more than $1 billion in back taxes on its operations there.

It also has appealed a decision by France’s data protection regulator that it must apply the “Right to be Forgotten” rule across its global domains, including those in the US. That allows people with connections to Europe to ask search engines to remove links to online content about themselves, under certain circumstances. The appeal will be heard in this year.

* On the top of Apple’s agenda in 2017 will be its appeal of the 13 billion euro tax bill. Lawmakers in Ireland are also appealing the decision, claiming that the European Commission, the executive arm of the EU, overstepped its jurisdiction and that Apple did not receive preferential tax treatment.

Both appeals are expected to be heard by Europe’s top courts in late 2017, at the earliest.

The cases will most likely take on an increasingly political angle. President-elect Donald Trump has suggested that US companies with significant cash held overseas might be able to repatriate these nest eggs at a reduced tax rate. If Trump goes ahead with this plan, expect a standoff between American and European lawmakers over where such money — including from Apple — should be taxed.

* The social media giant Facebook is becoming an increasing target for European officials because of its ever-expanding role in the region’s economy. In 2017, Facebook will face the outcomes of investigations in France, Spain, Germany and the Netherlands about how it tracks both members and non-members who use the company’s services and visit third-party websites with embedded Facebook “like” buttons. The company won a similar case on appeal in Belgium.

Facebook also has until the end of January to respond to European charges that it misled regulators when it sought approval for its $19 billion takeover of WhatsApp, the internet messenger it now owns.

Amid concerns that Facebook did not sufficiently clamp down on fake news during the US presidential election, the company has faced similar worries in Europe, where some officials have called for it to be held responsible for such content, and for hate speech.

In March, a German taskforce will report on how Facebook and other social media companies have responded to these issues. Legislation could follow if lawmakers believe the companies have not done enough.

* The ride-hailing company Uber has been locked in a years-long struggle to operate freely across Europe after some taxi associations and policymakers accused it of flouting local rules and promoting unfair competition. In April, the European Court of Justice, the region’s highest court, is expected to rule on whether Uber is a transportation service or a digital platform — a decision that will have far-reaching consequences.

If Uber is deemed a transportation service, it will have to comply with Europe’s tough taxi rules and would not be able to offer some of its low-cost services. If the court rules Uber is a digital platform, the company will have greater ability to expand aggressively in the region, one of its more important international markets.

* The e-commerce giant Amazon is awaiting the results of a lengthy investigation into whether it received unfair tax treatment from authorities in Luxembourg, where it has its European headquarters. Amazon denies the charges and says it complies with the tax rules where it operates. An outcome is expected by early summer at the earliest and follows similar tax cases against US companies like McDonald’s and Starbucks.

In a sign that it was trying to get ahead of the issue, Amazon announced in 2015 that it would start paying taxes in a number of European countries where it has large operations, instead of funnelling nearly all of its sales through Luxembourg.

— New York Times News Service

source : gulfnews