Thursday

15th Nov 2018

EU 'tax lady' hits Google with record fine

  • Margrethe Vestager has been called 'the woman Silicon Valley fears'. Donald Trump called her 'the tax lady' (Photo: European Commission)

She was dismissed by US president Donald Trump as the EU's "tax lady" who "hates the US", but Margrethe Vestager, the bloc's antitrust chief is not backing down amid rising tensions between the EU and the US.

Vestager, the EU's competition commissioner, announced on Wednesday (18 July) that the US tech company Google was to be fined a record €4.34bn for abusing its market dominance in mobile phone operating systems, and breaking EU antitrust rules.

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  • The commission accused Google of forcing smartphone manufacturers to pre-install Google search and Chrome (Photo: freestocks.org)

The move comes as Trump is increasingly hostile towards the EU - he called it a "foe" at the weekend - because of the bloc's tax and trade practices which he sees as hostile to American interests.

While Vestager's track record of putting pressure on US companies to play by EU rules also irked the previous Obama administration, Trump has elevated the frustration to a new level by telling Vestager's boss, EU Commission president Jean-Claude Juncker at a recent G7 summit that "your tax lady... she really hates the US".

The former Danish finance minister gave a characteristically spirited response on Wednesday.

"I've done my own fact-checking, and I do work with tax and I am a woman, so that is 100 percent correct. This is not correct for the latter part of the sentence though, because I very much like the US, I am from Denmark, that tends to be what we do, we like the US," Vestager told reporters.

"But the fact is this [the case] has nothing to do with how I feel, nothing whatsoever," she added.

No 'good time'

"There would never, ever, be a right timing," Vestager said dismissing that the possible political backlash would impact the EU's decision.

"The mission is very simple, we have to protect consumers and competition, to make sure that consumers get the best of fair competition … This is what we do, it has been done before, and we will continue to do it no matter the political context," she said.

The decision nevertheless could add to the rising transatlantic tension one week before Juncker travels to Washington to negotiate on trade imbalances with Trump.

A looming trade war is only one of the issues between the EU and the US that has emerged as problematic following the Trump administration withdrawal from key EU policy achievements - the Paris climate deal and the Iran nuclear agreement.

While Vestager is disliked by US presidents, she is widely respected by staff and colleagues.

She has been rumoured as a possible successor of Juncker in the next commission, although due to coming from a small social liberal party and not having served as a prime minister, that is an unlikely outcome.

Vestager, who said she would want to stay on as a competition commissioner, has already taken on US giants such as Amazon, Apple, Starbucks and MacDonalds since she took office in 2014.

She had ordered Apple to pay €13bn in back taxes to Ireland in 2016, earning her headlines calling her the 'woman Silicon Valley fears'.

90 days

Vestager said on Wednesday that Google has used its Android operating system "to cement its dominance as a search engine", preventing rivals from innovating and competing, adding that this is illegal under EU antitrust rules.

After a 39-month investigation, EU regulators found that Google forced manufacturers to install Google search and Chrome as the default search engine on Android devices in order to offer the Google Play store. They also found that it had prevented smartphone manufacturers from running competing systems, and gave financial incentives to manufacturers and mobile phone operators to pre-install Google Search.

The commission wants Google to bring its "illegal conduct to an end in an effective manner within 90 days of the decision," or its parent company Alphabet risks being hit with fines amounting to five percent of its daily turnover for each day it fails to comply.

Google said it would appeal the EU's decision. "Android has created more choice for everyone, not less," it argued in a statement.

The commission said that only one percent of users download rival search apps on Android in Europe, and only 10 percent of people download rival mobile browsers, highlighting Google's dominance of the market.

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