In September, the European Union will force the largest IT companies to live in justice

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European regulators tightly "took up" for the American transnational corporations, including for IT companies. The European Commission is establishing order in EU legislation and wants to simultaneously “restore justice” with regard to taxation, protection of the rights and freedoms of citizens, as well as copyright of publishers.



In addition, the current issue for the EU is security and privacy. However, it does not do without the conflict of commercial interests, in which both European and American IT companies are involved.

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Among IT companies, the main violators, according to the European Commission, are Apple, Facebook and Google.

The largest fine in EU history

Last week, the European Commission announced the end of the tax investigation against the American corporation Apple. The investigation lasted three years, the European Commission studied the business of an IT giant in Ireland. In this country, the company allegedly paid unreasonably low taxes. If Apple is found guilty of hiding taxes, it faces a multi-billion dollar fine.



However, the US authorities do not agree with EU regulators and consider the allegations to be false. After it became known about the end of the EU tax investigation against Apple, the United States again tries to force the European Union to abandon the investigation, threatening retaliatory measures.



The US Treasury issued a statement stating that Brussels is becoming a "supranational tax authority." This may threaten international tax reform agreements. The administration of US President Barack Obama also criticized the work of the European Commission, stating that "the Treasury is considering possible retaliatory measures if the European Commission continues the current course."



Earlier, the US Senate called on Treasury Secretary Jack Lew to consider introducing a double tax rate for European companies if the European Commission appoints Apple in connection with this investigation. Company CEO Tim Cook said that Apple acted in accordance with European law and that it was ready to appeal the decision of the European Commission.



In 2014, the European Commission accused Ireland of entering into tax transactions with certain corporations. Apple is accused of so-called transfer pricing - the sale of goods between divisions at domestic prices other than market prices, which allows the company to redistribute the total profit in favor of its divisions located in countries with lower taxes, reminds Kommersant.

In Ireland, corporate income tax is only 12.5%, which is significantly lower than in many other countries. In addition, according to the European Commission, Ireland agreed to lower the taxable profits of local Apple divisions. Thus, according to the investigation, Apple managed to avoid payments of tens of billions of dollars.

The European Commission prepared a 130-page report on the results of its investigation. However, the Irish government, like the US, does not recognize the violation and will challenge it in court.



Today, August 30, the European Commission should give an approximate amount that Apple will have to pay. Previously, analysts estimated the size of such payments in a very wide range - from $ 200 million to $ 19 billion, depending on the arguments of the EC, Vedomosti reports, citing The Wall Street Journal. The same figure ($ 19 billion) was also voiced by investment banker JPMorgan Chase, working with Apple. This penalty may be the largest in the history of the European Commission.

Google and antitrust laws

The European antitrust regulator continues to accuse Google of abusing Android’s dominant position in the mobile OS market.



In April, the EU launched a second charge. Prior to this, the largest search engine was accused of promoting its own services in the search results. The corresponding lawsuit is considered from the end of 2010. Since that time, three attempts have been made to reach an agreement, but so far to no avail.



Selling ads in apps like Maps, Search and Gmail on mobile devices brought Google about $ 11 billion. Therefore, if the European Commission proves the abuse of the dominant position of Android, the amount of the fine will also be significant.



“Based on the investigation,” said Margrethe Vestager, who is the European Commissioner for Competition at the European Commission, “we believe that Google’s behavior hampers consumer access to a wider choice of mobile applications and services, blocking the path of innovation for other market participants.” ".



According to Westager, Google has violated the EU antitrust law, requiring device manufacturers to install Google Search and Google Chrome browser, as well as preventing the sale of devices running other Android operating systems. In addition, it is alleged that Google "financially interested" manufacturers and network operators in an exclusive installation on mobile devices of the Google search service.







The European Commission is also interested in the work of the search giant advertising service. In this regard, the regulator is going to file a third lawsuit against. Google has already sent a request for the transfer of investigation materials for review. This step usually precedes an official statement listing violations of the antitrust law.



The new lawsuit may cost Google more than the previous ones, because the Google AdWords service it contains is the company's main source of revenue. So, last year, Google revenue amounted to $ 74.5 billion.

News Aggregators and Intellectual Property Law

In September, the European Commission will publish a draft amendment to EU intellectual property laws. The project intends to oblige news aggregators to pay a commission at the request of traditional media.



According to EU officials, the relationship of Internet companies with the media is not sufficiently balanced. Therefore, publishers need to provide exclusive rights to their content - by analogy with music labels and film companies.



For Google, Facebook and small news aggregators, this means that they will have to sign special agreements with each media to use the materials. The term of exclusive rights to content may be 50 years. However, the documents of the European Commission state that, if amendments are adopted, they may not require payment from Internet companies and may provide them with content for free.



The goal of the project is not to collect money from aggregators, but to access Europeans as much as possible to a wide variety of news, representatives of the European Commission emphasize. Therefore, publishers should receive decent compensation for publishing their texts in aggregators.







It is not the first year that relations between European publishers and aggregators are strained. According to Google, the news aggregator provides media sites with tens of billions of referrals per month, but does not make money on it - it does not advertise inside the news service. According to Internet companies, due to such transitions in 2014, the media earned about $ 10 billion from advertising.



According to the British OC & C Strategy Consultants, news aggregators and social networks have deprived the British media of about half of their income over the decade. Now, local media are losing 10-15% of revenue annually due to news aggregators and social networks.



In Europe, the relationship between aggregators and traditional media has not yet been regulated. In 2006, one of the courts of Belgium went to meet several Belgian newspapers and ruled that Google has no right to place links to their articles in the Google News section without fee or permission.

After that, Google removed the sites of these publications from the search results. However, in 2012, a settlement was signed, and the Belgians returned to Google News.



In 2014, the Spanish parliament passed a law obliging news aggregators to pay media publishers for content. As a result, Google has closed the news service in this country. Because of this, in the first few months, local media lost an average of 6%, and small news sites - up to 14% of traffic.



In 2013, a similar law was passed in Germany by the German authorities. Publications were faced with a choice: to allow Google News to publish excerpts from texts for free, or to exclude links to their sites from the search. One of the main lobbyists of this law in Germany was the publishing house Axel Springer. The company has not achieved payments from Google and has banned referring to its texts.



But after two weeks at Axel Springer, they found that the traffic of his publications had fallen dramatically. One of these publications for several days after the exclusion from Google News has lost 70% of traffic. The publishing house continued to lobby for restrictions on Google throughout Europe, but agreed to free use of its texts in Google News.



The current restrictions for news aggregators are not very effective. EU officials hope to be able to offer more effective regulatory methods.

Skype and WhatsApp Regulation

It is worth noting that the EU is concerned not only with the financial side and intellectual property issues, but also with security issues.



EU regulators will review security and privacy in the telecommunications sector. Officials plan to tighten the requirements for OTT services and introduce new rules in September of this year.



Officials insist that online services such as WhatsApp (owns Facebook) and Skype (owns Microsoft) comply with the “security and confidentiality provisions” that apply in the European Union. The touches will affect calls and messages that are made using services and sent to mobile numbers.







Earlier it was reported that Facebook tested secret chats in its application-messenger. Currently, Facebook Messenger is already using encrypted data transfer protocols that limit the ability to intercept data.



With the new rules, the EU will be able to equalize the rights of mobile operators and their online competitors. Innovations in terms of electronic privacy will replace the existing rules that were adopted in 2002, and will remove restrictions associated with the location of the subscriber.



European telecom operators, for example, Orange and Telefonica, have long complained that competitors based outside the EU and providing OTT services to European customers (we are talking mainly about US players) have advantages in the market due to imperfect legislation. In particular, such players often provide communication services, but are not subject to the same rules as traditional telecommunications companies.