EU Fight to Regulate U.S. Tech Giants Expands Despite Court Loss

The European Union’s two surprise court losses this week in cases related to its handling of tech companies are unlikely to slow its multi-front attempts to regulate U.S. digital giants.

On Thursday, the EU’s top court said Europeans’ data is unsafe in the U.S. and struck down a method that Facebook Inc. and thousands of other companies use to send information. A day earlier, Apple Inc. won a court fight over a record 13 billion-euro ($14.9 billion) Irish tax bill in a setback for the EU’s crackdown on preferential fiscal deals.

The Apple ruling seemed like a major blow to Margrethe Vestager, the EU tech czar who’s gained prominence by cracking down on Silicon Valley’s abuse of power and seeking to curb their effort to set up shop in the lowest-tax nations. But on Thursday, she announced an antitrust probe into voice assistants such as Apple Inc.’s Siri and Amazon.com Inc.’s Alexa to look at how tech companies use data to gain a tight grip on growing markets.

“What we see in Europe, which we do not see in the United States, is a set of governments who see digital as a policy area where government should be involved,” said Frances Burwell, a fellow at the Atlantic Council, a Washington, D.C.-based think tank. “It doesn’t always work, but that doesn’t mean that the conversation or the attempt is going to stop.”

Thursday’s decision by the top court was yet another defeat for the European Commission, the bloc’s executive body and antitrust agency. The judges struck down the so-called Privacy Shield, a mechanism that EU and U.S. officials spent years negotiating, and said Europeans’ data was insufficiently protected when moved to the U.S. because of concerns about American surveillance programs.

In the Apple court case, the iPhone maker contested a 2016 decision by the commission ordering it to pay back taxes to Ireland, saying the EU sought to “retroactively change the rules” by forcing it to pay taxes in Europe that are due in the U.S. The EU General Court sided with the company’s arguments.

Despite the defeat, Vestager said she would continue her quest to force fair behavior by large tech corporations.

After the judgment, she said her team would continue to scrutinize aggressive tax planning measures. And on Thursday, she unveiled a sweeping antitrust inquiry into voice assistants and other connected gadgets such as smart thermometers and TVs, an area companies like Amazon.com Inc. and Alphabet Inc.’s Google have sought to expand in recent years.

©2020 Bloomberg L.P.

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