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Apple Stock Slides in Premarket After EU Court Ruling
The European Union's top court has upheld multibillion-dollar penalties against Apple and Google.
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The European Union’s top court delivered a significant blow to tech giants Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) on Tuesday, upholding multibillion-dollar penalties in two separate cases. The rulings, which conclude years-long legal battles, mark a major victory for the EU’s ongoing efforts to regulate large technology companies.
EU Top Court Delivers Legal Setbacks for Apple and Google
In the case against Apple, the European Court of Justice ordered the company to repay approximately $14.35 billion in back taxes to Ireland. The court confirmed that Ireland had granted Apple unlawful tax benefits for nearly two decades, during which the company allegedly paid less than 1% tax on its European profits. This decision overturns an earlier appeal won by Apple, finalizing a case that dates back to a 2016 EU decision.
Google, meanwhile, faces a $2.65 billion antitrust fine stemming from a 2017 European Commission decision. The court upheld the penalty, agreeing that Google had abused its dominant position in search results by giving preferential treatment to its own shopping services over competitors. The court described Google’s practices as discriminatory.
Google Stock Slightly Up, Apple Slides in Premarket Trading
The rulings had immediate effects on the stock market. In pre-market trading as of 7:44 AM EDT on September 10, 2024, Alphabet Inc. (GOOG) shares were up slightly at $149.73, a 0.13% increase from the previous close. Apple Inc. (AAPL) shares, however, saw a more significant impact, dropping 1.24% to $218.16 in pre-market trading.
These legal setbacks could have far-reaching implications for the tech industry. Other companies may need to reconsider their European tax strategies and how they present services in search results. EU antitrust chief Margrethe Vestager indicated that the commission would continue its efforts to combat harmful tax competition, suggesting ongoing scrutiny for tech giants operating in Europe.
Despite the legal challenges, both companies maintain strong financial positions. Alphabet boasts a market cap of $1.835 trillion and a year-to-date return of 6.37%, while Apple’s market cap stands at $3.359 trillion with a more impressive 15.18% year-to-date return.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
