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Friend or Foe? EU Risks Trump Twitter Storm With Google Fine

By Aoife White and Stephanie Bodoni, BLOOMBERG

July 18, 2018

https://www.bloomberg.com/news/articles/2018-07-18/friend-or-foe-eu-ris…

U.S. President Donald Trump’s European Union “foes” are at it again -- attacking one of America’s biggest technology companies with a second painful antitrust decision.

EU Antitrust Commissioner Margrethe Vestager has levied a record 4.3 billion-euro ($5 billion) fine on the company, just a year after slapping Google with a 2.4 billion-euro penalty for thwarting online shopping rivals.

It’s the latest in a series of EU strikes on Silicon Valley giants that also included hefty back tax bills for Apple Inc. and Amazon.com Inc., accused of receiving unfair fiscal deals from EU nations.

Wednesday’s Google fine -- this time concerning alleged abuse of its market-dominating Android operating system -- could end up provoking a “tweet storm” by President Trump and more measured criticism from American officials, said Spencer Waller, a law professor at Loyola University Chicago.

“Most major EU competition decisions against U.S. firms have produced pushback from both Democratic and Republican administrations dating back to the Clinton administration,” Waller said. “Usually much of the criticism comes from the antitrust agencies who respond to the EU imposing liability or blocking a transaction on theories not currently being applied in the U.S.”

Senate Finance Chairman Orrin Hatch, a Utah Republican, spoke out on Twitter about the EU’s “history of engaging in regulatory, tax & competition actions & proposals that disproportionately hit U.S. tech companies.”

He said Wednesday’s order “calls into question whether these actions are anything more than a series of discriminatory revenue grabs.”

The White House didn’t immediately respond to a request for comment.

Precarious Time

The decision couldn’t come at a more precarious time in EU-U.S. relations. European Commission President Jean-Claude Juncker will travel to Washington July 25 for a meeting with Trump in a last-ditch attempt to avert a new round of tariffs on European car imports, amid an increasingly hostile trade climate.

It comes days after Trump told CBS Evening News in an interview that the EU “is a foe, what they do to us in trade” and following a contentious meeting with NATO allies in which he badgered them over their military spending levels. He attacked German Chancellor Angela Merkel over a pipeline deal with Russia and chastised British Prime Minister Theresa May for not pursuing a “hard” enough break with the EU in Brexit talks.

The U.S. in March deployed a seldom-used national-security law to impose levies on steel and aluminum imports, drawing a tit-for-tat tariff response from the EU that targets companies in sensitive political locations for Trump, such as motorcycle maker Harley-Davidson Inc. in Wisconsin, and Kentucky whiskey distiller Jack Daniel’s.

American criticism has so far failed to stem the EU’s attacks on big U.S. companies. Almost two years ago, the EU hit Apple with a record bill of 13 billion euros plus interest in tax it hadn’t paid in Ireland. Both Apple and Ireland have EU court appeals pending.

Vestager has also ordered Starbucks Corp. and Amazon to repay tens of millions of euros in back taxes to the Netherlands and Luxembourg.

A self-proclaimed proponent of fairness, Vestager has repeatedly said she doesn’t care what nationality a company is and doesn’t specifically go after well-known American firms.

“I very much like the U.S.,” Vestager told reporters in Brussels on Wednesday, after announcing her decision. “I am from Denmark, that’s what we do, we like the U.S.” and the EU order “has nothing to do with how I feel, nothing whatsoever.”

The EU’s tax probes and payback orders are viewed “with suspicion” from across the Atlantic and “are not well understood in the U.S. because we have no equivalent part of our competition law dealing with state aids,” said Waller.

Justice Chief

Makan Delrahim, the U.S. Department of Justice chief, said in June he’d plan to take a look at the EU’s findings on Android. Earlier this year he warned about the EU approach, saying imposing special duties on digital platforms "might stifle the very innovation that has created dynamic competition for the benefit of consumers."

Delrahim’s comments were a veiled critique of the EU’s investigation into Google’s shopping search. He said the U.S. favors "an evidence-based approach." Google has criticized the EU’s enforcement action for failing to prove consumers were harmed.

While the EU has aggressively gone after technology companies like Google and Apple, U.S. enforcers have been largely hands-off despite growing calls for the firms to get more antitrust scrutiny because of their dominance in many markets. The U.S. closed a nearly two-year investigation of Google in 2013 without taking any action.

“The U.S. Federal Trade Commission or Department of Justice should also act to end Google’s monopolistic abuses, instead of letting the Europeans be the only cop on the antitrust beat,” said John M. Simpson, a director at American non-profit organization Consumer Watchdog.

— With assistance by Toluse Olorunnipa, Alex Wayne, and Chris Elser

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