Google’s $2.7 billion EU fine will help innovation, competition commissioner says

Margrethe Vestager, European Commissioner for Competition, European Commission, on centre stage during the Web Summit 2017
Margrethe Vestager, European Commissioner for Competition, European Commission, on centre stage during the Web Summit 2017

The record $2.7 billion antitrust fine that the European Union slapped on Google in June will help drive innovation, the European commissioner for competition told a tech summit Tuesday.

Margrethe Vestager, who has been criticized for targeting U.S. tech giants, said it is a problem when successful companies that dominate a market, like Google, use their power to shut down competition.

“That can end up closing the door to innovation,” Vestager said during her speech at the Web Summit in Lisbon, Portugal.

In June, Vestager fined Google the record amount for abusing its dominance of the search engine market to place its shopping services at the top of web searches. Google decided in September to appeal against the European Commission’s decision — a process that might take several years to be resolved in court.

However, Vestager believes that the Commission took the right approach to ensure that small companies can innovate and have a chance to compete against multinationals.

“That’s why dominant companies like Google have a special responsibility not to undermine competition… And we had to fine Google because it didn’t live up to that responsibility,” Vestager said.

“By making sure these markets are open for competition, our decision will help innovation to thrive.”

‘Special tax treatment’

During her speech, Vestager also criticized companies that benefit from “special” tax arrangements, arguing that this is another obstacle to fair competition.

“When a government gives special tax treatment to a few companies, that makes it hard for anyone else to compete on equal terms,” she said.

In October, the European Commission announced it was taking Ireland to court for failing to recover taxes from Apple. A year earlier, Brussels had ordered Ireland to collect 13 billion euros ($15 billion) in illegal state aid from the tech giant.

More recently, the Commission said it was investigating whether the U.K. shielded multinational companies from tax avoidance.

This is not about repatriation tax

When asked about whether she feels under pressure over U.S. plans to force companies to move their money back home, Vestager told CNBC that her work is not about un-repatriated funds.

“This is not about the un-repatriated sums of money. If you take the Apple case, (it) is about profits made in Europe, North Africa and the Middle East all due to an IP located to Ireland. So this is profit generated in Europe and therefore should be taxed in Europe,” she told CNBC.

President Donald Trump could announce before Thanksgiving plans that will make U.S. multinationals like Apple, Amazon and Google transfer their money to their home country.

However, Vestager said her team will continue monitoring their profits made in Europe.

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