EU antitrust chief Vestager ends with wins over Apple and Google, but is it enough?
EU antitrust chief Vestager ends with wins over Apple and Google, but is it enough?
As the dust settles on her decade of regulatory battles, Vestager’s true legacy may rest with the future of the Digital Markets Act.
In the coming weeks, the European Union's competition commissioner, Margrethe Vestager, will conclude her tenure at the EU Commission. Over the past decade, Vestager has been one of the most important figures globally, if not the most important, in shaping modern antitrust regulation. She is stepping down as her political party's influence in the Danish parliament has waned.
Ostensibly, Vestager is finishing her role on a high note: the Court of Justice of the European Union, based in Luxembourg, recently ruled in favor of the Commission in two major cases she led against Apple and Google. In the first case, Apple was ordered to pay a staggering €13 billion ($14.4 billion) in back taxes to Ireland. In the second, a €2.4 billion ($2.7 billion) fine imposed on Google for manipulating its search engine results was upheld. However, this apparent victory is somewhat hollow, calling into question the impact of Vestager's decade-long efforts.
In Apple’s case, the European Commission ruled in 2016, after a three-year investigation, that Ireland had violated EU laws by granting Apple excessive tax benefits. "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014," Vestager stated at the time.
Recently, the European Court of Justice overturned a lower court's decision in favor of Apple, finding that the regulators were correct in their initial ruling. While the decision won't affect Apple's financial reports—since the company already transferred the funds into a trust pending the final ruling—it symbolizes a victory for Vestager's regulatory approach.
In Google’s case, the company was fined in 2017, following a seven-year investigation that concluded Google was manipulating its search results. The Commission found that Google's actions prioritized its own shopping service while hiding results from competing services that didn’t pay for exposure. "Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors. What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation," Vestager said at the time.
The Court of Justice recently rejected Google’s appeal, upholding the fine. This ruling also coincides with a civil lawsuit against Google in the U.S. by Yelp, a local search application developer. Yelp's claims mirror those that led to the European fine, potentially strengthening the case in the U.S.
Throughout her tenure, Vestager led an aggressive campaign to curb the power of tech giants. However, despite her efforts, these companies have only grown stronger, particularly during and after the COVID-19 pandemic. Not only have the attempts to reduce their dominance largely failed, but a new titan—Nvidia—has emerged, dominating the chip market much like Google dominates search, Meta dominates social media, Amazon dominates e-commerce, and Apple dominates mobile technology.
The two victories from today highlight the fundamental challenges Vestager faced. In Apple’s case, 11 years passed between the launch of the investigation and the final ruling. In Google’s case, it took 14 years. During this time, these companies continued the very practices that prompted the investigations in the first place. Yelp’s ongoing lawsuit against Google in the U.S. is proof of this. Meanwhile, these tech giants likely generated profits far exceeding the fines imposed on them. For these companies, the penalties are not a deterrent but merely the cost of doing business, a calculated expense factored into their strategies.
Several of Vestager’s other battles remain unresolved. In Google’s case alone, there are two pending appeals concerning additional fines: a €4.3 billion fine from 2018 related to restrictive clauses in Google’s contracts with Android manufacturers, and a €1.49 billion fine from 2019 over exclusivity agreements in Google’s ad services. These cases further demonstrate the limited effectiveness of the regulatory framework under Vestager's leadership. The lack of timely consequences has allowed these companies to profit significantly from their anticompetitive practices.
This problem isn’t exclusive to Europe. In August 2023, a U.S. federal court ruled that Google held a monopoly in search and that its exclusivity agreements with Apple and Mozilla’s Firefox browser hurt competition. However, the court will not decide on corrective measures until 2024, and even then, Google is likely to appeal. Meanwhile, technological advancements such as modern chatbots could render the traditional search engine market obsolete before any meaningful changes take effect.
Vestager will leave her role with some symbolic victories, but with clear evidence that traditional regulatory approaches have failed to address the immense power and influence of fast-moving, cash-rich tech giants.
However, all is not lost. Vestager’s legacy may yet be salvaged through the Digital Markets Act (DMA) and the Digital Services Act (DSA), which recently came into effect. These laws impose significant restrictions on major tech platforms, including dramatic measures like opening the iPhone to third-party app downloads in the European Union. Crucially, the new regulations enable faster investigations with strict time limits, ensuring that cases don't drag on for years.
In recent months, the Commission has used these new laws to open investigations into Meta, TikTok, X (formerly Twitter), Google, and Apple. If the intent behind these laws is realized, we could see more stringent and timely penalties that force real changes in behavior. Though Vestager will be watching from her home in Denmark, she will deserve much of the credit if these efforts succeed.
