You know, joining you guys to talk about
how shiny the new iPhone is is a lot easier than this but we'll get there.
Don't want to let in 2016, a European court ruled that basically Ireland is a
country, but a member state of the European Union had given Apple
preferential tax incentives that were illegal under EU law and Margherita
Vestager, the competition chief, instead of landing this decision today has come
out on the right side of an argument she's made for a long time, which is
that any member state of the EU cannot have an ad hoc, beneficial or
preferential tax arrangement with the country.
What we're talking about is like where a country says to a tech company, Come,
come, build with us to build offices, bring people, and in return you get
these things, but the things you get a different what everyone else gets.
And so the money is eyewatering. But just really simply it's been sat in
an escrow account gathering interest since that initial 2016 decision.
All that happened was Apple had a rights of repeal appeal under EU law, which
ultimately today they have lost. Wow.
So, I mean, there's this is interesting, of course, this tax case.
There's also a lot of U.S. antitrust news that's going on,
especially when it comes to Alphabet, the Google ad empire, etc..
But with all of these things, I always wonder how much does it actually matter
for the company? I know the time you were getting at that
a little bit, but we talk about these fines for these companies that have more
money than a lot of countries proper. And then these antitrust trials, which
just take years and years to play out. I mean, do investors really care about
this? I've always found it difficult to track
the performance of the stock of a Megacap tech company against a headline
about market competition or antitrust. You know, it's always been difficult to
tell how sanguine or concerned investors are that a real antitrust action will
result in a material impact to that business.
Just today, D.A. Davidson I think, put out or initiated
coverage actually on Alphabet, the parent of Google with a neutral
recommendation. And a big part of that was we feel that
antitrust is a headwind to the core search business.
And so you've always got to take it into account.
And I think you guys have had great conversations with generally of
Bloomberg Intelligence that in each jurisdiction what we're increasingly
seeing is not just the action of a fine. So in this case, in Google today, they
had to pay a fine, which then is small amounts of money in the grand scheme of
things. But it's whether or not a regulator
requires them to make a fundamental change to that business practice.
And therefore whether it will change the fate of whatever that business is.
That's why it seems to me, Ed, if we read between the lines, the case about
Google, which has a smaller fine than the, you know, how much Apple has to
pay, is a bigger deal because yeah, okay, it
means Apple's got to pay more taxes. But for for Google, this could be like a
fundamental threat to the way it does business, at least with this product.
Right. Well, I'd make one distinction, which is
that that mechanically Apple is paying back taxes
or it's paying taxes that it didn't pay in the first place, whereas this is an
actual fine. And one interesting distinction, I
guess, under EU law is that when an action is brought by the commission and
a fine is issued and then paid, often it goes into a pot of money that's then
redistributed across the European Union member states based on complex formulas.
So, you know, they're both slap slaps on the wrist.
But, you know, again, the biggest question that the street and markets are
going to have for Google is, is EU a regulator on behalf of 440 million
people. So an important market for Google going
to require them to change the practices that they currently use.
And I don't know that we quite have the answer on many facets of of Google's
business, which you guys will know will also now include AI because regulators
are looking closely at the investments made by a number of tech companies in
other companies.