You know you’ve had a bad week when two adverse rulings come home to roost – with billion-dollar consequences. So, it’s hard not to feel a little of Google’s pain as it faces down a pair of expensive and potentially damaging international judgements.
A record fine for anti-competitive practices
First up, the European Union’s record $2.7-billion fine for anti-competitive behaviour. This relates to the company’s practice of handling its own shopping search engine – Google Shopping – in a different way from those of its competitors by defaulting it to the top of searches while bumping others down the list. Regulators say that by illegally promoting its own price comparison service in this way, Google has ‘abused its market dominance as a search engine’ and demoted the services of competitors like Kelkoo.
Tech giant Apple has been hit with Europe’s biggest-ever tax penalty after Brussels ruled that the company had received what amounted to illegal state aid from Ireland. The company will be required to pay billions of euro in back taxes as the European Commission seeks to redress the aggressive tax avoidance strategies employed by the world’s biggest corporations.
The judgment follows a three-year investigation into claims that Dublin violated EU law by granting Apple an advantage not available to other companies. It’s likely that the decision will be the subject of appeals by both Apple and Ireland – both of which deny any wrongdoing.
Fun and games
In June this year, the British public voted in a referendum to leave the European Union. The fallout from what, for many, was a shock result, was nothing short of dramatic and the aftermath left a kingdom that seemed very far from united.
Fast forward to the end of August and while the world has been distracted by the games of the 31st Olympiad, heated discussions between Brexiteers and Remainers have subsided into barbed comments traded across social media and a kind of normality has been restored. Business as usual, then. Well, maybe. But while Usain Bolt is packing his running shoes away, it seems like Brexit hasn’t even left the starting blocks.
The race is on to be the new London
Following June’s momentous referendum result, the UK is on track to leave the European Union, sparking speculation that its capital city will see an exodus of banks looking to secure their trading position within Europe.
Large US banks, including Morgan Stanley and Goldman Sachs, employ many thousands of staff in the UK, using the country as a staging point to access member states in the bloc via a trading ‘passport’. However, now that Britain’s relationship with the rest of Europe is uncertain, a number of banks are looking to review their arrangements and preparing to shift operations – in part at least – to the continent.
Where do we go from here?
It seems certain that the UK is set on a course to leave the European Union, following a public referendum in June. Speculation is now focused on the terms of Britain’s Brexit and how its government will frame and maintain a continued relationship with its biggest trading partner as the country moves into a new phase of history.
There are only a limited number of options available. Possibly the most likely route would – ironically – be the one that bears the closest resemblance to the UK’s existing EU membership model: the ‘Norway’ option. An approach also shared by Liechtenstein and Iceland, it would involve Britain becoming part of the European Economic Area (EEA) and would confer access to the European single market.
IMF expresses fears over Eurozone growth
Uncertainty about the future of the European Union is affecting economic stability across the single currency bloc. The growth outlook for the Eurozone has been downgraded by the International Monetary Fund (IMF) in the wake of the UK’s Brexit vote, with its managing director, Christine Lagarde, warning of an economic slowdown as confidence dips and markets suffer increased volatility.
GDP in the eurozone is only expected to grow by 1.6% this year, with a further drop to 1.4% in 2017, which represents a contraction from 2015’s 1.7% expansion. The IMF said this was ‘mainly due to the negative impact of the UK referendum’ and was in line with the organisation’s pre-Brexit predictions.