I’m a bit of a Mac fanboy and a follower of Apple blogs and podcasts. I also happen to work for the European Union. The Apple blogosphere is abuzz with the news that Apple has been fined €13 billion by the European Commission for breaking EU state aid rules. There has been a lot of comment from people who know the tech industry intimately, certainly better than I know it. What I bring to the party is my knowledge of the EU, what it’s there for, its politics, and how it works.
I don’t work in the European Commission’s state aid department, and if I did I wouldn’t be allowed to write this blog. I’m writing this in a personal capacity as a private individual with a bit of specialised knowledge and the usual caveats apply. I offer no opinion on the legal merits of the Commission’s case, or Tim Cook’s rebuttal, I just want to talk about the politics of it, prompted by John Gruber’s comment on Daring Fireball.
EU state aid rules are there for a reason. They are there to create a level playing field for investors across the world’s largest economic bloc. The aim is to create a stable and nurturing environment in which companies can make long-term investment decisions while citizens can enjoy a certain quality of life. EU state aid rules are there to stop national and regional governments engaging in a race to the bottom, sacrificing tax revenue and services in order to attract business which might otherwise have invested elsewhere in the EU.
You might not like these state aid rules, you might not even agree with the principle, but the rules are there because EU Member States chose to adopt them and if they choose to change them, or abandon them, they can. What they can’t do is sign up to them and then flout them. The European Commission’s job is to enforce the rules, and if the European Commission spots (or thinks it spots) an infringement and then neglects to act it is failing at its job.
Ireland has famously attracted giant tech investors and with good reason. It has a talented work force, excellent infrastructure, and an investment-friendly political culture. Since Ireland joined the European Union in 1973, European taxpayers have poured around 20 billion US dollars into its building its infrastructure and training its workforce – influencing Apple’s decision to invest in Ireland.
As an EU member, Ireland has been one of the big beneficiaries of its generous regional policy. It has also signed up to a whole host of other rules – and been involved in setting those rules, through the EU’s twin-chambered legislature (Council and Parliament). The EU’s member states can’t cherry-pick, something which the UK’s Brexit advocates are finding out. You want to be in the club, you pay the membership fee and you obey the club rules.
Corporations pay tax not least because corporations benefit from taxpayer-funded state provision – universities churning out graduates, roads and railways to get those graduates to work, street lighting, waste collection, etc etc. Apple makes a staggering amount of money because it makes fantastic products. The European Union’s taxpayers have helped it to do that. (Just one example: Jony Ive was educated through the British state system.)
Corporate taxation is a hugely sensitive issue, especially since the Crash in 2008. Apple knows this. Whether or not it is judged to have obeyed the letter of the law in how it pays taxes in Europe, European citizens are looking at Apple and asking themselves whether it has respected the spirit of the law. Apple needs to stop playing the victim and start acting the good corporate citizen that it aspires to be.