BRUSSELS—Apple Inc. is battling the European Commission's call
to fork over €13 billion ($14.5 billion) in back taxes without the
army of lobbyists and public relations campaigners typical in such
fights.
The iPhone maker spent less than €900,000 in 2015 to lobby the
EU institutions and doesn't employ any full-time lobbyists here;
only five people work part-time, according to public filings. By
contrast, Alphabet Inc.'s Google spent at least €4.25 million last
year and employs more than 10 people.
Other U.S. technology companies, including Alphabet, Amazon.com
Inc. and Qualcomm Inc., also are trying to convince the European
Commission, the EU's antitrust regulator, that their tax regimens
or pricing policies aren't breaching its rules.
But Apple's lack of a presence in the EU capital stands in
contrast with many of its U.S. technology peers, which have built a
European lobbying presence to try to sway investigations and
potential legislation, such as rules covering copyrights and
internet-based communications services.
For example, Apple was unsuccessful in gathering information
over the last two years from the commission about the evolving
theory the EU was resting its case on, said people familiar with
the matter.
"You may not always agree with what they [the commission] do but
this is the center for regulation for our industry," John Frank,
Microsoft's vice president for European affairs, said at a
conference here this month. Microsoft, which spent roughly as much
on lobbying the EU last year as Google did, has had tussles with
the commission that go back to the early 1990s.
Since then, the commission has pushed forward a raft of
regulations and investigations aimed at altering the behavior of
U.S.-based internet superpowers.
"The European Commission has become the new center of gravity,
the greatest threat to large companies that might have antitrust
issues," said Frank R. Baumgartner, professor at University of
North Carolina at Chapel Hill and co-author of Lobbying and Policy
Change: Who Wins, Who Loses, and Why.
The EU recently surpassed the U.S. in terms of the number of
registered organizations lobbying its institutions, according to
Transparency International. As of Sept. 7, the EU registered 9,756
organizations, compared with 9,726 in the U.S.
For companies that are the subjects of antitrust and state-aid
investigations, attempting to influence the commission's
competition directorate, known as DG COMP, is a tricky task.
People familiar with the directorate say there is limited leeway
for influencing the outcome of any competition investigation. The
regulator can't stray too far from previous case law in its
decisions to ensure the ruling is upheld in court when the
companies inevitably appeal it.
Companies can try to lobby other parts of the commission to get
these other departments to feed the firm's perspectives into the
competition directorate's work, according to Karl Isaksson,
chairman of EPACA, an association of public affairs firms.
Some chief executives, including Apple's Tim Cook and Google CEO
Sundar Pichai, have made the trek to Brussels to clarify their
positions directly with the EU's antitrust chief Margrethe
Vestager. A top Google executive recently stressed the importance
of "educating" EU lawmakers about how the company works.
Asked about Google's lobbying in Brussels, spokesman Mark Jansen
said "European politicians have many questions for Google and about
the internet [and] we're working hard to answer those
questions."
Amazon and Qualcomm declined to comment on their efforts.
Google's experience with the commission's many antitrust
investigations over the years may suggest a bigger Apple lobbying
presence in Brussels wouldn't have had a meaningful impact on the
regulator's decision.
American companies in Brussels also lack a direct national
representation within EU institutions. That disadvantage doesn't
exist for, say, French companies that can lobby through their
national government, via their own members of the European
Parliament, or to their own commissioner. Top commission officials
say they meet frequently with U.S. companies.
Apple's peers have worked to advertise the benefits Europe
derives from their activities. Google has mounted public-relations
campaigns in Europe, such as an initiative to support digital
journalism. Amazon also frequently promotes the ways in which it
helps small European businesses to sell their products across the
bloc's internal borders.
Still, "I don't know what [Apple] would have done differently,"
said a person close to the commission's competition office. "It's
not a question of behavior; it's a question of what's in the
numbers and what's on the table."
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
September 25, 2016 21:35 ET (01:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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