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As EU launches probe into Apple's taxes, Intel slapped with record $1.4B anti-competition fine

post #1 of 36
Thread Starter 
Apple partner Intel attempted to appeal a $1.44 billion fine from the European Union for unfair business practices, but the chipmaker lost that bid on Thursday when a court determined that the record fine would stand.

European Commission HQ


The European Commission, which is the legislative arm of the EU, originally handed down its decision against Intel in 2009. Intel hoped it could reverse the ruling and perhaps lessen its fine, but according to Reuters Europe's second highest court found that the regulators were within their rights to hit the company with a 1.06-billion-euro loss.

The original 2009 decision found that Intel used anticompetitive practices against rival AMD. In order to keep its dominant position in the PC market, Intel gave rebates to Windows partners including Dell and HP, and the chipmaker also paid at least one retail chain to stock only computers running on Intel chips.
The European Union's $1.44 billion fine is in response to what it found to be anticompetitive practices by Intel.
In addition to running in most Windows PCs, Intel also makes all of the processors found in Apple's current Mac lineup.

The commission arrived at the amount for its fine by making it equal to 4.15 percent of Intel's 2008 turnover. The company had faced a possible maximum of 10 percent.

The decision to uphold Intel's fine from the organization comes as the European Commission has announced that it has set its sights on Apple, formally declaring an investigation into the company's use of Ireland as a tax shelter. The EU has questioned whether Apple is paying its fair share of taxes in Europe, and plans to examine individual rulings issued by Irish tax authorities regarding taxation of Apple's Ireland-based companies: Apple Sales International and Apple Operations Europe.

Ireland is known for having tax laws that are beneficial to multinational corporations, allowing them to see effective tax rates of less than 2 percent by moving their profits to affiliate corporations in the country. Other tech companies known for utilizing Ireland's laws are Microsoft, Facebook, and Amazon.

After the investigation into Apple was announced, the company responded this week and denied dodging EU tax laws or receiving special treatment from Irish authorities. The iPhone maker said it "pays every euro of every tax" that it owes.
post #2 of 36
Wow. That's going to sting a bit. Add that to whatever large fraction of this amount already spent litigating. I think it's great there are laws for capitalists. They don't have to like the laws but they can't feign ignorance of them.

Intel's culture isn't going to change. They've defined "marketing" on their own. What they call sales strategies or incentives others call manipulation and coersion (threats).
post #3 of 36
That is a excessive fine. Intel should increase the prices of their chips in the EU to cover it.
post #4 of 36
Yep. The EU is incapable of making a climate favorable to tech companies so they will "fine" companies based in countries that create a good environment to succeed.

That said, paying the retailer to stock only Intel based computers was just wrong.
post #5 of 36
The number 1.44 seems familiar!
post #6 of 36
Quote:
Originally Posted by Steven N. View Post

Yep. The EU is incapable of making a climate favorable to tech companies so they will "fine" companies based in countries that create a good environment to succeed.

That said, paying the retailer to stock only Intel based computers was just wrong.
so are you saying even though Intel was doing something wrong it is wrong for the EU to fine them for doing wrong?
post #7 of 36
I love the amalgam between a company who was outside of the law being fined and the association of apple being investigated, especially as the fine is from 2009 and apple is working inside the law.
post #8 of 36

Good. Fark intel.

post #9 of 36
This isn't even remotely an Apple story. It's an Intel story...end of story.

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post #10 of 36
Quote:
Originally Posted by Steven N. View Post

Yep. The EU is incapable of making a climate favorable to tech companies so they will "fine" companies based in countries that create a good environment to succeed.

That said, paying the retailer to stock only Intel based computers was just wrong.

 

Take the US approach. Let companies do whatever they want whereby big companies trample all over small companies to the detriment of innovation and the consumer. The EU at least attempts to appear to favor consumers and competition.

 

Intel clearly was in the wrong. At the time, AMD offered a superior chip performance wise. Intel had bet on the wrong technology and had to compete not on the quality of its chips, but by paying its partners off not to use the better technology while it corrected its mistake. Companies like Dell cheated on their earning by making it seem like the pay off from chips was related to the sales of computers (and also had to pay a fine). 

 

Intel essentially tied discounts for partners to only making computers with its chips. That might be fine if Intel didn't hold a monopoly position, but it did. The reality is Intel could have paid up to 10 percent of its global sales for 2008 as a fine. The fine was less than 5 percent. The EU was light. 

post #11 of 36
Quote:
Originally Posted by ascii View Post

That is a excessive fine. Intel should increase the prices of their chips in the EU to cover it.

 

Yes, that will go over well. Not. 

 

I wonder how much Intel cost consumers by enticing hardware partners through its monopoly position to use its own inferior chips. I am sure the payoffs was recouped somewhere down the line, and the company with the better technology wasn't able to compete on the merits. I am sure Intel made more than 1.44 billion because of its actions. 

post #12 of 36
Quote:
Originally Posted by SpamSandwich View Post

This isn't even remotely an Apple story. It's an Intel story...end of story.

Of course it is.   Such a ruling can effect all tech companies, not just Intel.   And since the story also states that the EU is investigating whether Apple is properly paying taxes in Europe, it's relevant.   Furthermore, since Apple uses Intel processors as a core component (and probably one of the most expensive components aside from the display), it's an Apple story.   And, if as a result of a fine, Intel feels the need to raise wholesale prices of their processors, that will affect Apple and Apple's consumers, if Apple has to raise prices in turn.

 

So it's an Apple story on many counts.  

post #13 of 36

It's all just a cost of doing business. By which I mean, corporations can write off their fines as business expenses, and use them to get a tax break for next year.

 

At least they can in USA and Canada, I assume they do in EU as well. It really softens the blow of the fine when it's tax deductable and you can just write it off. 

 

IMHO corporations shouldn't be allowed to write off fines. Better still, the fines should be levied directly against the shareholders. You own some shares in Intel? Then you own a share of the liability too, so here's your bill. At least that way people might be inclined to ensure the companies they own / support are responsible corporate citizens.

post #14 of 36
Intel should pay the fine. Paying companies not to use competitors chips is not good for consumers, especially when Intel is in a near monopoly position. Apple had some interest in AMD chips at times but would end up paying more overall for chips if it introduced any AMD based products. That is anti-competitive.
post #15 of 36
Quote:
Originally Posted by zoetmb View Post

Of course it is.   Such a ruling can effect all tech companies, not just Intel.   And since the story also states that the EU is investigating whether Apple is properly paying taxes in Europe, it's relevant.   Furthermore, since Apple uses Intel processors as a core component (and probably one of the most expensive components aside from the display), it's an Apple story.   And, if as a result of a fine, Intel feels the need to raise wholesale prices of their processors, that will affect Apple and Apple's consumers, if Apple has to raise prices in turn.

So it's an Apple story on many counts.  

The Apple and Intel issues are unrelated. It's click bait.

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post #16 of 36
Didn't realize AMD was still a threat. Perhaps they'll be distracted by AMD and miss the ARM coming after them.

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"Apple should pull the plug on the iPhone."

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post #17 of 36
Quote:
Originally Posted by SpamSandwich View Post

The Apple and Intel issues are unrelated. It's click bait.

It's padding.

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"Apple should pull the plug on the iPhone."

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post #18 of 36
Quote:
Originally Posted by Atashi View Post
 

It's all just a cost of doing business. By which I mean, corporations can write off their fines as business expenses, and use them to get a tax break for next year.

 

At least they can in USA and Canada, I assume they do in EU as well. It really softens the blow of the fine when it's tax deductable and you can just write it off. 

 

IMHO corporations shouldn't be allowed to write off fines. Better still, the fines should be levied directly against the shareholders. You own some shares in Intel? Then you own a share of the liability too, so here's your bill. At least that way people might be inclined to ensure the companies they own / support are responsible corporate citizens.

You don't know what you are talking about. Corporations are not allowed to write off penalties and fines as a cost of doing business. You also can't seem to reason that shareholders already own a share of the liability, as it reduces owners equity. Billing them directly would be a waste of resources by the government involved, as they would have to send out hundreds of thousands, if not millions, of fines rather than one. Furthermore how do you propose to bill someone who owns a single share and owns an 4 billionth of a share of a fraction of the company? Your fine of $0.001 is due, but we do not have a denomination that small. Lastly, how would you propose to deal with mutual funds where individuals hold fractional shares?

 

-PopinFRESH

post #19 of 36
Originally Posted by Steven N. View Post
Yep. The EU is incapable of making a climate favorable to tech companies so they will "fine" companies based in countries that create a good environment to succeed.

 

Ah, so that’s what they mean by climate change…

 

Originally Posted by TBell View Post

its own inferior chips.

 

HA! Intel. Making inferior chips. That’s great!

Originally posted by Marvin

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Originally posted by Marvin

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post #20 of 36

The EU seems to be funding themselves lately through big fines for big tech companies.

post #21 of 36
Quote:
Originally Posted by jbcaro View Post

The EU seems to be funding themselves lately through big fines for big tech companies.

No they are just taking money for those "big tech companies" for breaking EU law. As the budget for 2014 is over 13 billion dollars it would take quite a few more fines to fund it.
post #22 of 36
Quote:
Originally Posted by singularity View Post


No they are just taking money for those "big tech companies" for breaking EU law. As the budget for 2014 is over 13 billion dollars it would take quite a few more fines to fund it.

About 1/13th of their annual budget, so not that many more fines. Seems like they are funding themselves to me.

 

Anyway, if these tech companies were hurting the consumers, how much of these fines are going back to the consumers that were 'harmed'. Not much if any I think.

post #23 of 36
Quote:
Originally Posted by jbcaro View Post

Quote:
Originally Posted by singularity View Post


No they are just taking money for those "big tech companies" for breaking EU law. As the budget for 2014 is over 13 billion dollars it would take quite a few more fines to fund it.

About 1/13th of their annual budget, so not that many more fines. Seems like they are funding themselves to me.

 

Anyway, if these tech companies were hurting the consumers, how much of these fines are going back to the consumers that were 'harmed'. Not much if any I think.

oops sorry it's 193 billion dollars. My mistake bad typing.
As for where the money goes for these fines it's the same worldwide ... never to the people they harmed.
post #24 of 36
How could you possibly measure the harm Intel caused to individual consumers? It just isn't in any way practical. Weird criticism.

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post #25 of 36
It's not an excessive fine. It's in proportion to what they supposedly owe. Apple needs to pay their full taxes, too. Besides, big companies already get big tax breaks, the normal working people don't. All for the cash.
post #26 of 36
Originally Posted by bigmike View Post
Apple needs to pay their full taxes, too.

 

Yeah, see, they do. 

Originally posted by Marvin

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Originally posted by Marvin

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post #27 of 36

Another way for the EU to solve their financial issues. 

post #28 of 36
Quote:
Originally Posted by Tallest Skil View Post

Yeah, see, they do. 
Depending on your definition of "full taxes", of course.

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post #29 of 36
Good. All these corporations need to be reeled in a lot. They should be contributing to societies, not consuming them.
post #30 of 36
Hmm... I read and re-read the prosecution and still cannot see the notable point to raise anti-competitive claims. i mean isn't intel's strategy mentioned here used by every company trying to push more products? Isn't straightforward strategy to offer more discount for buying more pieces? Also paying for stockpiling computers is illegal or Intel should have paid to stockpile also AMD? I get the essence of intel trying to dominate the market with discounts and fancy "eases for payment" and not competing only on superior tech but is this really illegal? Isn't it happen as well everywhere even in the local supermarket's shelves? Then what? "contra revenue" and every discount based on units sold should be illegal in the same sense...

Also if all this is legal/illegal in EU shouldn't it be also in US and vice versa? Why this was raised only in EU? BS law EU stuff wanting to grab some money ...
post #31 of 36
Quote:
Originally Posted by AppleInsider View Post

but according to Reuters Europe's second highest court found that the regulators were within their rights to hit the company with a 1.06-billion-euro loss.

A fine is not a "'loss".

It is a fine.

post #32 of 36
Quote:
Originally Posted by Crowley View Post


Depending on your definition of "full taxes", of course.

 

Well, my definition of full taxes is the full amount of tax they are legally required to pay. If they pay a cent more then they should fire their finance director.

post #33 of 36

A cent?  Really?  I think you might have trouble retaining CFOs with that kind of KPI.

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post #34 of 36

This is a good fine. The sooner Apple lessen their dependency on Intel, the better.

Post from mstone to Benjamin Frost - "Perhaps that explains your lack of mental capacity. If I was your brother, I probably would have repeatedly smashed the side of your head with a cricket bat."
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post #35 of 36
Originally Posted by Crowley View Post
Depending on your definition of "full taxes", of course.

 

Not really. It means the same thing everywhere, regardless of the scale.

 

Originally Posted by Crowley View Post
A cent?  Really?  I think you might have trouble retaining CFOs with that kind of KPI.

 

There’s a good quote for this:

 
One of the most ridiculous defenses of [financial looseness] is that it is a very small part of our [corporate] income. If the average [business] set fire to a five-dollar bill, it would be an even smaller percentage of [its] annual income. But everyone would consider [them] foolish for doing it.

Originally posted by Marvin

Even if [the 5.5” iPhone exists], it doesn’t deserve to.
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Originally posted by Marvin

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post #36 of 36
Quote:
Originally Posted by Suddenly Newton View Post

Didn't realize AMD was still a threat. Perhaps they'll be distracted by AMD and miss the ARM coming after them.

AMD is an ARM licensee.

Given the long term damage done to AMD by these actions I wonder how much of the fine will go to them...actually I don't. It will all go into EU gravy boat
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