As EU launches probe into Apple's taxes, Intel slapped with record $1.4B anti-competition fine
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.
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.
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.
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.
Comments
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).
That said, paying the retailer to stock only Intel based computers was just wrong.
Good. Fark intel.
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.
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.
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.
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.
The Apple and Intel issues are unrelated. It's click bait.
It's padding.
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
Ah, so that’s what they mean by climate change…
…its own inferior chips.
HA! Intel. Making inferior chips. That’s great!
The EU seems to be funding themselves lately through big fines for big tech companies.