AAPL Apple Inc

By Natalia Drozdiak 

BRUSSELS -- Apple Inc. is battling the European Commission's call to fork over EUR13 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 EUR900,000 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 EUR4.25 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 15:17 ET (19:17 GMT)

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