Apple business thanks monopoly huge profits in the of apps for iOS, according to research to the US Congress technology: Apple has a monopoly on app distribution for iOS.
This is what the Judicial Commission of the US House of Representatives has concluded after a 16-month investigation that went on to hold an interrogation of the CEOs of major technologies at the end of last August. The commission's 450-page report assumes that Apple should not give preference to its own services in the iOS ecosystem over those of its competitors.
Of course, there are also conclusions about Google, Amazon or Facebook.
Media outlets like CNBC have already echoed this document, which was published on Tuesday afternoon in the United States. On paper and as far as Apple is concerned, the Judicial Commission of the US Congress —with a majority of Democrats— argues that Apple earns a huge income thanks to its position of "monopoly" in the distribution of software on iPhone.
The report states that technology companies like Apple cannot continue to enter "adjacent lines" of their businesses, and of course, that they cannot give preference to their services over those of competitors in their own ecosystems. Tech leader Tim Cook lives his particular summer horribilis, after Epic Games, developer and distributor of the popular online game Fortnite, began a legal battle against the 30% commission that Apple receives from all payments that are made in applications within the iPhone.
Although Apple has recently announced that it will temporarily withdraw that commission from 30% of apps in sectors hit by the COVID-19 crisis, tech has also seen how Epic has joined several rivals from the firm, such as Spotify or Tinder. The European music streaming service has been denouncing for months what it believes are monopolistic practices on the part of Apple, considering that Apple Music is receiving more attention in the iOS App Store than its product.
In fact, at Apple's last September event, the company introduced Apple One, a subscription that unifies several of its services —Apple Music, Apple TV+, Apple Arcade, Apple News+ and Apple Fitness+—. A unified subscription to these services is more cost-effective for consumers than a stand-alone subscription to one or more similar products, such as Spotify or Netflix.
Apple business thanks monopoly huge profits
The conclusions of the Judicial Committee of the House of Representatives are nothing more than recommendations. However, if they end up becoming law, Apple might be forced to change the way it does business and how it distributes its own applications in its own environment.
Apple's response has not been long in coming. In a statement echoed by CNBC, the iPhone maker assumes that "always" have considered this investigation as " reasonable and appropriate." However, they "vehemently reject the conclusions" that lawmakers have reached.
"Our company does not have a dominant share in any market or in any segment in which we have business," they argue.
Some of the specific points on which the House report stops raise that high prices for Apple products serve to keep its customers loyal to the brand and close its own ecosystem. Also in the practices with which Apple excludes its competitors in its own services, thanks to which it gets oversized benefits from the App Store.
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The Google rate passes its last exam before it takes effect: everything you need to know
The tax on certain Digital Services passes its last examination in the Senate on Wednesday. If approved, the new tax will only be published in the official State Gazette. The bill proposed that the rule enter into force 3 months after its publication in the BOE, so it is expected that the famous Google tax will end up applying in Spain from January 2021.
This, on paper. But it is not entirely clear what will happen in the coming months, in the context of the pandemic and knowing the immediate references. Emmanuel Macron's France has its tax on technology —known as taxa GAFA by its acronym Google, Amazon, Facebook and Apple— approved, but it is not being applied at the expense of resolving the debate about this new tax globally.
The Spanish Google tax was approved in the Congress of Deputies at the end of July, with a transactional agreement with the PNV so that the new tax law on certain digital services complies with the economic concert of the Basque Country.
Other amendments that were then incorporated into the bill's submission qualified the term" data transmission " in the Explanatory Statement of the standard, so that a concept of telecos would not be affected, or eliminated the need for technology that would be taxed by the new fee to be recorded in a newly created census, according to the newspaper Cinco Días at the time.
On the agenda of the plenary of the Senate that meets this Wednesday is the vote on the opinion of the committee that has been responsible for processing the Google tax bill. The president of the Government himself, asked questions from Business Insider Spain at the end of May, recalled that large technology corporations were not paying taxes in Spain, and that it is urgent that this be so.
"We believe that it is urgent and necessary when we talk about tax justice that these large corporations provide resources to the public treasury. If it can be done globally, great (...) if it can be a European solution, of course, the Government of Spain delighted that it is so, because stronger will be, indeed, that message we launch", he said.
The Cabinet approved the preliminary draft of the Google tax in February of this year. Paradoxically, it wasn't the first time I'd done it. Although it was initially presented in October 2018 and was first approved in January 2019, the early call for elections for April 28, 2019 caused its processing in the courts to expire.
In its second approval, the Minister of Finance and spokesman for the Executive, Maria Jesús Montero, warned that with this new tax the government expected a collection of almost 1,000 million euros. When it was first introduced in 2019, the government was much more ambitious: it expected to raise up to $ 1.2 billion. Expectations were lowered in the face of what was diagnosed in February as a "slowdown in the economy." Now that the contraction of the economy is a fact because of the COVID-19 pandemic, it is unknown how much the government expects to raise.
Between its approval in the Lower House and its consideration today in the Senate, several actors have spoken out on this new tax. One of the employers of the Spanish digital economy asked last June that the Google tax be regulated at least at European level, after the Trump administration planted the rest of the world economies in the OECD Forum.
This plante posed an explicit threat on the part of the US Secretary of the Treasury, Steve Mnuchin, who had a joint diplomatic response from the most noted countries: Italy, France, the United Kingdom and Spain itself. Montero warned days later that no European country would accept threats.
The idea of a global Google tax is longed for by all countries —except the United States. Sanchez himself, at a press conference, warned at the end of May the following: "what we said is 'let'S wait for the OECD to decide', which was initially to be at the end of this year when this tax was proposed to corporations that, I insist, are not paying taxes, do not pay them as the self-employed, do not pay them as small and medium-sized enterprises, and therefore introduce a very significant distortion in the market".
Mariangela Marseglia, Amazon country manager for Spain and Italy, also had considerations about the new Spanish Google tax in an interview with Business Insider Spain: "we are absolutely in favor of a shared solution led by the OECD". "If a government does something alone, in isolation, it will create an uneven playing field."
Also Uber or the former President of Cabify for Europe have shown their disagreement with this new tax on these pages. The first to understand that the fee should be focused on multinationals, not digital companies. The latter, because he believes that the tax could prove "counterproductive". Some companies have already begun to raise their rates to customers in the event of new taxes.
Beyond the plante in the OECD, it seems that European countries are in line with the need to end the tax avoidance of technology. In January, August and September, the Union and the European Commission waved the flag of a technology levy by 2021 in the event of no global agreement.
However, despite the fact that its processing is unblocked in the Spanish Senate today, it seems obvious that several things will still have to happen to see a Google tax effectively applied in Spain. France also has its GAFA rate go into effect effectively, under pressure from the Trump administration, which forced President Macron to sign a sort of truce with his American counterpart.
In Spain, the new tax on certain digital services or Google tax will tax with 3% of your income these 2 very specific activities:
- The provision of online advertising services.
- Online brokerage services.