France Targets Apple, Google for 'Abusive Commercial Practices' -- Update

By Sam Schechner 

PARIS--France wants to fine Apple Inc. and Google for allegedly taking advantage of smaller French software developers, targeting two of the U.S.'s biggest companies, as tensions heat up between the two continents after President Donald Trump said he would adopt new tariffs that could hit European firms.

The French Finance Ministry said Wednesday it has filed a complaint asking a Paris court to order Apple and Google, a unit of Alphabet Inc., to end "abusive commercial practices" following a three-year government investigation into how the Silicon Valley companies treat French start-ups that develop and sell applications for mobile phones. Some developers and publishers are unhappy that Apple and Google at times take a cut of in-app purchases and get access to more data on their users and subscribers than the developers do.

"No matter how powerful Google and Apple may be, they cannot treat our start-ups and developers the way they do today," French Finance Minister Bruno Le Maire said on French radio.

"We believe our terms comply with French laws and are looking forward to making our case in court," a Google spokeswoman said. Apple didn't immediately respond to requests for comment.

The French finance ministry says there's no connection between taking on tech firms and the U.S.'s new tariffs and taxes.

However, France has recently become more vocal about its actions against U.S. firms. A finance ministry official said Europe "needs to stand up and defend its own interests."

President Trump has said he would implement new tariffs on steel and aluminum imports, and the U.S. passed a tax overhaul that could hit European tech and pharmaceutical firms operating in the U.S. Each side has accused the other of protectionism, raising the specter of a trade war.

Mr. Le Maire plans to speak with Commerce Secretary Wilbur Ross later Wednesday about the U.S. tariff plan and push for an exemption of the EU, according to the finance ministry official.

Mr. Le Maire has been a prime agitator in other efforts to rein in the tech giants. The EU is considering levying a new tax on the revenue--instead of the profit--of tech giants. Mr. Le Maire and others argue that tech giants use legal loopholes to shift too much profit to tax havens, and that until laws can be changed to stamp out such practices, Europe must tax revenue instead.

Mr. Le Maire said Wednesday he is pushing the EU to adopt the new tax this year. But it remains unclear whether the proposal can muster the unanimous support from EU countries that it needs to become law. Ireland, Luxembourg and other low-tax EU countries where many tech firms are headquartered have expressed opposition to the measure.

The case France announced Wednesday seeks to address a "significant imbalance" in the way Google and Apple treat developers, the finance ministry said, adding the government is seeking to fine each company two million euros.

"When our developers want to sell their app on Google or Apple, the fees are imposed on them," Mr. Le Maire said. "That's unacceptable. It's not the economy we want."

Write to Sam Schechner at [e-mail]

(END) Dow Jones Newswires

March 14, 2018 10:30 ET (14:30 GMT)

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