Apple Hit With €500M Fine as EU Enforces Digital Markets Act

[AppliedMicro]

One is a Government .. the other is "Apple"

Is there a difference?
And if so, what?

Apple very much behaves like a quasi-government with regard to their App Store.
Making the rules ("laws") that everyone is supposed to obey.
Making judgements whether someone violates them or not (and enforcing them).
Also, having a uniform, non-negotiable fee structure ("taxes").

 

[turbineseaplane]

Is there a difference?
And if so, what?

Apple very much behaves like a quasi-government with regard to their App Store.
Making the rules ("laws") that everyone is supposed to obey.
Making judgements whether someone violates them or not (and enforcing them).
Also, having a uniform, non-negotiable fee structure ("taxes").

I deleted my post as you were typing..

But I agree with this below, as well as your characterization of how Apple behaves with their App Store

Funny how people seem to not understand the difference between laws and corporate policies.

 

[danny842003]

Funny how that keeps coming up but people defend Epic for not complying to the App Store market.

firstly I haven’t. Secondly the App Store isn’t a government so it’s not the same thing.
If two companies aren’t doing the right thing they can fix it themselves in court.

 

[surferfb]

Is there a difference?
And if so, what?

Apple very much behaves like a quasi-government with regard to their App Store.
Making the rules ("laws") that everyone is supposed to obey.
Making judgements whether someone violates them or not (and enforcing them).
Also, having a uniform, non-negotiable fee structure ("taxes").

I'd argue no one is forced to deal with Apple, you're forced to deal with the government.

 

[AppliedMicro]

I'd argue no one is forced to deal with Apple, you're forced to deal with the government.

App developers, game publishers and streaming service providers would argue otherwise, I suppose

(I mean... they're obviously not legally forced to deal with them. It's just market forces. Which is probably where we'd draw different conclusions from)

 

[Mrkevinfinnerty]

Yeah, the Apple invocation of "privacy and security" is getting a bit tiresome.

They've turned those largely into buzzwords.

It's become the Apple Corporate version of throwing around signaling terms like "woke", "DEI", "Benghazi", "the laptop", etc..

You can almost write the statements before they've been issued.

Genuinely surprised they haven't found a reason that tariffs are a 'threat to 'the privacy and security of our users'

 

[surferfb]

App developers, game publishers and streaming service providers would argue otherwise, I suppose

(I mean... they're obviously not legally forced to deal with them. It's just market forces. Which is probably where we'd draw different conclusions from)

As I'm often told, if a developer Apple doesn't like the rules, it can always leave the App Store EU

 

[BaldiMac]

Let me explain this again:

1. The profits in question went untaxed for YEARS (2003-2014) due to Apple's structure. That's the period the EC ruling covered.

Correct. However, the delayed revenue and taxes were listed on Apple's US tax forms.

2. The 2018 US tax payment happened AFTER the 2016 EC ruling, and was only forced by the 2017 Tax Act.

Forced?

3. Without the Tax Act, these profits could have remained offshore and untaxed indefinitely - which was Apple's clear intention until legislation changed.

4. The entire structure was designed for tax deferral with no concrete repatriation plans - Tim Cook testified to Congress that Apple had no intention to bring the money back under previous tax rates.

5. The EC case specifically addressed preferential treatment that Ireland gave to Apple (and not other companies) - that's what made it illegal state aid under EU law.

Correct! Though as you agreed, booking profits in a stateless corporation was legal at the time.

The fact that Apple eventually paid some US tax years later doesn't negate that the structure allowed billions to go untaxed during the period covered by the EC investigation.

Again, as you agreed, this was legal except for the fact that Apple received permission to restructure from two Irish subsidiaries into two branches of one subsidiary. (Yes, this is an oversimplification.)

This isn't about "taking money from American taxpayers" - it's about enforcing consistent tax treatment for all companies operating in the EU.

And yet, money intended to be booked and taxed in the US was retroactively booked and taxed in the EU.

 

[BaldiMac]

I'm a little blown away folks are defending Apple's tax shenanigans.

All of the debating would accomplish more and feel a bit more in good faith if some points were acknowledged.

Always true of both sides of anything.

I'm simply stating what happened instead of allowing misinformation to go unchallenged. Ireland was certainly wrong in it's tax ruling around Apple's restructuring as decided by the courts.

I do disagree that the entire $14 billion tax bill should go to the EU (Ireland) considering Apple would have made different decisions if Ireland hadn't approved their restructuring.

 

[MLVC]

Correct. However, the delayed revenue and taxes were listed on Apple's US tax forms.


Forced?


Correct! Though as you agreed, booking profits in a stateless corporation was legal at the time.


Again, as you agreed, this was legal except for the fact that Apple received permission to restructure from two Irish subsidiaries into two branches of one subsidiary. (Yes, this is an oversimplification.)


And yet, money intended to be booked and taxed in the US was retroactively booked and taxed in the EU.

1. "Delayed revenue and taxes were listed on Apple's US tax forms" - Listing deferred income on a tax form doesn't mean it was taxed. Apple specifically used check-the-box regulations to classify entities in a way that avoided current US taxation under Subpart F.

2. Yes, "forced" is exactly the right word. Apple explicitly stated they had no intention to repatriate under previous tax rates. The only reason they paid in 2018 was because the Tax Act made the payment mandatory, not optional.

3. "Booking profits in a stateless corporation was legal" - This misrepresents the EC finding. The illegality wasn't about stateless entities in isolation but about the preferential tax treatment Ireland gave exclusively to Apple through specific rulings.

4. "Money intended to be booked and taxed in the US" - This directly contradicts your own previous statements about deferring taxation indefinitely. You can't claim they were "intending" to pay US tax while simultaneously acknowledging they had no plans to repatriate.

5. The crux remains: Apple received preferential treatment from Ireland that allowed them to pay effectively zero tax anywhere on billions in profits generated in Europe for over a decade.

The EC ruling wasn't about taking money from American taxpayers - it was about enforcing consistent application of state aid rules that apply to all companies, European or American.

 

[jakey rolling]

Correct. However, the delayed revenue and taxes were listed on Apple's US tax forms.

Which is completely irrelevant to this story. How Apple chooses to "list" their revenue in the US and how the IRS chooses to tax that revenue has no bearing whatsoever on how any other country anywhere calculates and taxes a company's revenue. None. There is no correlation here whatsoever.

Correct! Though as you agreed, booking profits in a stateless corporation was legal at the time.

The court that has relevant jurisdiction in this matter has ruled otherwise.

Again, as you agreed, this was legal except for the fact that Apple received permission to restructure from two Irish subsidiaries into two branches of one subsidiary. (Yes, this is an oversimplification.)

And again, as has already been explained to you, the court that has relevant jurisdiction in this matter disagrees.

And yet, money intended to be booked and taxed in the US was retroactively booked and taxed in the EU.

A fact that is relevant to exactly nobody who matters.

 

[danny842003]

I'm simply stating what happened instead of allowing misinformation to go unchallenged. Ireland was certainly wrong in it's tax ruling around Apple's restructuring as decided by the courts.

I do disagree that the entire $14 billion tax bill should go to the EU (Ireland) considering Apple would have made different decisions if Ireland hadn't approved their restructuring.

Ignorance of the law has never been a defence. Apple has the money to get the best legal advice.
If you’re going to get cute with the taxman these outcomes are simply a cost of doing business.

 

[jakey rolling]

I do disagree that the entire $14 billion tax bill should go to the EU (Ireland) considering Apple would have made different decisions if Ireland hadn't approved their restructuring.

I mean, this whole thing basically played out like a three-card-monte dealer that picked the wrong mark and got hosed on a massive bet. Of course they would have "made different decisions."

 

[v0lume4]

Which leads to less choice and a bigger monopoly for Google. Which.. well... that circle will continue.

The EU doesn't create ANYTHING they only know how to DESTROY something that's good and what people want.

Yep. Typical government. Wait for everyone else to build the amazing stuff that even they themselves use, just to tear it back down.

 

[User 6502]

Americans won't be paying the fine, the EU citizens will.

Look what Apple did when the EU demanded that Apple should offer 3-year warranty. Apple increased the prices in the EU due to that.

If the cost of doing business in the EU becomes more expensive, someone is going to pay for it, and it won't be the American citizens. We have seen this before.

You clearly do not understand how tariffs work. Tariffs are paid by the citizens of the country imposing them. It's the orange idiot who is putting tariffs, so it is definitely going to be the us citizens who will pay for them. Look at what is already happening to inflation.

 

[leonremi]

We now go live to the MacRumors userbase for their spin on why Apple should pull out of the entire continent of Europe rather than make some simple changes.

Would love to see the people who say that be the ones who have to explain to the shareholders why Apple pulled out of a market of 745M people.

I honestly would be fine with Apple being kicked out of Europe.

Pretty sure the likes of HMD could cook up some amazing machines and run a nice user interface on top of a Linux distribution.

 

[ProbablyDylan]

I get a speeding ticket when I'm caught speeding. Why shouldn't Apple pay fines when they break European law? We should both get punished for the choices we made.

 

[surferfb]

I get a speeding ticket when I'm caught speeding. Why shouldn't Apple pay fines when they break European law? We should both get punished for the choices we made.

The law against speeding is clear and well written.

If the law against speeding was written the way the DMA is, it’d be “tell us how fast you were going and then we’ll tell you if you were speeding or not”.

 

[Xand&Roby]

The law against speeding is clear and well written.

If the law against speeding was written the way the DMA is, it’d be “tell us how fast you were going and then we’ll tell you if you were speeding or not”.

In my country there is a rather surreal concept, they call it the difference between official taxation and real taxation.

When I had a company I paid an official taxation of 42.5%, but the official taxation was 63.5%.

Meanwhile, Apple paid 0.0001% in Ireland.

I understand that it may be complicated for you and the McCarthyists, but I repeat: criminals are answered with the most heinous crimes.

Make peace with us.

And consider that the EU is also kind, because the fines would actually be double-digit percentages on turnover, not that misery you are whaining about.

 

[danny842003]

In my country there is a rather surreal concept, they call it the difference between official taxation and real taxation.

When I had a company I paid an official taxation of 42.5%, but the official taxation was 63.5%.

Meanwhile, Apple paid 0.0001% in Ireland.

I understand that it may be complicated for you and the McCarthyists, but I repeat: criminals are answered with the most heinous crimes.

Make peace with us.

And consider that the EU is also kind, because the fines would actually be double-digit percentages on turnover, not that misery you are whaining about.

The 2004-15 incident wasn’t even a fine it was a reclamation of unpaid taxes with interest. Simply paying what they owed.

 

[surferfb]

In my country there is a rather surreal concept, they call it the difference between official taxation and real taxation.

When I had a company I paid an official taxation of 42.5%, but the official taxation was 63.5%.

Meanwhile, Apple paid 0.0001% in Ireland.

I understand that it may be complicated for you and the McCarthyists, but I repeat: criminals are answered with the most heinous crimes.

Make peace with us.

And consider that the EU is also kind, because the fines would actually be double-digit percentages on turnover, not that misery you are whaining about.

I’m not sure what you’re getting at here.

My only point is telling Apple to “just follow the law” in one breath and “you can’t go by the letter of the law, but the spirit of the law” in the next, and have the regulator saying “We don’t care what the law says about number of users needed for it to apply, it applies to your platform anyway” and “we’re not sure if that attempt to comply works or not - we’ll decide later and fine you if it doesn’t comply” - in an environment like that telling Apple “just follow the law” isn’t as simple as saying “don’t speed.”

 

[jakey rolling]

The law against speeding is clear and well written.

If the law against speeding was written the way the DMA is, it’d be “tell us how fast you were going and then we’ll tell you if you were speeding or not”.

Perhaps the better analogy would be "Driving without due care and attention", then. Even if the highway you are driving on has a speed limit of 110km/h and you're driving 100km/h, you would still be violating the law if you're in the middle of a heavy snow storm and weaving in and out of traffic that is travelling at 70km/h. Pointing to the speed limit and saying "I'm not speeding, officer" isn't going to fly. The definition of "due care and attention" is just as much up for interpretation as the DMA is, and the penalties for violating that law (a version of which exists in every US State and every Canadian Province) are very steep.

There is a pretty big spread of grey area between a law that is written so specifically that it is easy to find and exploit loopholes (and we all know how much corporations love to exploit loopholes), and a law that is so vague that nobody could be reasonably expected to be able to know how to comply with it. In that grey area there is a thing called a "resonable person" test. Perhaps you should read about it and understand why it exists. Because it exists in some pretty major areas of North American common-law as well.

 

[picpicmac]

We now go live to the MacRumors userbase for their spin on why Apple should pull out of the entire continent of Europe ... the ones who have to explain to the shareholders why Apple pulled out of a market of 745M people.

The population of the EU is not 745M. You've added a whole 300M to the population.

And sure, there have been people here who react to these sort of announcements with the idea of pulling out of the EU, but frankly those are not many people who post things like that.

In reality, Apple will just pass on the fine as additional costs to its customers.

 

[jakey rolling]

In my country there is a rather surreal concept, they call it the difference between official taxation and real taxation.
When I had a company I paid an official taxation of 42.5%, but the official taxation was 63.5%.

Not sure from your description, but it sounds similar to the difference between "marginal" and "actual" tax rates that we have here in Canada (and most of the US), where, for example (totally made up numbers), if you make over $300k a year, you might be in the 35% "marginal" tax bracket, but your "real" tax rate for the entire year is 25%, because marginal tax rates only apply to the portion of income earned between the various thresholds (example below).

Of course, like a lot of things, a lot of people misunderstand how marginal tax rates work and there are a lot of confidently incorrect YouTube videos that talk about taxes, so you have a certain number of numptys every year saying things like "I don't want to get paid anymore money this year because it'll push me into the next tax bracket and I'll lose money".

Income From​	Income To​	Marginal Tax Rate​	Taxes Paid​
0​	30,000​	0%​	-​
30,000​	60,000​	15%​	4,500​
60,000​	80,000​	20%​	4,000​
80,000​	120,000​	25%​	10,000​
120,000​	250,000​	30%​	39,000​
250,000​	300,000​	35%​	17,500​
		Income Tax Total:	75,000​
	​	Actual Tax Rate:	25%​

 

[turbineseaplane]

The "Safety & Security" of the App Store always seems a bit compromised when Apple IAP is being used and thus Apple profiting from it..

App Store Curation