The French government is planning to take legal action against Apple Inc. and Google Inc. over contracts that the two tech giants imposed on a number of startups and software developers.
French Finance Minister Bruno Le Maire told RTL radio that he plans to bring the two companies before the Paris commercial court for abusive trade practices, as he had been notified that both Alphabet Inc.-owned Google and Apple unilaterally imposed contractual demands on smaller players, mainly tech startups and software developers.
The contractual terms included pricing structures, data sharing, the sale of applications and the ability to rewrite contracts, according to Bloomberg News.
"Google and Apple should not be able to treat our startups and our developers the way they currently do," Reuters reports, citing Le Maire's interview with RTL.
The move follows shortly after the French minister confirmed that the European Union plans to impose a tax on tech companies' revenues of about 2% to 6%.
France, Italy, Germany and Spain are pushing for tax reforms in the tech sector, as they want a move away from the EU's current tax framework under which tech companies, including Apple, Google, Amazon.com Inc., Facebook Inc. and Microsoft Corp. transfer profits from European countries with higher tax rates, such as France, Germany and the U.K., to offices in other countries within the EU that have lower corporation tax regimes, such as Ireland and Luxembourg.
Maire said on RTL radio that he expects the tax loopholes to be closed at the beginning of next year.
Current EU rules allow companies to base their headquarters in European countries with lower tax rates, thereby paying the local tax rate on profits rather than the tax of each European market they operate in.
At present, Apple's European head office is in Cork, Ireland, while Facebook leads its European operations from Dublin. Meanwhile Google and Amazon are headquartered in Dublin and Luxembourg, respectively.
The latest EU proposal, focused on companies' revenues rather than profits, may force tech companies like Google, Amazon and Facebook to open up their tax affairs across the EU. The exact tax rate is expected to be confirmed within a few weeks, and is likely to be closer to 2% than 6%.
In addition to the European Commission, the Organisation for Economic Co-operation and Development is trying to harmonize various governments' tax proposals to ease the harm they could cause to companies' financial positions and will present the G20 finance ministers with a report on the subject this April.
