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France threatens to fine Google, Apple on developers abuse

(Bloomberg) -- France is threatening to fine Alphabet Inc.’s Google and Apple Inc. for abusive commercial practices through their app stores, further complicating the relationship with the very companies the country seeks to attract.

Finance Minister Bruno Le Maire said Wednesday France will take legal action against Google and Apple and fines could be in the “million of euros”. Fines are likely to be about 2 million euros ($2.5 million) per company, accused of taking advantage of local developers. This comes after a two-year investigation by the ministry’s fraud repression unit, according to an official in Le Maire’s office.

“I learned that when developers develop their applications, and sell to Google and Apple, their prices are imposed, Google and Apple take all their data, Google and Apple can unilaterally rewrite their contracts,” Le Maire said in an interview with RTL radio. “All that is unacceptable and it’s not the economy that we want. They can’t treat our startups and developers the way they do.”

Google said its terms comply with French laws and it intends to make that case in court, according to an e-mailed statement by a representative for the company in France. The company said it has been collaborating with the French fraud office on several matters over the past few years, including its Google Play app store.

A representative for Apple didn’t respond to a request for comment.

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An Apple Inc. logo is displayed on a screen during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 5, 2017. The conference aims to inspire developers from around the world to turn their passions into the next great innovations and apps that customers use every day across iPhone, iPad, Apple Watch, Apple TV and Mac. Photographer: David Paul Morris/Bloomberg

Complicated Relationship

France has had a complicated relationship with Internet giants. On the one hand the country is courting them to set up operations in the country and on the other hand it is leading efforts at the European Union level to force them to pay more taxes in the countries where they operate, rather than in low-tax countries such as Ireland and Luxembourg where they’ve based their European subsidiaries.

The likes of Google, Amazon and Facebook meanwhile have consistently praised France for its talent pool of engineers and researchers over the past years. They’ve cited the quality of candidates as the main reason for setting up labs in and around Paris on themes from artificial intelligence to delivery drones.

In the case unveiled by Le Maire Wednesday, the anti-fraud office determined that between 2015 and 2017 there were “significant imbalances” in the relationship between Google and Apple and developers who sold via their application stores.

Amazon Too

The findings of a similar probe into Amazon.com Inc. last year are being reviewed by a tribunal, Le Maire’s office said. Le Parisien reported last December that the Finance Ministry is seeking to fine Amazon 10 million euros.

The Developers Alliance, an industry group which boasts 70,000 developers globally as members, said it welcomes the support of the French government, but would rather see it focus on other fronts like the free flow of data and more openness between markets.