France Threatens Apple, Google Over 'Abusive' Business Practice

The French government is taking tech giants Google and Apple to court over "abusive business practices" against smaller rivals, threatening fines that could further strain transatlantic ties as fears of a trade war grow.

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"I believe in an economy based on justice and I will take Google and Apple before the Paris Commercial Court for abusive business practices" against French start-ups, Finance Minister Bruno Le Maire told RTL radio on Wednesday.

He said the two U.S. firms imposed financial conditions on app developers in France while siphoning data on their use, and that both Apple and Google "can unilaterally modify contracts."

The action is based on an inquiry by the French anti-fraud office from 2015 to 2017 which uncovered "a significant imbalance" in the tech firms' relations with French companies, a finance ministry source told AFP.

App developers, for example, were unable to negotiate the fees for having their products listed in Apple's App Store or Google Play.

"I consider that Google and Apple, as powerful as they are, shouldn't treat our start-ups and our developers the way they do today," said Le Maire, calling the situation "unacceptable."

The fraud office urged in its report fines of US$2.5 million for each company, the ministry source said, though Le Maire said only that they would be "in the millions of euros."

Apple declined to comment immediately on Le Maire's claims, but Google said its business practices "conformed to French law." "We are ready to explain our position before the courts," Google said.

French Digital Minister Mounir Mahjoubi has often criticized the "golden prisons" for internet users, whose access to content is controlled by U.S. technology giants.

The government's latest moves dovetail with a lawsuit filed against Apple by a French business software start-up, Nexedi, 18 months ago – a case that will also be heard at the Paris Commercial Court from May 31.

The developer says Apple had required it to install certain software elements in its own apps in order to secure access to the App Store.

"We are very happy and reassured that Bruno Le Maire has reacted," Nexedi's CEO Jean-Paul Smets told AFP. "We're expecting a lot from this suit, and we're not the only ones."

Apple is also under investigation by Paris prosecutors over suspected "planned obsolescence" in some iPhone models, after the company admitted to slowing down older models to preserve battery life.

Google, for its part, was handed a record fine of 2.4 billion euros by the European Union last June for illegally favoring its shopping service in search results, a penalty it has appealed.

France was already pursuing Apple, Google and other U.S. technology giants over the legal strategies that let them route their income from across the EU through low-tax nations.

That leads companies to declare their earnings in countries such as Ireland, the Netherlands and Luxembourg, depriving other member states of revenues even though they may account for a bigger share of the earnings.

European officials are preparing to announce next week an "electroshock" plan for taxing digital economy revenues, which would make companies pay a greater share of their taxes in the same countries where they earn their profits.