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Apple legal worries mount as the long-dormant French case progresses – POLITICO

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PARIS – A French case against Apple that has been stirring up dust for years could soon add to the tech giant’s headache.

The legal one The lawsuit, which focuses on the U.S. tech giant’s contracts with French app developers and reflects ongoing litigation in California, will continue into the fall, according to case files and people familiar with the case. The next hearing, slated for mid-September, will set a new timetable for the final stages of the dispute, People said.

The French Ministry of Economic Affairs sued Apple for the first time four years ago in the Paris Commercial Court and the case has progressed quietly amid firm opposition from the company. This month, France Digitale, a start-up trade association that has become a prominent opponent of Apple, was jointly admitted as a co-plaintiff with the French state and made additional statements about how it believes the tech company’s contracts Damage developers, according to a court document inspected by POLITICO. All parties will present their final arguments before the judge makes a decision on a date set in September.

Apple did not say how it denies the case and declined to comment on France Digitale’s complaints.

The development comes at a time when politicians and regulators in Europe and the United States are trying to contain the power of the Silicon Valley giants.

If the French court sided with the Department of Commerce and France Digitale, the US tech giant could be obliged to change some of the clauses signed by app developers, while the app store is scrutinized in Europe and the US

In June, the UK competition authority said it would look to see if Apple’s operating system, app store and web browser are stifling innovation and raising prices. The German competition authority initiated an investigation against the company’s app store; and the Dutch Authority for Consumers and Markets announced that their own investigation into the App Store will be completed this year. In the United States, a blockbuster antitrust case between Apple and the game developer Epic Games was concluded in May, which involved a 30 percent commission from the technology giant.

In France alone, Apple is already facing a complaint from the digital advertising industry to the competition authority and another, also from France Digitale, to the data protection supervisory authority.

“[In France], we will either have a very clear condemnation of Apple’s violation of existing competition law or evidence that the law in force does not allow touching digital giants, ”said Nicolas Brien, President of the European Startup Network, which includes France Digitale, with reference to the Paris Commercial Court Proceedings.

France Digitale, joining the case, is another blow to Apple, which is on a lobbying tour on both sides of the Atlantic to crack down on new rules that could hamper its business.

In the US, the tech giant is calling on lawmakers to reject a series of antitrust laws aimed at limiting its power. On Wednesday, Apple targeted the Digital Markets Act – the EU law to curb the market power of tech companies – which highlighted the “dangers” of installing apps that did not come from the carefully curated App Store, a practice known as ” Sideloading “is known.”

Before the French court, Apple is backed by the App Association, a lobby that represents app developers who are reportedly sponsored by Apple and other tech companies. “Overall, the App Store ecosystem benefits greatly from the developers of mobile apps. The existence of a standard contract allows everyone, regardless of their size, equal access to a world market, ”said Mike Sax, founder of the organization, in a statement.

“Significant imbalance”

Economy Minister Bruno Le Maire originally filed the case in June 2017, a month after President Emmanuel Macron won the election. According to a second court document received from POLITICO, after a two-year investigation by the Directorate General for Competition, Consumer Affairs and Anti-Fraud (DGCCRF, in French), the lawsuit was brought to the Paris Commercial Court. The case didn’t make waves until 2018, when the so-called Techlash and the Paris campaign to tax digital giants like Apple grew in importance. Le Maire then said France was ready to take on Silicon Valley companies.

The DGCCRF did not respond to a request for comment.

To build the case, the government is relying on the country’s trade code, which was originally drafted to regulate relationships between France’s retail giants like Carrefour and their suppliers. The rules have since been used at least once against technology companies: In 2019, Amazon was fined under this rule and some clauses in its contracts with online retailers were revised.

In the court document, the Department argues that some of Apple’s contractual clauses create “a significant imbalance in the rights and obligations of the parties.” The government is asking the court to force the US tech company to remove the clauses considered problematic and pay a fine of 2 million euros.

The file dragged on for years, in part because, according to the document received from POLITICO, Apple itself questioned the Code of Commerce.

On June 18, France Digitale officially joined.

In the first court document inspected by POLITICO, the startup lobby argued that the US tech giant “dictated unfair terms” to app developers trying to reach iPhone users in the country. Apple is able to do this because it is a “gatekeeper,” the organization added, referring to the term that defines the largest technology companies with enormous market power. This year, Apple was the second largest smartphone supplier in France after Samsung.

France Digitale supported the ministry’s argument that many of Apple’s contract clauses that app developers have to accept are unfair. This includes the requirement for app developers to set prices for their applications according to a set price grid; Apple’s ability to unilaterally stop an app from spreading; and the clauses that allow Apple to develop an application similar to that of the developer who does not have the opportunity to challenge it.

France Digitale also criticized Apple’s 30 percent commission and the obligation for developers to only use Apple’s payment system, echoing complaints from other companies.

Music app Spotify and video game developer Epic Games – who, along with France Digitale, are members of the Coalition of App Fairness, a largely anti-Apple group – have both complained about the app store’s practices. Spotify believes Apple prefers its own music app itself (the European Commission reached similar conclusions in April). Epic Games, which owns the popular video game Fortnite, has backed up against Apple’s 30 percent commission and the obligation to use Apple’s own payment system. The game developer filed complaints in the US, UK and EU.

Apple has argued over the years that the 30 percent commission is an industry standard. In November last year, the company reduced its commission for smaller developers to 15 percent.

Pieter Haeck contributed to this report.

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