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The European Commission will launch a formal investigation into Apple, Starbucks and Fiat in relation to tax arrangements with three EU countries.
The companies’ respective arrangements with Ireland, the Netherlands and Luxembourg will be investigated.
Announcing the move, tax commissioner Algirdas Semeta said that “fair tax competition is essential”.
Last year, a US Senate investigation accused Ireland of giving special tax treatment to Apple.
The European Commission will look at whether the companies’ tax affairs breach EU rules on state aid.
Competition Commissioner Joaquin Almunia said: “In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes.”
Countries in Europe cannot allow certain firms to pay less tax than they should, Joaquin Almunia added.
The European Commission will launch a formal investigation into Apple in relation to tax arrangements with three EU countries (photo AFP)
The investigations will focus on “transfer pricing”, or whether the countries allowed the multinational companies to charge one part of the company over the odds for goods or services from another part of the company as a way of shifting profits.
Under Commission rules, companies must charge their subsidiaries market rates.
Sanctions for a breach of tax rules could include an attempt to claw money back from Apple, Starbucks and Fiat.
Apple said that it had not had “any special tax deal with the Irish government”.
“We have received no selective treatment from Irish officials,” the company said.
“Apple is subject to the same tax laws as scores of other international companies doing business in Ireland.”
The Irish finance ministry said Apple “did not receive selective treatment and there was no <<special tax rate deal>>”.
“Ireland is confident that there is no state aid rule breach in this case and we will defend all aspects vigorously,” the Department of Finance said.
Last year’s US Senate committee investigation revealed that Apple had been able to funnel profits into Irish subsidiaries or “ghost companies” that had no declared tax residency anywhere in the world, cutting billions from its tax bill.
The Senate committee hearing revealed that Apple designated its Irish entities as unlimited companies, which meant it did not have to publish annual accounts.
The Irish arrangement allowed Apple to pay just 1.9% tax on its $37 billion in overseas profits in 2012, despite the fact the average tax rate in the OECD countries that make up its main markets was 24% last year.
In a 40-page memorandum, the Senate committee said: “Ireland has essentially functioned as a tax haven for Apple.”
Coffee giant Starbucks has been embroiled in a tax controversy for a number of years.
In 2012, the multinational admitted that it had a special tax deal with the Dutch government which allowed it to transfer money to its Dutch sister company in royalty payments.
Starbucks said on Wednesday that its Dutch tax arrangements conformed with financial law.
“We comply with all relevant tax rules, laws and OECD guidelines and we’re studying the Commission’s announcement related to the state aid investigation in the Netherlands,” a Starbucks spokesperson said.
The Dutch finance ministry said it was confident that its tax system was “robust”.
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Apple buys headphone maker and music-streaming service provider Beats Electronics for $3 billion, the tech giant has confirmed today.
The deal is thought to be Apple’s biggest acquisition.
As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join the technology giant.
Apple buys headphone maker and music-streaming service provider Beats Electronics for $3 billion
Apple boss Tim Cook said the deal would allow the company to “continue to create the most innovative music products and services in the world”.
Beats was founded by music producer Jimmy Iovine and hip-hop star Dr. Dre and until recently was best known for its headphones.
It started a subscription-based music streaming service earlier this year.
However, Apple already has its own iTunes store which is the world’s largest music download service. It also launched iTunes Radio last year.
That has made some industry watchers question the move.
Commenting on the deal, Beats co-founder Jimmy Iovine said: “I’ve always known in my heart that Beats belonged with Apple.”
“The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology.
“Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”
According to various media reports, Apple is in talks to buy headphone maker and music-streaming service provider Beats Electronics.
The reports claim Apple could pay as much as $3.2 billion and a deal could be announced next week.
If completed, the deal will be Apple’s biggest ever acquisition.
The deal is being seen as move by Apple to get a stronger foothold in the phone and music accessories business and bolster its online music offerings.
Beats Electronics was founded by Jimmy Iovine and Dr. Dre and until recently was best known for its headphones (photo Getty Images)
The two areas are expected to see fast growth in the coming years.
The Financial Times cited a source as saying the firms were still negotiating the details.
Beats was founded by music producer Jimmy Iovine and hip-hop star Dr. Dre and until recently was best known for its headphones.
It started a subscription-based music streaming service earlier this year.
However, Apple already has its own iTunes store which is the world’s largest music download service. It also launched iTunes Radio last year.
That has made some industry watchers question the move.
The reported price is also a huge premium on Beats’s previous valuation.
Beats was valued at just $1 billion after its last funding round in September, which saw it get a $500 million investment from the Carlyle Group.
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Apple has awarded its new retail chief Angela Ahrendts a pay package which includes $68 million in shares.
The pay award, which amounts to 113,334 shares, was revealed in a regulatory filing to the Securities and Exchanges Commission (SEC).
Apple announced the appointment of Angela Ahrendts in October, but she only started her job on May 1.
Angela Ahrendts was previously chief executive of UK luxury retailer Burberry.
She will receive 85% of the shares as long as she stays with Apple for four years, regardless of performance.
Apple has awarded its new retail chief Angela Ahrendts a pay package which includes $68 million in shares (photo CNN)
Angela Ahrendts will receive the shares award over a number of vesting periods beginning on June 1, 2014, and ending on June 14, 2018.
The first tranche will vest on June 1, 2014, and is worth $9.8 million at Apple’s closing price of $600.96 on Monday.
She can expect the next tranche to vest on May 1, 2015.
At Monday’s closing price the second tranche would be worth $13.6 million.
The pay package makes her among the most highly paid female executives in the world.
Angela Ahrendts is the first woman to be appointed to Apple’s board of directors in a decade and will take charge of its global retail and online stores, which employ around 42,400 people.
She was credited with the turnaround of Burberry doubling sales thanks to overseas expansion, while the retailer’s share price rose by 250% under her tenure. She was appointed chief executive in 2006.
Burberry has seen significant overseas growth, particularly in China. As of last year three-quarters of Burberry stores were located in emerging markets.
In contrast nearly half of Apple’s 431 stores are in its home market of the US. Despite this only 31% of Apple’s revenues last year came from America.
A federal court in California has ordered Samsung to pay $119.6 million to Apple for infringing two of its patents.
The jury delivered its verdict in a federal court in San Jose on Friday in the latest lawsuit involving Samsung and Apple.
Apple had sought $2 billion at the trial, accusing Samsung of violating patents on smartphone features.
Samsung has been ordered to pay $119.6 million to Apple for infringing two of its patents
The court also ruled that Apple infringed Samsung’s patents and awarded $158,000 in damages.
Apple had sought $2.2 billion after accusing Samsung of infringing five of its patents covering functions such as the “slide to unlock” from its devices.
Samsung denied any wrongdoing and sought $6 million after arguing Apple had infringed two of its smartphone patents related to camera use and video transmission.
This verdict marks the latest legal battle over intellectual property between the world’s top two smartphone makers.
Apple and Samsung have been fighting patent battles for years and across many countries.
Two years ago, a separate jury ordered Samsung to pay Apple $930 million after finding it had used Apple technology.
That verdict is still being challenged by Samsung.
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Apple and Samsung have both issued alerts about faults on iPhone5 and Galaxy S5 handsets.
Apple has begun a replacement program for some of its iPhone 5 handsets that have a faulty sleep/wake button.
Separately, Samsung has revealed that some of its flagship Galaxy S5 handsets have been shipped with a non-functioning camera.
It said anyone who bought an S5 with a faulty camera should contact Samsung’s customer service or their mobile operator to get the phone replaced.
Samsung has revealed that some of its flagship Galaxy S5 handsets have been shipped with a non-functioning camera
Samsung said it had found a “very limited” number of handsets had been shipped with the fault. It said it had traced the cause of the problem and had taken steps to ensure it did not re-occur in future production runs.
“We have discovered that the issue has been seen in a very limited portion of early production Galaxy S5 units, and was caused by complications in the Read Only Memory component which stores the information necessary to operate the camera,” Samsung said in a statement.
Samsung declined to say how many handsets were affected but did say that the faulty handsets had been reported in the US and several other countries.
Apple said a “small percentage” of iPhone 5 handsets were affected by manufacturing problems that meant its sleep/wake button stopped working or only worked intermittently.
It said it would replace the sleep/wake mechanism in affected phones free of charge. To help customers it has set up a webpage on which they can enter the serial number of their phone to see if it is in the affected batch.
The faulty button is believed to affect iPhone 5 handsets manufactured before May 2013.
Apple’s replacement program begins in the US on April 28 and rolls out worldwide on May 2. Customers with affected handsets can either post their device to an Apple repair centre or drop it off in person.
Apple has signed a deal to bring its iPhone to China Mobile – the world’s largest carrier.
China Mobile has more than 760 million subscribers and was one of three networks to be awarded China’s first 4G licenses earlier this month.
Apple has been looking to boost its sales in China, the world’s largest smartphone market, but has struggled amid growing competition from rivals.
The latest deal is expected to help it increase its market share.
“China is an extremely important market for Apple,” Tim Cook, Apple’s CEO, said in a statement.
“Our partnership with China Mobile presents us the opportunity to bring iPhone to the customers of the world’s largest network.”
Earlier this year, Tim Cook said he expected China to replace North America as Apple’s largest source of revenue. The iPhone is the firm’s most important product in terms of earnings power.
China two other major phone carriers, China Unicom and China Telecom, already offer iPhones to their subscribers.
Apple has signed a deal to bring its iPhone to China Mobile
China is the world’s biggest smartphone-using country, with 1.2 billion users.
Chinese sales of previous iPhone models have slumped recently, as consumers have turned to cheaper rival handsets from Samsung, and domestic Chinese developers.
China’s three bestselling smartphone makers are Samsung, Lenovo and Coolpad, according to a recent report by the consultants IDC.
Apple’s sales have also been impacted by the fact that unlike in developed markets, many phone carriers in emerging markets do not subsidies smartphones.
That means that subscribers have to pay the full amount for the phone upfront, making Apple’s products relatively expensive for some buyers.
In an attempt to take on the low-cost rivals Apple unveiled a relatively cheaper version of the iPhone, the 5c, earlier this year.
Analysts said the firm was hoping that a cheaper handset combined with a deal with the biggest mobile carrier in the world may help it take on rivals.
However, Apple is yet to announce how much Chinese customers will have to pay for the iphone 5s and 5c models sold via China Mobile.
Nevertheless, analysts say the deal has huge potential. Cantor Fitzgerald Research estimates that Apple could sell 24 million iPhones next year to China Mobile customers alone.
Apple sold 102.4 million iPhones globally in the nine months to September this year.
The iPhone 5s and 5c will be available to China Mobile subscribers from January 17th.
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Samsung must pay $290 million to Apple for copying iPhone and iPad features in its devices, a Silicon Valley jury has ruled.
This verdict comes after a previous jury found Samsung owed Apple $1.05 billion for copyright infringement.
However, District Judge Lucy Koh ordered a new trial because she said that jury miscalculated the amount Samsung must pay.
Samsung is expected to appeal.
The jury’s ruling covers 13 of the 26 Samsung devices that Apple had argued copied its technology. These are mostly older Samsung tablets and smartphones.
Samsung must pay $290 million to Apple for copying iPhone and iPad features in its devices
The $290 million figure comes on top of the $550 million Samsung owes Apple as a result of the initial verdict. In total, Apple has now been awarded close to $930 million in the case.
Apple shares traded slightly higher on the news. Samsung closed down slightly earlier in the day.
Samsung had argued that Apple should not have ownership over technology like what Samsung said was the “basic rectangle” shape of smartphones.
The jury in the courtroom – which is located just 15 minutes away from Apple’s headquarters in California – thought otherwise, awarding close to the $380 million Apple sought. Samsung said it owed just $52 million.
Samsung was found to have infringed Apple patents, including one that allows users to “pinch and zoom” on smartphone and tablet screens.
A separate trial to determine whether or not current Samsung devices violate Apple’s patents is scheduled for March 2014.
Apple has also asked Judge Koh to consider a sales ban against all of the older Samsung models that used Apple’s technology.
While Judge Koh has previously refused to issue such an injunction, a separate US Appeals Court asked her to reconsider this week.
Apple has revealed a list of data requests it has received from governments across the globe.
The US government tops the list with 1,000 to 2,000 requests in the six months to June 30.
Apple said the US requests affected 2,000 to 3,000 accounts, adding it gave out data on zero to 1,000 accounts.
The tech giant said the most common “requests involve robberies and other crimes or requests from law enforcement officers searching for missing persons”.
It said the response usually involves disclosing information about an account holder’s iTunes or iCloud account “such as a name and an address”.
“In very rare cases, we are asked to provide stored photos or email. We consider these requests very carefully and only provide account content in extremely limited circumstances,” Apple said.
The UK was second on the list, with 127 requests. Spain, Germany and Australia also featured in the top five.
Apple has revealed a list of data requests it has received from governments across the globe
Apple added that since its main business was “not about collecting information”, the vast majority of requests it received from law enforcement agencies were about information on “lost or stolen devices”.
The company logs these requests under a separate category as “device requests” which, it said, “never include national security-related requests”.
Apple received more than 3,500 such requests in the US between January and June this year.
The tech giant also used the report to call for more freedom to disclose the details of such requests to customers.
Apple said that currently the US government did not allow it to disclose “except in broad ranges, the number of national security orders, the number of accounts affected by the orders, or whether content, such as emails, was disclosed”.
“We strongly oppose this gag order,” it added.
Apple said it had asked the government to ease these restrictions but so far had not seen any major changes.
“Despite our extensive efforts in this area, we do not yet have an agreement that we feel adequately addresses our customers’ right to know how often and under what circumstances we provide data to law enforcement agencies.”
The move by tech companies came after leaks by whistleblower Edward Snowden revealed mass surveillance programmes by the National Security Agency (NSA) and associated agencies.
Apple said it had filed a letter with the Foreign Intelligence Surveillance Court supporting a group of cases requesting greater transparency.
Apple has decided to refund fans of TV show Breaking Bad after a mix-up over the number of episodes in its final season.
The confusion meant many people effectively paid twice for the final 16 episodes of the hugely popular show.
This was because Apple charged people who bought a “season pass” twice – once for each eight-show chunk as they were billed as separate seasons.
Apple has decided to refund fans of TV show Breaking Bad after a mix-up over the number of episodes in its final season
Apple has sent out emails giving people an iTunes voucher for the extra cash they spent.
Breaking Bad Season 5 was split into two halves by cable channel AMC with each eight-episode section being shown a year apart. The second half of this season, which sees the show reach a conclusion, was first broadcast and made available online on August 11.
The split caused problems on iTunes where many people had paid to see the closing series expecting that this would include all 16 episodes.
When Apple charged people again for the second eight episodes, called The Final Season, many complained and one outraged fan took legal action over the extra charge.
Apple has refunded the extra $22.99 levied on those people who were charged extra to watch The Final Season. Those who bought a season pass for Season 5 will now be able to watch all 16 episodes.
Nine million iPhone 5S and iPhone 5C have been sold in three days, according to Apple.
Apple said that sales of the iPhone 5S and 5C had beaten previous launches of new phones.
Apple said demand for the iPhone 5S had outstripped supply and Apple shares rose almost 6% on the news before falling back to trade 4% higher.
The 5S has a fingerprint sensor built into the phone’s main button. The cheaper 5C comes with a plastic back in a choice of colors.
In a statement, Apple CEO Tim Cook said: “The demand for the new iPhones has been incredible, and while we’ve sold out of our initial supply of iPhone 5S, stores continue to receive new iPhone shipments regularly.
Apple said that sales of the iPhone 5S and 5C had beaten previous launches of new phones.
“We appreciate everyone’s patience and are working hard to build enough new iPhones for everyone.”
Analysts said that while the sales were strong, Apple had made an effort to ensure that the opening weekend was a success.
“Apple was concerned about the public relations angle of a soft first weekend, so they took some steps to strengthen the numbers,” telecom analyst Jeff Kagan said in an email.
“Traditionally users could pre-order devices. Not this year.
“This year anyone who wanted a new iPhone must get into line. That bolstered the lines and strengthened [the] opening weekend from a PR perspective. This upset users, but made for great numbers,” he said.
In a notification to market regulators Apple said it expected sales in its fourth quarter to be at the higher end of its previous announced range of between $34 billion and $37 billion.
Apple also forecast that its gross profit margin would be near the high end of the previously provided range of 36-37%.
Apple has unveiled iPhone 5S and cheaper iPhone 5C at an event in California.
iPhone 5S introduces a fingerprint sensor built into the phone’s main button to identify the user. iPhone 5C comes with a plastic back in a choice of colors.
It marks a change of strategy for Apple which had not launched two distinct types of handset at the same time before.
The iPhone is Apple’s most important product in terms of earnings power.
The new fingerprint system can be used to unlock the 5S and provide authentication for purchases from Apple’s online marketplace.
One analyst suggested the feature would help the handset stand out against its Android rivals.
“Touch ID is actually quite an elegant solution to an ever more significant problem: namely, the theft of mobile devices and, perhaps even more critically, the information stored on those devices,” said Windsor Holden from the tech consultancy Juniper Research.
Apple has unveiled iPhone 5S and cheaper iPhone 5C at an event in California
“Many people haven’t yet bothered to implement any kind of security solution on their handsets and for those who have, securing handsets with Pin authorisations can be quite a time-consuming process.”
However, Apple is not the first phone company to offer such a fingerprint reader.
Motorola added the facility to its Atrix handset in 2011, but many owners had problems using it. The feature is not included in the Google-owned business’ latest models.
It is expected the iPhone 5C will be considerably cheaper when bought through a contract, with prices starting at $99 in the U.S.
The iPhone 5S comes in three colors – slate, gold, and silver – and is made of high-grade aluminium.
The 5S’ Sim-free price ranges from $850 for a 16 gigabyte version to $1,100 for a 64GB model.
The basic 5C model, with 16 gigabytes of storage, has been priced Sim-free at $727..
“The 5C is far from being <<cheap>> as the iPhone 4S [which now costs $540] continues in that role,” remarked Ben Wood from tech advisors CCS Insight.
There had been speculation that the 4S was going to be phased out.
The new iPhones go on sale in the US, UK, China, Australia and Canada among other countries on September 20. It marks the first time China has been included in the initial wave of sales.
Ma Ailun, a 23-year-old woman from northwest China, died after being electrocuted while using her iPhone 5, her family has claimed.
Ma Ailun, a flight attendant with China Southern Airlines, was picking up her handset to answer a call last Thursday when she received an electric shock, police said Sunday, in reports carried by the state-run Xinhua news agency.
“(I) hope that Apple Inc can give us an explanation. I also hope that all of you will refrain from using your mobile devices while charging,” the older sister of victim said on Sina Weibo, the Chinese equivalent of Twitter.
Ma Ailun, a flight attendant with China Southern Airlines, was picking up her iPhone 5 to answer a call when she received an electric shock
The post has gone viral online, with many forwarding the message and warning others of the dangers of using mobile devices while they are being charged.
Ailun’s father, Ma Guanghui, confirmed that his daughter was electrocuted, adding that her body showed signs of electrocution.
Ma Ailun’s sister said she hopes to seek justice from Apple.
Apple said Sunday the company felt “deeply sorry for the unfortunate accident” and expressed condolence to the victim and her family.
The company said it would have a thorough probe into the case.
A US judge has ruled today that Apple conspired with publishers to fix the price of electronic books.
Manhattan Judge Denise Cote said the iPad maker “conspired to restrain trade”.
But Apple’s spokesman, Tom Neumayr, said Apple would appeal against the ruling and fight “false allegations”.
Five publishers that were originally named as defendants alongside Apple have already reached settlements, including Penguin.
The judge ordered a new hearing to determine damages to be imposed on Apple.
The US Department of Justice said the conspiracy was designed to challenge online retailer Amazon’s dominance of the fast-growing e-books market.
Penguin settled its case for $75 million. Hachette, HarperCollins and Simon & Schuster created a $69m fund for refunds to consumers, while Macmillan settled for $26m.
Judge Cote said: “The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy.”
“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” she said.
US Assistant Attorney General Bill Baer called the ruling “a victory for millions of consumers who choose to read books electronically”.
A US judge has ruled today that Apple conspired with publishers to fix the price of electronic books
He said the judge agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers to raise prices.
“Through today’s court decision and previous settlements with five major publishers, consumers are again benefiting from retail price competition and paying less for their e-books,” Bill Baer said.
Consumer groups in the US cheered the news.
“If we let companies get away with this type of price fixing, consumers will be denied a substantial part of the benefits of the digital revolution,” said Dr. Mark Cooper of the Consumer Federation of America, which had filed a supporting brief in the case.
But after the ruling, Tom Neumayr insisted that Apple had brought innovation and competition to the market, not restricted it.
“Apple did not conspire to fix e-book pricing and we will continue to fight against these false accusations,” he said.
“We’ve done nothing wrong.”
Previously, Apple’s attorney, Orin Snyder, had told the court that Judge Denise Cote would set a “dangerous precedent” if she concluded that Apple manipulated e-book prices.
However, Columbia University law professor Scott Hemphill said today’s ruling was narrow and would be unlikely to set any legal precedent.
“It may send some signals to tech companies about what they can and can’t do,” said Prof. Scott Hemphill.
“But the precedential value is limited because the ruling is by a district court.”
However, he added that the judge in this case took particular pains to anticipate a challenge from Apple – something that chief executive Tim Cook hinted at earlier this year, when he dismissed the idea of a settlement.
Apple has decided to publish details of data requests from the US authorities.
Apple is the latest tech firm to disclose the US government requests and said it received demands for information linked to between 9,000 and 10,000 accounts or devices between December 2012 and the end of May 2013.
It said the demands included “national security matters” among other information. Microsoft and Facebook published similar numbers last week.
But Google and Twitter have said that such disclosures are not helpful.
“We have always believed that it’s important to differentiate between different types of government requests,” said a statement by Google published on Saturday.
“Lumping the two categories together would be a step back for users.”
A tweet from Twitter’s legal director, Benjamin Lee, added: “We agree… it’s important to be able to publish numbers of national security requests – including FISA [Foreign Intelligence Surveillance Act] disclosures – separately.”
Apple has decided to publish details of data requests from the US authorities
Tech firms have been under pressure to disclose information about data passed to the National Security Agency (NSA) since The Guardian and Washington Post newspapers revealed the existence of PRISM – a programme giving the NSA access to user data held on the servers of tech firms including Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, and Apple.
The NSA later confirmed the existence of the surveillance scheme as well as a separate phone records programme which it said had helped it thwart terrorist plots in the US and more than 20 other countries.
However, privacy activists and some politicians have raised concerns that the efforts went beyond what was intended under powers granted by the Patriot Act following the 11 September 2001 terror attacks.
Following the revelations, several of the tech firms involved said they had asked the US government to allow them to disclose information which would help them address concern about the scale of information that had been handed over.
On Friday, Facebook and Microsoft announced they had been given permission to reveal the number of data requests from US officials in aggregate, and Apple has now followed with its own statement.
“We first heard of the government’s <<PRISM>> program when news organizations asked us about it on June 6,” it said.
“We do not provide any government agency with direct access to our servers, and any government agency requesting customer content must get a court order.”
Facebook added that between 1 December 2012 and 31 May 2013 it received between 4,000 and 5,000 requests from US law enforcement for customer data, involving between 9,000 and 10,000 accounts or devices. It did not say with how many it had complied.
It said the “common form of request” came from police who were investigating crimes such as robberies, trying to find missing children and patients with Alzheimer’s disease, or hoping to prevent suicides.
It noted that it would not have been able to decode encrypted conversations which took place over its iMessage or Facetime chat software on behalf of the authorities, nor did it store “identifiable” data related to Apple Map searches or requests made to its voice-controlled Siri service.
“Regardless of the circumstances, our legal team conducts an evaluation of each request and, only if appropriate, we retrieve and deliver the narrowest possible set of information to the authorities,” it added.
Apple has been accused by US Senate of being “among America’s largest tax avoiders”.
A Senate committee said Apple had used “a complex web of offshore entities” to avoid paying billions of dollars in US income taxes. But it said there was no indication the firm acted illegally.
Apple chief Tim Cook will go before the panel on Tuesday. In prepared testimony Apple said it did not use tax gimmicks.
The Irish Republic, home to three Apple subsidiaries, says it is not to blame for the firm’s low tax payments.
The US Senate had said that Apple paid little or nothing on billions of dollars in profits placed in Irish subsidiaries.
“They are not issues that arise from the Irish taxation system,” Deputy Prime Minister Eamon Gilmore told national broadcaster RTE when asked about the Senate committee report.
“They are issues that arise from the taxation systems in other jurisdictions and that is an issue that has to be addressed first of all in those jurisdictions.”
Apple has a cash stockpile of $145 billion, but the Senate committee said $102 billion of this was held offshore.
The company says it is one of the largest taxpayers in the US, having paid $6 billion in federal corporate income tax in the 2012 fiscal year.
The Senate Permanent Subcommittee on Investigations has been examining “methods employed by multinational corporations to shift profits offshore”.
Some large firms in the US have come under fire for their reluctance to repatriate their foreign earnings as they could face a top tax rate of 35%.
US corporation tax is one of the highest in the world at 35%. However, companies typically pay far less, thanks to numerous deductions and exemptions.
In its report into Apple, committee chairman Carl Levin said: “Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven.
“Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.”
Apple has been accused by US Senate of being among America’s largest tax avoiders
Committee member John McCain said: “Apple claims to be the largest US corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders.”
Apple said in its statement: “Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax.
“It does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands.”
It added that it had “substantial” foreign cash because it sells the majority of its products outside the US, and these foreign earnings were taxed in the jurisdictions where they were earned.
The committee has already questioned tech giants Microsoft and Hewlett-Packard over their tax practices.
In September, the committee accused the two firms of using places such as the Cayman Islands, so they do not have to pay US taxes, saying their methods ranged from “egregious to dubious validity”. Both companies deny any wrongdoing.
Five of the top 10 companies with the biggest offshore cash balances are in the technology sector.
Apple said it wanted to see legislation that “dramatically simplifies” the US corporate tax system.
It believes reform should be “revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates, and implement a reasonable tax on foreign earnings that allows free movement of capital back to the US”.
Apple said that, though these changes may increase its own taxes, it would not be opposed to such a result “if it occurs in the context of an overall improvement in efficiency, flexibility and competitiveness”.
The company said the changes would stimulate job creation in the US, increase domestic investment and promote economic growth.
Apple drew criticism three weeks ago when it sold $17 billion in bonds to raise cash to fund payouts to shareholders, rather than repatriating some of its cash reserves, which would be taxed in the US.
The move saved the company an estimated $9.2 billion in taxes.
In its prepared testimony, Apple said that the move was in its shareholders’ best interests.
While critics argue that companies shifting their profits overseas is a huge tax avoidance scheme, others want lower rates to encourage firms to invest in the US.
Last week Cisco chief executive John Chambers said his company was likely to invest more overseas if US tax laws were not modified.
“I prefer to have the majority of my employees here in America. That’s the right decision for us, but if we can’t bring our cash back, we’re going to grow dramatically faster overseas in terms of job placements,” he told CNBC.
“I think this is something our country has to fix.”
The US is not the only country trying to ensure companies pay their “fair share” of taxes.
UK Prime Minister David Cameron has called for countries to work together to clamp down on tax avoidance.
In the UK, Google, Starbucks and Amazon are among several large companies to face criticism over the amount of corporation tax they pay.
Despite making sales of hundreds of millions of pounds, they reported small profits or even losses in the UK after shifting their earnings to overseas operations.
The row led coffee chain Starbucks to agree to pay more UK corporation tax.
On Sunday, Google’s executive chairman Eric Schmidt defended his company, saying it had “always aspired to do the right thing”, but added that “international tax law could almost certainly benefit from reform”.
Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders.
Apple made a net profit of $9.5 billion in the first quarter of 2013, down from $11.6 billion last year.
However, the results were better than many had expected, as strong iPhone and iPad sales boosted revenues to $43.6 billion.
Concerns over slowing demand for Apple products amid increased competition have hurt its share price recently.
“Though we’ve achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012,” Tim Cook, Apple CEO, said.
Apple said it sold 37.4 million iPhones and 19.5 million iPads worldwide in Q1 2013.
Although Apple continues to remain a dominant player in the tablet computer and smartphone markets, investors have been worried that its market share was being eroded by increasingly popular offerings from rivals such as Samsung.
Apple has reported its first quarterly drop in profits in a decade, but said it will raise dividends for shareholders
There have also been concerns over the lack of new product launches.
Analysts have suggested the company needs to innovate and develop new products to stay ahead of the competition, rather than relying on updates to existing products.
“The market is tired of the same old thing at Apple,” said Lauren Balter, an analyst at Oracle Investment Research.
“Investors are looking for innovation. The reality is that people are looking at other products now and they are looking at other cool features from competitors.”
These concerns have seen investors ditch Apple shares over the past few months. It has lost around 40% of its stock market value since hitting an all-time high in September last year.
However, Tim Cook tried to assure investors and shareholders that the firm was continuing to take measures to ensure that it maintained its dominance in the market.
“The decline in Apple’s stock price over the last couple of quarters has been very frustrating for all of us… but we’ll continue to do what we do best,” he said.
“The most important objective for Apple will always be creating innovative products.
“Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline,” he added.
Some analysts said that the lack of a new product did not mean that Apple was not developing one.
“What no investor can see is what is happening between closed doors in research and development,” said David Tan, assistant professor of strategy at Georgetown University.
“[Research and development] is always very secretive. It always takes a very long time between the inception of an idea and commercializing a product.”
Apple, which before the latest earnings had $137 billion in cash, has been under pressure to share some of it with shareholders.
On Tuesday Apple said it planned to buy back $60 billion in shares, and raise its dividend to shareholders by 15%.
The move encouraged investors and Apple’s shares rose 5.5% in after-hours trading on Wall Street.
Apple has been denied a trademark for its iPad Mini by the US Patent and Trademark Office.
The trademark application for iPad Mini was turned down because the name was “merely descriptive” and did not create a unique meaning, it said.
However, Apple still has until July to persuade the Patent Office that the smaller tablet differs sufficiently from its iconic device.
Apple has been denied a trademark for its iPad Mini by the US Patent and Trademark Office
Apple has been involved in a series of patent disputes with rival firms.
It won a landmark case against Korea’s Samsung last year but this month, a judge in the US ordered the $1 billion in damages awarded to Apple be cut by 40% and set a new trial to assess the level of damages.
The award was the biggest in a series of global legal fights between the two companies over patents.
The Patent Office issued the letter in January, although it has only just emerged.
The letter said the “applied-for mark merely describes a feature or characteristic of applicant’s goods”.
The terms “mini” and “pad” and the prefix “i-” were all descriptive, it decided.
Neither as individual terms nor as a composite result – iPad Mini – did they “create a unique, incongruous, or non-descriptive meaning in relation to the goods being small handheld mobile devices comprising tablet computers capable of providing internet access”.
In its last quarter to January, Apple said that it sold a record 22.9 million iPads and iPad Minis.
Suzanne Nassie from Massachusetts says that an iPad she bought at Walmart turned out to be only a piece of plastic painted to look like a real tablet.
Suzanne Nassie said she knew there was a problem the second she opened the shrink wrapped package.
The fake so confusing the store even refused her a refund at first before finally relenting.
“This isn’t even a real device,” Suzanne Nassie said upon discovering the trick.
“Somebody put a phony device in that box.”
There was no cord, and no way to turn the device on.
Suzanne Nassie brought it back to the store, but wasn’t allowed to speak to a manager and was refused a refund even though she brought the $499 receipt printed out just 20 minutes prior.
Instead Walmart employees told her to contact Apple.
By then she’d found even more problems.
Suzanne Nassie from Massachusetts says that an iPad she bought at Walmart turned out to be only a piece of plastic painted to look like a real tablet
“There’s a speaker that’s suppose to be on the back, it’s just little painted dots,” Suzanne Nassie told CBS Boston.
“When I peered inside at the port on the back where you’re suppose to charge it, it’s just plastic. No metal prongs or anything of that nature.”
Suzanne Nassie isn’t the first Walmart customer to get burned on an iPad.
People have reported buying fake devices at stores in New Jersey, Florida, and Texas.
This November, Florida man Emilio Pereda told reporters he purchased a fake iPad from the retail giant for $500.
“There were no red flags,” Emilio Pereda said.
“It was completely wrapped with this wrapper from Walmart with your sku number that matches the receipt.”
Suzanne Nassie has since been contacted by the store manager who apologized then offered a full refund.
“It’s frustrating that someone would try to take advantage of others for their own gain. We have apologized to our customer and offered her a full refund,” a Walmart spokesperson said.
“We’re still working to understand how this could have happened and are actively reviewing our transactional records and surveillance video to determine how this product ended up on our shelves. If a customer is purchasing an iPad at this store, they are welcome to open the product to confirm the right product is in the box after making the purchase.”
Apple does not have exclusive rights to use the “iPhone” trademark in Brazil, local regulators have ruled today.
Apple has already lodged an appeal against the decision with the Brazilian regulators.
The ruling is the result of a local company, Gradiente Eletronica, registering the name in 2000, seven years before the US firm.
Apple can continue to sell iPhone-branded handsets in Brazil.
But the decision means that Gradiente has an option of suing for exclusivity in Latin America’s biggest market.
The Institute of Industrial Property (INPI) said its decision only applied to handsets, and that the California-based company continued to have exclusive rights to use the iPhone name elsewhere including on clothing, in software and across publications.
INPI added that Apple had argued that it should have been given full rights since Gradiente had not released a product using the iPhone name until December 2012.
Gradiente Eletronica registered iPhone name in Brazil in 2000, seven years before Apple
Apple is asking the INPI to cancel Gradiente’s registration through expiration – it is arguing that the Brazilian firm did not use the name between January 2008 and January 2013.
The Manaus-headquartered company now sells its Android-powered iPhone Neo One for 599 reals ($304).
Bloomberg previously reported that the chairman of Gradiente had said: “We’re open to a dialogue for anything, anytime… we’re not radicals.”
Apple’s most recent financial results revealed its cash reserves had grown to $137 billion.
The company’s manufacturing partner, Foxconn, currently produces iPhones and iPads among other equipment at its facilities in Brazil.
David Einhorn, an activist shareholder, is suing Apple, demanding that it share out more of its $137 billion cash pile to its investors.
Apple’s cash pile has grown to that size from $98 billion last March.
US hedge fund manager, David Einhorn, who is behind the unusual move, told the television channel CNBC that Apple had a “Depression-era” mentality, which gave it a tendency to hoard cash and play safe.
Apple called the move “misguided”.
The complaint was filed at a court in New York.
Apple has a number of fights on its hands already. Although it is dominant in both smartphones and tablet computers, competition is hotting up and its share price is falling.
The firm’s shares are now 35% below the record high they reached in September 2012.
David Einhorn, who owns Green Light Capital, told CNBC: “It has sort of a mentality of a depression. In other words, people who have gone through traumas… and Apple has gone through a couple of traumas in its history, they sometimes feel like they can never have enough cash.”
He has also been speaking to the Reuters news agency, which he told he had had meetings with Apple’s senior management on the subject of sharing out the cash pile.
Activist shareholder David Einhorn is suing Apple, demanding that it share out more of its $137 billion cash pile to its investors
David Einhorn said he had recently contacted Apple’s chief executive, Tim Cook after failing to interest the company’s chief financial officer, Peter Oppenheimer, in the matter.
His proposals for releasing funds to shareholders involve “preferred” stock – which pays a fixed dividend over time.
Apple is planning to eliminate these at its shareholder meeting later this month.
Preferred shares rank higher than ordinary shares when it comes to paying out a company’s assets.
David Einhorn has a history of activism.
In 2011, David Einhorn urged Microsoft Corp to get rid of its chief executive Steve Ballmer, accusing him of being “stuck in the past”.
Tech giant Apple has lost its crown as the world’s most valuable publicly traded company after its shares continued to fall.
Oil company Exxon Mobil has regained the top slot after Apple shares fell 2.4%, following a 12% drop on Thursday.
Apple, which posted disappointing iPhone sales figures on Wednesday, has seen its shares fall 37% since their record high last September.
Exxon became number one in 2005, traded places with Apple during 2011, and had been number two since early 2012.
At the close on Wall Street, Apple had a market value of $413 billion, against Exxon’s of $418 billion.
Apple has been hit by fears over its future growth, despite record profits.
Although the firm said on Wednesday that it had sold more iPhones (47.8 million) and iPads (22.9 million) in the final three months of last year than in any previous quarter, investors and analysts had expected yet more.
On Thursday, about $50 billion was wiped off Apple’s value after the biggest daily drop in the firm’s stock in four years.
Exxon Mobil has regained the crown as world’s most valuable publicly traded company after Apple shares continued to fall
Apple is also facing fierce competition from rivals like Samsung, which accounted for one in four of all mobile phones shipped worldwide last year, according to Strategy Analytics.
Apple’s share price rose sharply following a revival under Steve Jobs, who died in 2011, which came about first in computers and then the iPod music player, and was then followed by the iPhone and iPad.
Apple’s shares were worth as little as $3.19 in 1997 when it faced the possibility of bankruptcy, and reached a record $702.1 on September 19.
Apple’s plea to ban sales of Samsung’s smartphones that violate its patents has been rejected by a US judge.
Apple had requested the ban after a jury ruled earlier this year that some Samsung products had infringed Apple’s patents.
Samsung was also ordered to pay $1.05 billion in damages, a ruling the South Korean firm has since challenged.
However, the judge said there was not enough evidence that the infringed patents had hurt Apple’s US sales.
“The phones at issue in this case contain a broad range of features, only a small fraction of which are covered by Apple’s patents,” District Judge Lucy Koh said.
“Though Apple does have some interest in retaining certain features as exclusive to Apple, it does not follow that entire products must be forever banned from the market because they incorporate, among their myriad features, a few narrow protected functions.”
Since winning $1.05 billion damages in August this year, Apple has suffered setbacks in its various legal clashes with rivals.
Last month, Apple was asked to disclose the details of its patent-sharing deal with HTC to Samsung.
It has also lost an appeal against a UK ruling that Samsung had not infringed its design rights.
Apple’s plea to ban sales of Samsung’s smartphones that violate its patents has been rejected by a US judge
The US technology firm was also asked by a UK High Court to publish a statement on its website admitting that Samsung had not infringed its designs.
Meanwhile, sales bans sought by Apple against Samsung’s Galaxy Nexus phone and Samsung’s Galaxy Tab 10.1 tablet computer in the US were also lifted in October.
In November, a judge in the US dismissed a case brought by Apple alleging that Google’s Motorola unit was seeking excessive royalty payments for patents.
“The momentum that Apple had gained in the wake of the big billion dollar judgement seems to be losing its steam,” said Manoj Menon, managing director at consulting firm Frost & Sullivan.
“It appears that Apple will find it increasingly difficult to convince courts around the world that it has been hurt by alleged patent infringements.”
The smartphone market has seen tremendous growth over the past few years and Apple and Samsung have emerged as two of the biggest players in the sector.
The success of Apple’s iPhone has been a key driver of its growth, while Samsung has reported record quarterly profits helped by the popularity of its Galaxy range of smartphones.
However, as their market share has increased, so has the intensity of their legal battles with each other.
The two firms have filed legal cases against each other in more than 10 countries, each accusing the other of violating its patents.
However, analysts said that it was time the two companies sat down together and agreed on an amicable solution to their tussles – a move that has also been suggested previously by a judge in the US.
Manoj Menon of Frost & Sullivan said that as manufacturers look to develop even more advanced phones, they will eventually need to use technologies, the patents for which may not belong to them.
“What we are seeing is a convergence of different technologies into one device,” he said.
He explained that for innovation to continue in the sector it was key that various companies agreed to licensing terms for their patents.
Last month, Apple agreed such a deal with Taiwanese phone-maker HTC as it signed a 10-year licence agreement that ended their legal battle over patents.
Pictures leaked online claim to show the case for the forthcoming iPhone 5S, Apple’s next update of its market leading smartphone.
Surfacing on French website Nowhereelse.fr, the images reveal an exterior virtual identical to the current iPhone 5, which was only released in September.
But a closer look at the inside of the part shows the fixing points of some of the internal components – which differ from the latest model – seems to suggest that it could be a new part for an updated phone.
Nowhereelse.fr hedge its bets, admitting that while it could be a case from a new iPhone prototype, it could equally be part of a well-made Chinese iPhone clone.
It says it first found the images published on the website forum iPhone5Parts and makes no attempt to confirm their authenticity.
Nevertheless, the apparent leak comes as the rumors have begun to circulate online that Apple is already about to begin making the successor to its latest smartphone.
Pictures leaked online claim to show the case for the forthcoming iPhone 5S
A Chinese site in November claimed the firm was set to begin trial production of the new model this month, although has no details of what new features it may contain.
The Commercial Times estimated that full commercial production of the rumored iPhone 5S will begin as early as Q1 2013, with the December run only expected to return between 50,000 and 100,000 units.
Facing low yield rates in the production of iPhone 5, Apple has accelerated the certification processes for related parts and components for the iPhone 5S, the paper revealed, according to DigiTimes.
“While the speculated iPhone 5S is expected to enter volume production in the first quarter of 2013, Apple is also likely to release a new version of iPad a quarter later than the iPhone 5S, since the display resolution of its latest version of iPad has come out lower than expected,” the paper said.
However, while the firm may begin trial production, some believe it may not go on sale until later next year.
“The industry was surprised at how quickly the iPad 4 replaced the 3, however that was to make all of its top line products have the same connector,” said Luke Peters, editor of T3 magazine.
“Trial production might see we see snippets on the web, but its usually 6-7 months until we see a launch, and so I would expect to see a new version, be it an iPhone 5S or a 6, late next year.”
It comes as Samsung’s Galaxy S3 has become the world’s best-selling smartphone model for the last quarter, pushing aside Apple’s iPhone.
Apple has dominated the chart for more than two years, research firm Strategy Analytics said.
It claims Samsung sold 18 million S3 models in the third quarter, compared with iPhone 4S sales of 16.2 million.
Strong sales of the flagship Galaxy S3- which comes with a large 4.8 inch touchscreen – helped Samsung post a record $7.3 billion operating profit in the July-September quarter.
Apple customers were also believed to be waiting for the release of the iPhone 5, which is expected to propel Apple back to the top spot.
Korean giant Samsung has filed papers at a US court claiming that Apple’s latest iPad mini, released this month, infringes eight technology patents.
Samsung has asked a judge to add the 7.9-inch Apple tablet to a list of products, including the iPod Touch 5, and the iPad 4, which it claims violate patents on radio signaling technologies.
A patent war has engulfed technology giants with firms trying to make sure the others’ latest products are involved in the legal dispute in a bid get sales banned.
Apple and Samsung have filed cases against each other in more than 10 countries, each accusing the other of violating its patents.
Last week Apple successfully applied to add Google’s latest mobile operating system, Android 4.2, Jelly Bean, to the case.
In a minor victory for Samsung, on Wednesday, the judge ordered Apple to disclose the financial details of its patent licensing deal with HTC.
Samsung has filed papers at a US court claiming that Apple’s latest iPad mini, released this month, infringes eight technology patents
Apple and HTC signed a 10-year license agreement earlier this month, but did not make the details public.
But the court ordered Apple to produce a full copy of the settlement agreement “without delay”, subject to an “attorneys’ eyes only” designation, meaning it will not be made public.
Legal experts say the question of which patents are covered by the HTC settlement, and licensing details, could be instrumental in Samsung’s efforts to thwart Apple’s subsequent quest for a permanent sales ban on its products.
Samsung has argued it is “almost certain” that the HTC deal covers some of the same patents involved in its own litigation with Apple.
It seeks to show Apple is willing to license its technology if the price is right.
It has been speculated that HTC has agreed to pay Apple a royalty of up to $8 on each smartphone it sells, but the figure has been flatly denied by the firm’s chief executive.
The settlement of Apple and HTC ended their worldwide litigation and brought to a close one of the first major flare-ups in the global smartphone patent wars.
Apple first sued HTC in 2010, setting in motion a legal conflagration that has since circled the globe and engulfed the biggest names in mobile technology.
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