Apple Just Threatened to Stop Selling Phones in the UK Over A Lawsuit
This is how BigTech reacts to government regulation.
Tech CEOs like Mark Zuckerberg have made it clear that they do not appreciate government regulation. In their minds, they want to do business how they want to do business and that's the end of the story. But even people as powerful as them can’t always get what they want. From time to time, the countries in which these companies operate hit them with devastating legal blows.
One of the more recent blows has been dealt out to Apple Inc. Apple has been ordered by a British judge to pay $7 Billion in license fees, but lawyers have implied that Apple will leave the UK market if the court does not change the terms of their decision.
Apple’s Day In Court:
In June, a UK court gave Apple a ruling that determined the company had infringed on two patents belonging to Optis Cellular Technology. The patents in question protect a technology that allows devices to connect to 3G and 4G networks.
Optis Cellular has sued Apple in the past, and has earned the reputation of a “patent troll” or a company that enacts patent lawsuits for profit, but doesn’t actually manufacture the patented product.
Upon being served the loss in the court, Apple’s attorney, Marie Demetriou, said that “Apple’s position is it should indeed be able to reflect on the terms and decide whether commercially it is right to accept them or to leave the UK market. There may be terms that are set by the court which are just commercially unacceptable.”
The Path Forward:
The current amount set to be paid by Apple is $7 Billion, but a hearing to negotiate that amount is scheduled for July of 2022.
The judge in the case, Mr. Justice Meade, suggested that Apple “might be disappointed” by the rate to be set in the 2022 trial. The only way for Apple to avoid the financial penalty would be to leave the UK market.
More immediately, another hearing in the coming weeks will determine if Apple agrees to pay whatever amount is determined at the trial in July of 2022. If they refuse to do so, Apple would become an “unwilling licensee” and possibly be banned from selling iPhones and iPads in the UK.
The Bigger Picture:
If the matter is not settled, ending Apple sales in the UK could be devastating. Apple phones dominate almost 50% of the mobile market share in the UK. Additionally, in 2020, $1.7 Billion of Apple’s sales came from the UK. But to put things in perspective, the current fine of $7 Billion is more than 4 times the amount of annual UK sales.
In reality, this threat to leave the UK market is unlikely to actually materialize. It is more likely a negotiation tactic. But it does showcase the hostility between the UK and Big Tech Companies. Companies like Apple are fully aware of the hold they have in overseas markets. They know that the British government cannot really handle Apple totally exiting the market because of the economic foothold they have in the country. Apple employs around 6,500 UK Residents and pays $6 Million in taxes. By threatening to leave the market, Apple is trying to scare the government into easing down their attacks on the company.
These legal skirmishes are becoming more and more common. British authorities are trying to rein in not only Apple (who has multiple anti-competitive investigations pending against them), but Facebook and Google as well. The UK government has realized that American tech companies are stifling the growth of British-based startups and legal action is how they hope to rectify the situation.
