13 billion reasons for Apple to abandon Europe

uropea

The Commission can only order recovery of illegal state aid for a ten-year period preceding the Commission’s first request for information in this matter, which dates back to 2013. Ireland must therefore recover from Apple the unpaid tax for the period since 2003, which amounts to up to €13 billion, plus interest.

When Apple and other big technology firms set foot in Ireland they did for a good reason: they could use the tax system there to earn more profits. That justified the investments they made on their headquarters and the European staff working on that country.

That is no longer true: the European Commission investigation has discovered how much money the Irish tax system has lost due to this kind of management, and it’s no small money.

Apple can’t be the only one to be found guilty and pay, of course. Others -Amazon, Google, Microsoft- have been doing the exact same thing for years, so I guess this won’t be the first time we heard or read news on this front.

The problem? Those companies created European branches in countries such as Ireland for a reason. If that investment results in fines like the one we are seeing, then it makes no sense -not as much, at least- to maintain that  structure in Europe. I’d say many of them will leave those headquarters or will reduce their staff in the short term.

Xiaomi against imaginary valuations

Investors are taking a second look at China’s high-value startups such as smartphone maker Xiaomi, which is now facing growing pressure to live up to high expectations.

Xiaomi missed its 2015 sales target: they estimated 80 million smartphones shipped, but they weren’t capable of growing that fast and that much. They haven’t surprised us as before, and now the pressure from investors seems to be pretty high.

That’s reasonable, and maybe Xiaomi’s valuation was overestimated. But its business is done in quite the right way -let’s forget the design similarities with Apple-, so we should take that into account.

I can’t help but compare this company with Uber or Airbnb, which certainly offer us really good alternatives on their segments, but at the cost of companies that work according to the current regulation. Until that regulation covers that kind of ‘sharing economy‘ (great euphemism), they are doing something that could be (or has been) considered a fraud in many countries.

Unfair comparison, and unfair valuations anyway.

Source: China’s Xiaomi Under Pressure to Prove Value to Investors