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Is Apple good for Europe?

Apple announced Thursday it will open a new software developer training center in Italy, asserting its products support over a million jobs on the continent. But with its tax practices in the spotlight, is the company an asset for the European economy?

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    The Apple Inc. logo is seen through raindrops on a window outside of its flagship store in New York, January 18, 2011.
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Apple released a statement Thursday asserting that its product ecosystem is responsible for more than a million jobs in Europe.

The figures were released during an announcement of a new App Development Center in Naples, Italy, aiming to nurture a new generation of coders for its software.

While much of this news is welcome, it comes at a tricky time for the company, as the European Commission is probing its tax practices, contending that Apple has arranged its affairs on the continent to unfairly shirk a significant proportion of taxes.

“Europe is home to some of the most creative developers in the world and we’re thrilled to be helping the next generation of entrepreneurs in Italy get the skills they need for success,” said Tim Cook, Apple’s CEO, according to the press release.

“The phenomenal success of the App Store is one of the driving forces behind the more than 1.4 million jobs Apple has created in Europe and presents unlimited opportunities for people of all ages and businesses of all sizes across the continent.”

The company’s App universe has driven the development of 75,000 jobs in Italy alone, with a further 242,000 in the UK, 209,000 in Germany, and 163,000 in France, according to Apple’s own data.

Apple also claims to employ 22,000 Europeans directly.

While some observers wonder whether this publicity drive may be an attempt to divert attention from the allegations of tax avoidance, and to demonstrate the ways in which Apple has benefited the European economy, there can be no doubt of the explosive growth of the app ecosystem.

“Before Apple opened the App Store in July 2008, there was no such thing as an App Economy job,” observes chief economic strategist Michael Mandel of the Progressive Policy Institute.

“No employer was posting want ads looking for iOS or Android developers; no one was talking about the shortage of mobile app coders.  This has been an incredibly rapid transformation of the job market, paralleling the astounding growth of smartphone usage.”

Dr. Mandel’s comments are published in a PPI report into app-economy jobs in Europe, also released Thursday, which concludes that European workers and companies have indeed been able to take advantage of the “App economy boom.”

Yet, as Mandel also notes, this new marketplace is not owned solely by Apple. Many developers work across multiple platforms, so while PPI data suggests that 75 percent of App Economy roles belong to iOS (Apple’s operating system), the same is true of Google’s Android.

And what of Apple’s tax practices across the pond?

Apple earns 55 percent of its revenue outside the United States, and yet its foreign tax rate is a mere 1.8 percent, an arrangement that the European Commission insists is simply unacceptable. 

This could mean that Apple owes more than $8 billion in back taxes, according to analysis by Bloomberg.

Yet this is perhaps just the highest-profile in a series of cases scrutinizing European tax practices of various US companies, including Amazon, Starbucks, and McDonalds.

The United States Senate Committee on Finance published a letter Friday, in which they stated:

“Predictable tax policy fosters a fair and stable environment for business and investment. Going back in time to penalize taxpayers under a new law, or a new interpretation of an existing law without notice, runs counter to that objective. The EU Commission surely understands the importance of promoting a tax environment that is fair, efficient, and growth-friendly.”

A decision in Europe could come as soon as March, 2016.

And yet, whatever comes of this decision, and whatever connection there may or may not be between Apple’s announcement and its tax travails, few observers doubt that this new training center in Italy will be of economic benefit.

Indeed, it comes as part of an industry-wide drive to promote the art of coding, as firms begin to fret over skills shortages, notes the BBC.

“Apple opening such a centre can only be a positive for the European app economy,” said Jaede Tan of App Annie, an analytics company.

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