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Apple fights on multiple fronts

News, 31 August 2016

CUPERTINO, CA: Apple's expected launch next week of a new iPhone and Apple Watch will help to deflect attention from its current problems around product failures, tax payments and falling smartphone sales.

The tech giant – recently named by Brand Finance as having the world's most valuable brand portfolio – will hold its annual autumn product launch on September 7, with most speculation revolving around the removal of the headphone jack on its latest iPhone.

Whether that and a range of colours will be enough to reverse a sharp decline in sales – Q2 iPhone sales were 14.9% down year on year – is a moot point.

Later in the year a refreshed line of Mac desktops and laptops is on the cards, with an upgraded iPad due in 2017.

These developments have been overshadowed, however, by the events of the past few days.

A proposed US class-action lawsuit filed on Saturday alleges that the company was aware of a problem affecting the iPhone 6 and 6 Plus and refused to fix it.

The so-called 'touch disease' renders the touch screen unusable making the phone unfit for purpose: Apple is accused of fraud and violating California's consumer protection laws.

Across the Atlantic, meanwhile, the European Commission has decided that Apple was illegally given tax benefits amounting to some €13bn by the Irish tax authorities, which should now be repaid.

"Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules," said Commissioner Margrethe Vestager of the deal which saw Apple paying a corporate tax rate of no more than 1% compared to the standard Irish rate of 12.5%.

Both Apple and the Irish government intend to appeal against the ruling, which marks the latest in a series of interventions by the EU against US corporations.

Google, for example, faces antitrust actions on several fronts. Last year Vestager opened investigations into Google Shopping and the Android mobile operating system; last week she added new charges relating to online advertising and shopping comparison sites.

Data sourced from Bloomberg, Telegraph, BBC, Financial Times; additional content by Warc staff