Apple may take advantage of a U.S. tax break on repatriated overseas cash to bring back up to $252 billion to America – and could end up buying the streaming service Netflix, market research analysts say.
GBH Research says that such a move would jump start Apple’s streaming video/content business, even if so large an acquisition would be out of character for Apple.
Speculation that the tech giant may be interested in acquiring Netflix is an oft-floated idea, experts say, although the company usually backs away from mergers and acquisitions deals that are more than $2 billion.
Television is one of the few screens that has Apple hasn’t conquered, but that may soon change. The world’s richest company appears ready to set out to produce Emmy-worthy programming along the lines of HBO’s ‘Game of Thrones’ and Netflix’s ‘Stranger Things.’
Netflix has more than 100 million worldwide subscribers and a video library that added 1,000 hours of original programming last year alone
But with the ‘content arms race’ well underway between Netflix (spending $8 billion this year), Disney and Amazon – not to mention a host of others including HBO and Facebook aggressively spending on streaming content, now might be the right time for Apple to make an aggressive move, analysts say.
On Wednesday Google was criticized for moving more than £14 billion into a tax haven in a controversial bid to slash its bills.
The internet search giant funnelled the cash through low-tax European countries and then into Bermuda, in a switch thought to have saved it £2.7 billion in 2016.
Stranger things, one of the massive hits on Netflix Apple hopes to emulate
It was the latest example of the firm using complex arrangements to shield itself from tax.
Liberal Democrat leader Sir Vince Cable said the move was ‘galling’ and a campaign group said it showed international tax rules were deeply flawed.
To reduce its bills, Google books most of its international advertising revenues – including those from the UK – in low-tax Ireland.
It then passes this on to a company in the Netherlands, where there are also generous tax laws, in a strategy known as ‘the Double Irish with Dutch Sandwich’.
From there the money is sent to Bermuda, where the corporate tax rate is zero.
The firm used the same technique in 2015, though the amount it had saved in 2016 – the most recent accounts available – was 7 per cent higher, according to Bloomberg.
Major tax reforms recently passed in the US are also likely to mean it can more easily repatriate its £45bn overseas cash pile.
It will be allowed to do so by paying a one-off 15.5 per cent rate on the stash, under changes pushed for by President Donald Trump.
A Google spokesman insisted the company paid all the taxes that were due.
But the firm under growing pressure to pay more tax, with bureaucrats in Brussels currently drawing up plans to squeeze more cash out of it and its rivals.
Technology companies are also under fire on a range of other issues, including their efforts to tackle content featuring extremism and abuse on their platforms.
According to filings in the US, Alphabet, Google’s parent company, paid an effective tax rate of 19pc – about £3.4 billion on profits of £14.3 billion.
Its rivals Facebook and Apple have also been accused of using similar tax arrangements to shave billions off their total bills as well.
Apple is thought to have the biggest offshore cash pile, at about £185 billion.
Hollywood has long shuddered at the thought of Apple training its sights on TV the way it once did on the music business.
Fifteen years ago, Apple’s then-CEO Steve Jobs convinced record labels to let the company sell digital music on its iTunes store for 99 cents a single, a deal the music industry was happy to take in the face of growing music piracy enabled by Napster.
Over time, though, Apple’s dominance in digital music chafed music executives, who saw the company siphoning off a chunk of their profits.
Movies and television have proven much harder for Apple to crack.