Apple's Bid To Overturn Chicago 'Netflix Tax' Dismissed by Judge

Apple Inc.’s AAPL attempt to overturn Chicago’s Amusement Tax — also called a “Netflix Tax” — has been dismissed by an Illinois court judge.

What Happened: Cook County Circuit Court Judge Daniel Duffy granted a motion by Chicago to dismiss Apple’s lawsuit against the Amusement Tax, Bloomberg Law reported.

A change introduced by Chicago to the law in 2015 imposed a 9% tax on streaming entertainment services like Netflix Inc. NFLX, Spotify Technology S.A. SPOT and Apple’s Apple TV+ as well as Apple Music.

While the judge dismissed the Apple complaint without prejudice, he noted that the Tim Cook-led company can file a second amended complaint within 35 days.

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Why It Matters: Apple had originally filed the lawsuit in 2018, alleging that the tax was unconstitutional on both the state as well as federal levels and violated the Internet Tax Freedom Act (ITFA).

After Chicago won the trial, Apple amended its lawsuit to say it was directing an “as applied” challenge to the tax instead of a “facial” challenge.

However, the judge ruled that Apple’s allegations in the amended complaint were insufficient.

Apple intensified its push into the streaming sector by increasing its marketing spend on Apple TV+ to more than $500 million in 2021.

In early March, Apple TV+ entered the Xfinity platform offered by Comcast Corporation CMCSA.

Price Action: Apple shares closed 2.7% lower in Monday’s regular trading session at $150.62, but rose 0.2% in the after-hours session to $150.94.

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