What’s going on?

Apple was sued by US regulators alleging that it has built a monopoly in smartphones.

What does this mean?

• While Apple undoubtedly has a solid base of loyal fans, US Department of Justice (DoJ) suspects the tactics Apple used to get there.
• Apple is being accused of gatekeeping its own services and boycotting messaging apps that promote communication between iPhone users and others.
• If DoJ proves that Apple is making the market tougher for rivals and consumers, the company could be forced to split up its business – a tangible threat to Apple’s 64% market share.
• That was possibly what drove AAPL down 7% since beginning 2024, while the S&P 500 climbed 10%.

Why should I care?

The bigger picture: EU has been doing it too

• Apple is already used to being the target – EU fined Apple $2bn for forcing music streaming companies to take payments through the App Store; and Apple’s being assessed against the rules of Europe’s Digital Markets Act, the riskiest outcome of which could add up to fines worth 10% of Apple’s annual revenue.

Zooming out: It’s just another drop of water

• The legal threats aren’t necessarily what bother Apple’s investors, but rather iPhone sales lagging behind local rivals in China and electric vehicle plans being trashed, losing its spot in the Fab Five ranking (behind Nvidia, Microsoft, Meta, Alphabet, and Amazon).
• The only bright side for iPhone fans is that any forced changes could mean more App Store freedom, a wider choice of browsers, and better support for third-party smartwatches and contactless payments.

Content source: 
1. Finimize (2024) Fair And Square. Available at: https://finimize.com/content/fair-and-square [Accessed on Mar 31, 2024]