The U.S. DOJ on Thursday sued Apple, accusing the consumer electronics giant of violating antitrust laws, adding to the growing list of bad news accumulating on the stock this year.
Patrick Seitz for Investor’s Business Daily:
The lawsuit alleges that Apple’s conduct makes it harder for Americans to switch smartphones, undermines innovation for apps, and imposes extraordinary costs on developers, businesses and consumers…
“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a news release.
MacDailyNews Take: The average app price in the Apple App Store as of January 2024 is 79-cents.
So, according to the U.S. DOJ’s Merrick Garland, apps that on average cost considerably less than a buck apiece led to “higher prices” for consumers. (smirk)
Again:
How much did it cost developers to have their apps burned onto CDs, boxed, shipped, displayed on store shelves prior to Apple remaking the world for the better for umpteenth time? [How much did it cost consumers?] Apple incurs costs to store, review, organize, surface, and distribute apps to over one [2.2] billion users. — MacDailyNews, June 10, 2022
It’s Apple’s App Store. Of course they have a right to charge commissions. Apple’s App Store isn’t a charity and it’s not free to operate. – MacDailyNews, November 14, 2022
In afternoon trades on the stock market today, Apple stock dropped [4.15% to $171.25]. Year to date, Apple stock is down more than 10%.
The Justice Department alleges that Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers. Those restrictions mostly pertain to Apple’s App Store.
The lawsuit is “seeking relief to restore competition” in the smartphone market.
MacDailyNews Take: Apple’s iPhone currently holds U.S. market share of 60.77%. Not a monopoly. iPhone currently holds worldwide market share of 24.70%. Again, not a monopoly. “Attempted monopolization” is not illegal; it’s the goal of every for-profit business.
Other issues weighing on Apple stock include weak iPhone sales in China and the lack of a strategy for artificial intelligence. Apple also faces legal issues over its App Store policies in Europe.
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MacDailyNews Take: It’s Apple’s App Store. Of course they have a right to charge commissions; for ANY amount they wish to charge, in fact. A properly run company will maximize commission based on what the market will bear.
Apple does not have a monopoly on smartphones. If developers think Apple’s App Store commissions are too much, they can go peddle their apps to Android users. Apple offers developers access to customers with money and the willingness to spend it on quality products. That has a value. Apple invested billions to build its brand and attract high quality, well-heeled customers over decades.
That said, as we wrote in December 2022:
Those who want safety, security, and privacy will stick to Apple’s App Store, but a single point of control is always a danger, especially when it comes to capricious censorship (see: pre-Musk Twitter, Apple’s App Store in China, etc.).
iPhone and iPad users must, like Mac users, have the ability to install third-party apps; even if they never do, for it will keep Apple honest. The ability to ban an app loses all power when it’s simply available in another App Store.
These moves, including removing the mandate to use WebKit, Apple’s Safari browsing engine, in third-party browsers, will greatly reduce, if not eliminate, the threat of anti-trust actions against Apple for the foreseeable future.
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