Mike Peterson
Antitrust and government regulatory action represent some of the biggest risks to Apple, which reports earnings on Tuesday, according to an analyst at D.A. Davidson & Co.
In a note to investors seen by Reuters, lead analyst Tom Forte said he hopes Apple executives address the regulatory risks on the company's 2 p.m. Pacific Time earnings call with analysts.
The company has shied away from addressing controversy on its earnings calls, however. It isn't likely that Apple CEO Tim Cook or CFO Luca Maestri will address any antitrust issues at length during the hourlong call.
Apple faces increased antitrust scrutiny related to its App Store and services business. Many of those take aim at the company's 30% cut of app and in-app purchases, while others seek to open up the iOS platform. One potential lawsuit levied at Google could also threaten the payments Google makes to Apple for the search engine's default spot on iOS.
In addition to lawsuits from companies like "Fortnite" maker Epic Games, Apple also faces potential legislative risks such as a sweeping antitrust package that could impose tighter restrictions on Silicon Valley companies.
Some analysts, like Wedbush's Daniel Ives, believe that the antitrust scrutiny and lawsuits have "more bark than bite" and suggest that they won't likely result in any major structural changes to the Cupertino tech giant.
Malcolm Owen
Wesley Hilliard
Marko Zivkovic
Christine McKee
5 Comments
Let me put out a amorphous note on the day of earnings calling attention to the obvious antitrust issues that have existed for 6 months….Because I want to call attention to myself and try to make myself relevant
The lack of success in court for BlueMail's antitrust lawsuit against Apple doesn't bode well for Epic's lawsuit. Part of the ruling involved the judge stating that BlueMail's success on other platforms did not support the idea that iOS was critically important to their business. Since Fortnite did the majority of its sales on console and PC, it's hard to see how Epic's complaint will fare any better than BlueMail's.
That said, Congress can pass new trade laws that impact the tech sector regardless of what happens in court per actual antitrust claims.
This is exactly why Apple needs to pull out of a market that wants more competition within Apple's ecosystem. Because there already is competition (eg, Android), and by forcing Apple out of the market regulators will actually reduce competition. How does that help consumers when competition is eliminated?