Apple stock closes down 3% on news of Epic ruling

Apple's stock price dipped more than 3% at the end of trading Thursday after a mixed ruling was handed down in the Epic v. Apple court case.

Shares of Apple closed down $5.10, or 3.3%, to hit $148.97 at the bell, the stock's worst performance in months. Trading peaked at $155.48 before suffering a precipitous decline shortly after 11 a.m. Eastern, around the time when news of the Epic case decision broke.

In a ruling today, U.S. District Judge Yvonne Gonzalez Rogers found Epic did not demonstrate that Apple's control of the App Store constitutes a monopoly, but did require tech giant to offer alternative payment methods for in-app purchases. The decision's wording leaves wiggle room for interpretation and people familiar with Apple's thinking believe developers will only be allowed to include links to outside payment options, not implement third-party systems in-app, CNET reports.

Judge Rogers in her ruling said Apple is "restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing" and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app."

Apple called the decision a "resounding victory" despite the fact that it will precipitate one of the most impactful App Store changes in the platform's history. The company did, however, prevail on nine other counts. Epic said it will appeal.

The App Store contributes significantly to Apple's services revenue, which reached a new high of $17.5 billion for the third fiscal quarter of 2021. According to estimates from App Annie, Apple raked in nearly $73 billion from App Store purchases in 2020, while more conservative guesses put the number closer to $64 billion.

Today's slump pumps the brakes on momentum AAPL gained in two months. The stock was trending upward and hit number of new milestones over the past two weeks, most recently touching an all-time high on Tuesday.

Apple is up slightly in after-hours trading.

12 Comments

NYC362 101 comments · 4 Years

About 3 years ago

rcfa said:

Best buying opportunity…

Truly is.

Even if Apple were to see revenue fall let's say $3 billion from the outcome, in the scope of the almost $400 billion annual revenue, that's not even 1%. With new products coming over the next few weeks, more and more people signing up for various services, that loss can easily be made up.

Beyond that, if Apple really wanted to add to the bottom line, they could start their own search engine. Instead of Google paying Apple billions to be the default search engine in Safari...and then making even more billions on that... Apple could create their own and eliminate the middleman (Google) and rake in even more money and it would be a lot more than whatever might be lost from the App Store fallout.

Beyond that, even if developers give an alternative place to pay, even with a discount, most people aren't going to do it. The convenience of the App Store, and not having to give a credit card number to a whole pile of other sites is going to keep a majority of people right were they are- in the App Store.

KTR 280 comments · 4 Years

About 3 years ago

I hope that ruling back fires, apple loyalist ( like me ), will only buy from the apple App Store and and apple payment system

sevenfeet 471 comments · 16 Years

About 3 years ago

NYC362 said:

rcfa said:

Best buying opportunity…

Truly is.

Even if Apple were to see revenue fall let's say $3 billion from the outcome, in the scope of the almost $400 billion annual revenue, that's not even 1%. With new products coming over the next few weeks, more and more people signing up for various services, that loss can easily be made up.

Beyond that, if Apple really wanted to add to the bottom line, they could start their own search engine. Instead of Google paying Apple billions to be the default search engine in Safari...and then making even more billions on that... Apple could create their own and eliminate the middleman (Google) and rake in even more money and it would be a lot more than whatever might be lost from the App Store fallout.

Beyond that, even if developers give an alternative place to pay, even with a discount, most people aren't going to do it. The convenience of the App Store, and not having to give a credit card number to a whole pile of other sites is going to keep a majority of people right were they are- in the App Store.

Here's a little secret. Apple already has a search engine, hiding in plain sight. We typically interface with it as "Siri" but it's also used on the backend for Maps, Apple Music and a slew of other technologies. What Apple doesn't provide is a web landing page or common API like Google or Microsoft provides. Why not? Well a few reasons but I think they can be distilled down to two major points. First, the Google search engine is the major driver of the company's revenue but they also have to collect piles and piles of data on us in order to make the search engine more effective. Apple could certainly do the same thing, but that would end the business model of "Apple Privacy" which they have staked out their reputation over many years.

The other main reason is that Google is paying Apple billions not to do this. Oh sure, the contract states that Google is looking for default status on Apple products, but the wink-wink nudge-nudge reason is to make it worth Apple's while not to enter the market. I'm sure it's nowhere in the contract since that would instantly be used by the Department of Justice to go after Google for anti-trust.