Analyst says DOJ suit will result in Apple paying a hefy fine, and changing its business model،
Commenting on the lawsuit, Ives told clients in a note: “We don't anticipate any change in business model at this time, but Apple is clearly going to have to find a way to settle this matter, pay a hefty fine and ultimately find solutions . compromise with developers on the structure of the App Store in the future. The analyst has an “outperform rating” on Apple stock with a price target of $250. Shares closed Friday at $172.28.
The suit, filed Wednesday morning by the Justice Department with 16 state and district attorneys general, accuses Apple of committing several antitrust violations, including one that claims Apple blocked the development of a ” super
app” which would have made it easier for consumers to switch. mobile platforms. Apple was also accused of causing the failure of the Amazon Fire Phone in 2014 and making it difficult for manufacturers like HTC and LG to compete in the industry.
DOJ blames Apple's monopolistic methods for forcing LG to stop producing Android phones
As Ives points out in his note to Wedbush customers, Apple has angered app developers by not allowing them to add a link to third-party payment processors for in-app purchases. Instead, outside the EU, Apple collects 15-30% of in-app purchases by completing these transactions through its own in-app payments platform. Following the epic Epic vs. Apple lawsuit, Apple is allowing developers to include a link to a third-party payment processor, but still takes a 12% to 27% cut.
Meta Platforms, Microsoft, Apple's integrated payments helped the company's Services unit become Apple's second-largest business after
iPhone (services generated $85.20 billion in revenue last fiscal year, 2023), some changes to the App Store could be the end result of the DOJ lawsuit. This would be on top of the massive fine Apple will likely be forced to pay.
It's probably in Apple's best interest not to get bogged down in a long and morale-draining trial. A settlement would help the tech giant put this behind it without spending too much time and money defending the company. In addition to wondering what constitutes a massive Alright, it will be interesting to see what changes Apple is willing to make to the App Store.
