Apple’s market cap shrinks by $115 billion after getting sued in iPhone antitrust case
Apple’s stakeholders and investors are concerned about how the string of lawsuits that the tech company is facing will affect the financial standing and health of the company.
In the US, Apple faces a new lawsuit, filed by the Justice Department and 16 state attorneys general, who allege violations of antitrust laws. On the other hand, in Europe, authorities are reportedly investigating whether Apple is adhering to the Digital Markets Act, raising further regulatory pressures on the company.
With regulators in the United States and Europe taking on Apple with a fine-toothed comb, investors are worried regarding potential fines.
Apple’s encounter with regulatory scrutiny is not novel. Over the years, the company and its industry counterparts have faced allegations of monopolistic practices, profiting by stifling competition. However, as Apple’s products have become increasingly ubiquitous in daily life worldwide, regulatory authorities have grown more assertive in addressing concerns about its market power.
The repercussions were evident in the stock market, with Apple’s shares plummeting by 4.1 per cent on Thursday. This decline wiped out approximately $113-$115 billion in market value, contributing to a year-to-date loss of 11 per cent. Even though Apple very up until very recently held the title of the world’s most valuable firm with a valuation exceeding $3 trillion, Apple’s performance in 2024 has lagged behind both the Nasdaq 100 and the S&P 500. As of the day of writing this article, Apple’s market cap stood at about $2.65 trillion.
The DoJ’s antitrust lawsuit filed a New Jersey federal court on Thursday, accuses Apple of impeding rivals’ access to hardware and software features on its popular devices. Similarly, potential investigations in Europe, targeting not only Apple but also some of its competitors, will scrutinize the company’s policies regarding fees, terms, and conditions for app store developers.
In response to the lawsuit by the US DoJ, Apple denounced it as “wrong on the facts and the law.” The company cautioned that such legal actions could establish a precedent empowering governmental intervention in technology design, asserting its intention to vigorously contest the allegations. However, Apple refrained from commenting on the potential European probes.
The US lawsuit alleges that Apple has exploited its control over app distribution on the iPhone to suppress innovations that could facilitate consumers in switching phones. Among the accusations are Apple’s refusal to support cross-platform messaging apps, restrictions on third-party digital wallets and non-Apple smartwatches, and the blocking of mobile cloud streaming services.
Apple defended its practices, emphasizing its commitment to innovation aimed at enhancing user experiences while prioritizing privacy and security. Having said that, the lawsuit poses a threat to the company’s identity and the principles that it believes set its products apart in fiercely competitive markets.
In Europe, the Digital Markets Act grants the European Commission authority to impose significant penalties, up to 10 per cent of a company’s total annual worldwide revenue, and double that for repeat offenders. Following formal investigations into Apple and Google, regulators aim to reach final decisions within 12 months.
Apple’s recent 1.8 billion Euros or about $2 billion fine in the European Union for obstructing music streaming apps from informing users about cheaper alternatives underscores the heightened scrutiny since the implementation of the Digital Markets Act on March 7th.
(With inputs from agencies)
