Apple Inc. (AAPL) The App Store lives on, albeit with different payment options, and Apple is not a monopoly. These are the key findings of US District Judge Yvonne Gonzalez RogersDecision in antitrust proceedings brought by Fourteen days Manufacturer Epic Games, that is to challenge the case.
The suit started after Apple removed Fortnite from the App Store. It did so after Epic included a link to its own payment system in Fortnite, in violation of its development agreement. Epic has purposely bypassed Apple’s in-app payment system, which is estimated to reduce an estimated 15 to 30% of all in-app transactions on iOS devices such as iPhones. This generates billions in sales every year.
The central theses
- The judge in the antitrust lawsuit against Apple by Fourteen days The manufacturer Epic Games indicated that Apple was not a monopoly, but indicated that changes to the App Store might be appropriate.
- While the cartel case is serious, it may not be too much of an issue for the overall performance of Apple stock.
- Big money investors still love stocks in the tech giant.
Judge Rogers represented Epic on Epic’s side of the payment system complaint, but other key decisions in the case followed Apple’s path. Your definition of the market in the case as digital mobile gaming transactions, rather than the entire iOS ecosystem as Epic had hoped, seems to have laid the foundation for a “no monopoly” decision (but I’m not a legal expert!). Still she said that Apple was on the verge of monopoly power in this market.
Therefore, future changes to the App Store may be appropriate. Legal interest can also force changes. How does this possibly affect Apple stock?
While an antitrust litigation is serious and it certainly seems like a big deal, it might not be too much of an issue for the stock’s overall performance. Let’s keep in mind that based on my estimates in the Legal Interest link above, App Store sales can represent around 5% of total sales.
It could grow naturally. However, the impact of this decision on overall sales and growth should be minimal, especially over time. Big money investors know that.
I watch when I believe institutional investors Trade stocks. I call them big money signals. I don’t think these market movers will be too concerned about the recent ruling in the long run. To get a feel for what Big Money really thinks about Apple, let’s broaden our horizons.
Below is a chart for Apple that dates back to 2017. I wrote down the times when big money flooded stocks. The way I see it, the more big money the better.
The activity in the graph above shows how much money Apple loves stocks over time. Accepted Basics, shown growth and future potential, it is hard not to agree. Sure, the stock had rough spots. But zoom out and it’s clear this stock had to be somewhere – UP.
Now the antitrust lawsuit is obviously important. But even if the App Store were marginalized by other options on iOS devices, it is very likely that the potential impact on overall sales would be small.
And who knows? The company could make a positive change to this situation and maybe create a new, profitable payment arrangement or something very unique. Also, don’t forget the possibility that Apple could in the end a winner from market forces.
The bottom line
Apple received mixed verdicts in its most recent antitrust case (the App Store’s payment system may be in trouble, but the judge doesn’t view the company as a monopoly). But even in the worst case scenario, there can be minimal impact on the overall business.
In my view, Big Money is feeling this and is focusing more on the long-term fundamentals and growth potential. What are you saying?
Disclosure: The author does not hold a position in the AAPL at the time of publication.