Apple is grappling with a potential antitrust lawsuit from the U.S. Department of Justice (DOJ), as it navigates a turbulent period marked by a declining stock value since early December.
This looming legal challenge reflects the heightened scrutiny that Big Tech companies are increasingly facing.
The DOJ's investigation, now in its final stages, is centered on Apple's dominant strategies in maintaining iPhone supremacy.
Specific focus areas include the integration of the Apple Watch with the iPhone, the exclusivity of iMessage to Apple devices, and the control over Apple Pay's payments system.
These practices are under review for making it difficult for consumers to switch to competitors and for stifling competition in the market.
Apple CEO Tim Cook has previously defended the company's practices.
During a congressional antitrust committee hearing in 2020, Cook emphasized Apple's commitment to growth and opportunity creation, not just for Apple but for a broader ecosystem encompassing artists, creators, and entrepreneurs.
"Our approach has always been to grow the pie," Cook argued at the time.
Stock Market Jitters
Apple's shares experienced a notable decline amid increasing antitrust concerns.
In the first week of 2024, Apple shares plunged 5.99%, with the company at risk of losing its position as the world's most valuable company to Microsoft.
The decline pulled Apple's market cap to $2.82 trillion, which is a stark contrast to the 48% increase in Apple's share price during 2023.
Nick Rodelli, a CFRA analyst, highlighted the growing legal risks for Apple.
"While Apple's share price increased by 48% in 2023, our concerns regarding Apple’s legal risks have intensified in recent months," Rodelli wrote in a note on Friday.
Global Regulatory Pressures
The antitrust concerns are not just a U.S. affair; Apple is facing regulatory pressures globally.
The European Commission has expressed concerns over Apple's control of NFC technology for mobile payments. It is expected to decide whether to accept Apple's offer to open this technology to rivals.
In addition, Apple is expected to comply with new European regulations under the EU's Digital Markets Act, which aims to regulate core digital platform services.
The outcome of these investigations and potential lawsuits could have significant implications for Apple and the tech industry.
A shift in Apple's "walled garden" approach might be necessary, impacting its more than a billion subscribers and nearly two billion devices globally.