Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Europe’s latest Apple bite is close to the core

Europe’s latest Apple bite is close to the core

Big Tech investors have historically brushed off the threat from Margrethe Vestager, the European Commission’s antitrust tzar who wants to reduce U.S. behemoths’ digital dominance. The combined market value of Apple, Amazon.com, Facebook and Google owner Alphabet has risen more than threefold to $4.4 trillion since the Dane’s first term started in 2014. Two new probes into Apple, launched on Tuesday, suggest that it’s time to start taking her more seriously.
Vestager is concerned that the rules for Apple’s preponderant app store distort competition. Music-streaming rival Spotify Technology complained that Apple levies a 30% “tax” on purchases made within apps by smartphone users, while simultaneously stopping app developers from steering customers to cheaper options.

The second probe centres on Apple Pay, which allows customers to buy things using an iPhone. Vestager worries that Apple makes it hard for competing payments systems to work smoothly with its popular smartphones. Apple said it was disappointed that the European Commission “is advancing baseless complaints from a handful of companies who simply want a free ride”.

But Chief Executive Tim Cook – and the company’s investors – should be worried. The smartphone market is mature, and that’s a problem for Apple, as it accounts for roughly half of revenue. Sales of iPhone handsets fell 7% in the first quarter of 2020.

Apple has compensated by selling more apps, and subscriptions to its gaming and music services. These services are closing in on a quarter of all revenue thanks to rapid growth. Citi analysts reckon that the app store accounts for 30% of all services revenue.

That has convinced the market to revalue Apple, as investors prefer recurring services revenue to one-off hardware sales. The company’s shares are valued at 24 times estimated earnings over the next 12 months, using Refinitiv data. That’s nearly twice as high as the multiple from 2015 until the end of 2018.

If the commission forces Apple to cut App Store fees and promote competing systems to Apple Pay, its revenue growth would slow, probably meriting a lower multiple, and jeopardising its $1.5 trillion market capitalisation.

In other words, Vestager is getting serious – unlike with past probes into Google’s shopping website and Android operating system, which made little difference to the company’s core business. Cook’s shareholders, and those in other tech behemoths, ought to be worried.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
×