If the battle with Epic Games over competition policy in the App Store wasn’t enough, Apple (AAPL) – Download Apple Inc. (AAPL) report it is now facing a new antitrust war. On Friday, a group of Democratic and Republican representatives in Congress unveiled a bill aimed at curbing the power of Big Tech.
On this topic, Apple Maven today discusses three important topics:
- What is this new proposed legislation?
- How could he influence the Cupertino company?
- How could Apple shares suffer in the foreseeable future?
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The latest “attack” on the federal government’s legislative assembly on Big Tech came in the form of four proposed laws.
Two of them address the issue of companies favoring competing products and services on their platforms. Imagine that Amazon ranks its own offer higher than the offer of its competitors on amazon.com or that Alphabet first displays its devices on a search page.
The other two are tangentially related to the first two. One limits Big Tech’s ability to acquire companies that can compete with other vendors on their platforms. The latter refers to the rights of users and the ability to transfer their own data to others, even if they are competing platforms.
For now, a new law is being prepared. Before the vote on the floor of the House is considered, the proposal should first be cleared by the Subcommittee on Justice. From then until then, expect lobbying efforts to slow down or even stop the process altogether.
Risks for Apple
In my opinion, all FAAMG companies will lose out on the proposed law – including Microsoft, a company that fought its own antitrust war in the 1990s, but this time has largely remained out of the spotlight. Which technology company could suffer the most is a matter of debate.
Apple would probably “feel the heat” mostly in its service segment. The company has already been accused of being too powerful a custodian of the App Store, a popular application platform through which tens of millions of developers offer their products and services.
Outside of the App Store, it’s not clear how the legislation could affect Apple. CEO Tim Cook has made it clear that Apple is not a monopoly in any business in which it is involved – from smartphones to personal computers and most, if not all, digital services.
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Nothing new for now
Interestingly, despite the news appearing during trading hours on June 11, Apple shares barely moved in response. AAPL shares ended the trading day by almost 1%, very high on the day and ahead of the S&P 500 gain of 0.2%.
In my opinion, investors have rejected the news because it is largely in line with expectations set many years ago. Even before the U.S. presidential and senatorial elections in 2020, it became clear that the left and right parties in Congress would be united by their desire to limit the power of Big Tech.
I find it unlikely that Apple shares will be disrupted primarily due to antitrust efforts in Washington – at least for now. Nevertheless, I remind investors in Big Tech shares that antitrust policy is a key risk to consider when assessing investment opportunities in these names.
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(Disclaimer: This is not investment advice. The author may have one or more shares listed in this report. The article may also contain affiliate links. These partnerships do not affect editorial content. Thanks to Apple Maven for support)
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