On Thursday afternoon, the US Justice Department, along with over a dozen states, launched a significant antitrust case against Apple.
Accusing the tech giant of employing anticompetitive strategies—including obstructing the entry of new apps and undermining the display of Android messages on iPhones—the lawsuit aims to challenge Apple’s dominance in the smartphone sector.
Anticipated for years due to ongoing concerns over Apple’s restrictive App Store policies, exorbitant fees, and its exclusive technology ecosystem, the move is a critical moment in the broader US crackdown on Big Tech monopolies, as reported by CNN.
Apple now faces monopoly charges as the most prominent entity among several technology firms scrutinized after decades of minimal regulation.
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At a Thursday news conference, California Attorney General Rob Bonta stated that the groundbreaking lawsuit against Apple would ultimately benefit both businesses and consumers. “This is a pro-business action,” he said.
“When we make sure that the rules of the marketplace are being followed, that no one is acting illegally, abusing their power, acting in a way that’s anti-competitive or exclusionary, it provides an opportunity for the next innovator, the next dreamer, the next visionary, the next startup, the next mom and pop to be able to participate in the marketplace and compete, as opposed to being squashed out and pushed out because of the dominant market force,” Bonta finished.
While the DOJ handed down their suit, Apple CEO Tim Cook had been intensifying efforts in China through a charm offensive that includes the inauguration of a new flagship store in Shanghai as well strategic meetings with key suppliers.
Cook looks to counteract a 24% drop in iPhone sales in the initial six weeks of 2024, a significant challenge for the tech giant in the face of stiff competition and market headwinds, according to CNN.
On his third visit to China within a year, Cook opened Apple’s latest store in Shanghai’s Jing’an district, close to a historic temple, positioning it as the largest in China and second only to the Fifth Avenue flagship in New York.
The store’s opened hoping to enhance its retail presence in a market where it recently achieved a record 17.3% market share, according to IDC Research. However, recent data from Counterpoint Research indicates a slip in market positioning, with competitors like Vivo, Huawei, and Honor gaining ground.
“China remains a critical market for Apple, particularly in the premium segment above $800, where it holds a dominant position,” said Ivan Lam, a senior analyst at Counterpoint.
“With Huawei’s resurgence and other Chinese [phone makers] gaining traction in offline sales, Apple is proactively strengthening its offline presence, leveraging flagship stores as a key tool to promote high-end smartphones,” he explained.
Cook’s engagements in Shanghai went beyond store openings. He even praised Chinese suppliers for their advanced manufacturing capabilities during an information session featuring executives from BYD, Lens Technology, and Everwin Precision Technology. Cook’s activities also included visits to a film studio and interactions with mobile game developers.
Despite these efforts and the allure of new retail locations, Apple faces challenges from rising nationalist sentiment and calls for loyalty to domestic brands.
Apple’s premium pricing strategy amid economic slowdown and tighter consumer spending has been identified as a contributing factor to its sales decline. The Chinese government’s push against Apple, partly in retaliation for geopolitical moves, also complicates its position.
Nonetheless, there are some loyal Apple customers in China who have expressed their support for the brand, valuing its design over nationalist calls for product boycotts.
Under Tim Cook, Apple has actively engaged in various efforts to promote environmental sustainability, racial equity, and LGBTQ+ rights. Cook himself has been vocal about his personal values and how they align with Apple’s operations and policies.
However, the approach to embracing these values and initiatives has lead to criticism from those who view them as overly political or detracting from the company’s primary focus on technology and innovation.
According to analyst forecasts reported by Bloomberg, Apple experienced a significant 30% decline in iPhone sales year-on-year in December, amidst a general market growth. The downturn is expected to continue into 2024, leading to a similar double-digit fall in iPhone sales.
Edison Lee, an analyst at Jeffries, called attention to an investor note on Sunday that this decline was evidenced by industry checks. The anticipation of further sales drops for Apple in 2024 is supported by widespread discounts on the iPhone across various online platforms as well.
These discounts, while reducing the average selling price, are not expected to boost sales volume, according to Jeffries’ analysis.
