Apple faces mountain of controversy at worst possible time

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Apple faces a host of controversies as it prepares to launch its biggest product of the year. (Photo by GEOFF CADDICK / AFP via Getty Images)

A few days before the launch of its next iPhone, Apple is facing a multitude of headaches

Apple (AAPL) announced on Tuesday that it would host its annual fall event September 14, where it is generally expected that launch iphone 13, a new Apple Watch and AirPods. But the widely anticipated event comes just as Apple navigates controversies that could hamper its operation for years to come.

Apple is apparently immune to such controversies, as its stock price continues to hit all-time highs on Tuesday, before falling Wednesday that still left its market capitalization well above $ 2.5 trillion. Additionally, analysts expect the upcoming iPhone 13 to be a huge hit for the tech giant.

“In the grand scheme of things, from the point of view of the Apple user, from the point of view of the investor, I think a lot of it is non-events,” said Gene Munster. , managing partner of Loup Ventures, at Yahoo Finance, referring to recent antitrust and privacy backlashes against the technology. giant.

The most urgent is Apple’s legal battle with “Fortnite” maker Epic Games on its App Store fees and require some developers to use Apple’s proprietary payment system. A decision in this case, expected in the coming weeks, could transform the way Apple manages its digital store. However, it’s not just Epic taking on the App Store. Apple is also said to face investigations from the Department of Justice and the European Commission of the European Union.

Aside from antitrust concerns, Apple has faced a decline in its planned child protection software which will scan users’ iCloud accounts for images of child pornography. The feature has raised concerns among privacy and free speech advocates who say totalitarian governments could use it to root out political enemies and protesters.

But none of this seems to bother consumers or investors.

Apple’s antitrust fight does not scare investors

Perhaps Apple’s greatest existential risk is its antitrust fight with Epic. The maker of “Fortnite” sued the tech giant in August 2020, alleging that Apple’s App Store payment system and restrictions against third-party app stores violated antitrust laws. Specifically, Epic claims consumers are being harmed by Apple’s policy of forcing developers to use its payment system, which charges a 30% commission.

"Fortnite" Epic Games creator CEO Tim Sweeney leaves after weeks-long antitrust lawsuit in federal court in Oakland, California, United States, May 21, 2021. REUTERS / Brittany Hosea-Small

Epic Games chief executive, creator of “Fortnite,” Tim Sweeney leaves after a weeks-long antitrust lawsuit in federal court in Oakland, California, United States on May 21, 2021. REUTERS / Brittany Hosea-Small

The trial ended in May and U.S. District Judge Yvonne Gonzalez Rogers is expected to announce her decision in the coming weeks. Apple’s App Store generates billions of dollars in revenue, and developers like Epic have long complained about the 30% fee that Apple charges for every purchase made in the market.

Apple has tried to appease small developers by lowering fees to 15% for companies making less than $ 1 million a year, but that hasn’t slowed down criticism.

Last week, Apple announced that it was going to start allowing developers of “reader” applications to connect to their own websites to allow users to set up and manage their accounts. Reading apps are those like Netflix, Spotify, or the Amazon Kindle app that allow you to view content that you haven’t purchased through the Apple App Store. The change follows an investigation by the Japanese Fair Trade Commission and applies to all reading apps around the world.

While this seems to scare investors off, Apple isn’t making a lot of money with these apps. Instead, the company derives most of its revenue from the games app store.

In August, Apple announced that it would now allow app developers to tell users how they can buy items outside of the app store by email. But developers like Spotify and Netflix have long created a workaround by only allowing users to sign up for their services outside of the App Store.

Yet the move is viewed by analysts as a wise one on Apple’s part, as it continues to face pressure on its App Store policies.

“The recent concessions … that Apple has made to developers over the past few weeks is a smart move, because [CEO Tim] Cook and his company see it written on the wall that adjustments and fee changes need to be made in areas of the App Store going forward, ”Wedbush analyst Dan Ives told Yahoo Finance.

NEW YORK, NY - AUG 9: Daniel Ek, CEO of Spotify, talks about a Samsung and Spotify partnership during a product launch event at Barclays Center on August 9, 2018 in the Brooklyn neighborhood of New York City.  The new Galaxy Note 9 smartphone will go on sale on August 24.  (Photo by Drew Angerer / Getty Images)

Spotify CEO Daniel Ek. The company has a habit of fighting Apple for its practices in the App Store. (Photo by Drew Angerer / Getty Images)

For investors, these changes don’t seem like much of a problem, and users apparently don’t mind where they pay for the apps or who gets a discount.

Developers, however, will continue to oppose Apple’s App Store policies.

“There is room for further adjustments to some of the App Store policies,” Munster said. “I think these headlines are going to be a part of Apple’s history for probably a year or two.”

Privacy concerns are on the rise, but consumers are still buying iPhones

Apple has made privacy the cornerstone of its products for years, pushing its capabilities and policies into TV ads and billboards around the world.

But the company has recently come under fire for its intention to search users’ iCloud accounts for images of child pornography. While the removal of this content is admirable, privacy and cybersecurity experts say the process has opened up Apple to potential abuse from restrictive governments like the Chinese Communist Party.

Cyber ​​security experts say Apple’s approach could allow those governments to find dissidents by forcing Apple to seek out additional content, including protest material.

Apple has since said it will take longer to work out the basics of the feature, but it has taken a toll on the company’s reputation for maintaining user privacy.

Still, according to Ives, that shouldn’t hurt iPhone 13 sales.

“We don’t see all of these issues overshadow the upcoming iPhone 13 launch, which we believe represents a massive 5G upgrade opportunity with around 25% of Apple’s installed base not upgrading their phones. for over 3.5 years, ”Ives said.

Apple won’t be immune forever

While Apple’s controversies haven’t ruled its stock prices or the sales of its devices, they could eventually add up and start to hurt the tech giant and its reputation for being more scandal-free. that, say, Amazon or Facebook.

“I think of corporate perception as a debit and credit system and Apple has accumulated a lot of credits, but every negative debit erodes the perception,” said Patrick Moorhead, president of Moor Insights and Strategies, at Yahoo Finance.

“Consumers haven’t seemed to care about all of this lately, as Apple’s credit far outweighs debit, but over time the crossover could happen,” Moorhead said. “It would be a dark day for Apple investors, but we’re a way away from that point.

In the meantime, Apple’s stock could continue to hit new highs.

Daniel howley is a technical writer at Yahoo Finance.

Do you have any advice? Email Daniel Howley at dhowley@yahoofinance.com via encrypted mail to danielphowley@protonmail.com, and follow him on Twitter at @DanielHowley.

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