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Wednesday, July 24, 2024

Apple’s market cap drops by $115 billion as regulators investigate

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In Short:

Regulators are focusing on Apple on both sides of the Atlantic, which has worried investors about potential fines and market dominance. In the US, Apple is being sued for antitrust violations, while in Europe, investigations are underway regarding compliance with Digital Markets Act. Apple’s shares dropped over 4% on Thursday, erasing $115 billion in market value. The company has faced accusations of suppressing competition for years and is now under increased regulatory scrutiny.

Regulators Target Apple Over Antitrust Concerns

Regulators in the US and Europe are focusing on Apple, raising concerns among investors about potential fines and threats to its market dominance. In the US, the Justice Department and 16 attorneys general are suing the company for antitrust violations. Meanwhile, in Europe, Apple is facing probes related to compliance with the Digital Markets Act.

Market Reaction

Following the news, Apple’s shares dropped over 4% on Thursday, resulting in a $115 billion loss in market value. This decline has pushed the company’s year-to-date losses beyond 11%. Despite being the world’s most valuable firm valued at over $3 trillion, Apple has underperformed compared to the Nasdaq and the S&P in 2021.

Regulatory Scrutiny

This is not the first time Apple has faced regulatory scrutiny. The company, along with its competitors, has long been accused of stifling competition to benefit themselves. As Apple’s products have gained widespread popularity, regulators have become increasingly vigilant about its market power.

The lawsuit filed in the US accuses Apple of impeding rivals’ access to hardware and software features on its devices. The potential European investigations will focus on Apple’s app store fees, terms, and conditions for developers.

Company Response

In response to the US lawsuit, Apple criticized the allegations as “wrong on the facts and the law” and cautioned against setting a precedent that could allow government interference in technology design. The company is yet to comment on the potential European probes.

The US lawsuit highlights Apple’s control over app distribution on iPhones and its impact on innovation. The DOJ cites examples of technologies where Apple allegedly suppresses competition, including super apps, cloud streaming game apps, messaging apps, smartwatches, and digital wallets.

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