Apple stock closes down 3% on news of Epic ruling
Apple's stock price dipped more than 3% at the end of trading Thursday after a mixed ruling was handed down in the Epic v. Apple court case.
Shares of Apple closed down $5.10, or 3.3%, to hit $148.97 at the bell, the stock's worst performance in months. Trading peaked at $155.48 before suffering a precipitous decline shortly after 11 a.m. Eastern, around the time when news of the Epic case decision broke.
In a ruling today, U.S. District Judge Yvonne Gonzalez Rogers found Epic did not demonstrate that Apple's control of the App Store constitutes a monopoly, but did require tech giant to offer alternative payment methods for in-app purchases. The decision's wording leaves wiggle room for interpretation and people familiar with Apple's thinking believe developers will only be allowed to include links to outside payment options, not implement third-party systems in-app, CNET reports.
Judge Rogers in her ruling said Apple is "restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing" and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app."
Apple called the decision a "resounding victory" despite the fact that it will precipitate one of the most impactful App Store changes in the platform's history. The company did, however, prevail on nine other counts. Epic said it will appeal.
The App Store contributes significantly to Apple's services revenue, which reached a new high of $17.5 billion for the third fiscal quarter of 2021. According to estimates from App Annie, Apple raked in nearly $73 billion from App Store purchases in 2020, while more conservative guesses put the number closer to $64 billion.
Today's slump pumps the brakes on momentum AAPL gained in two months. The stock was trending upward and hit number of new milestones over the past two weeks, most recently touching an all-time high on Tuesday.
Apple is up slightly in after-hours trading.
Read on AppleInsider
Shares of Apple closed down $5.10, or 3.3%, to hit $148.97 at the bell, the stock's worst performance in months. Trading peaked at $155.48 before suffering a precipitous decline shortly after 11 a.m. Eastern, around the time when news of the Epic case decision broke.
In a ruling today, U.S. District Judge Yvonne Gonzalez Rogers found Epic did not demonstrate that Apple's control of the App Store constitutes a monopoly, but did require tech giant to offer alternative payment methods for in-app purchases. The decision's wording leaves wiggle room for interpretation and people familiar with Apple's thinking believe developers will only be allowed to include links to outside payment options, not implement third-party systems in-app, CNET reports.
Judge Rogers in her ruling said Apple is "restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing" and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app."
Apple called the decision a "resounding victory" despite the fact that it will precipitate one of the most impactful App Store changes in the platform's history. The company did, however, prevail on nine other counts. Epic said it will appeal.
The App Store contributes significantly to Apple's services revenue, which reached a new high of $17.5 billion for the third fiscal quarter of 2021. According to estimates from App Annie, Apple raked in nearly $73 billion from App Store purchases in 2020, while more conservative guesses put the number closer to $64 billion.
Today's slump pumps the brakes on momentum AAPL gained in two months. The stock was trending upward and hit number of new milestones over the past two weeks, most recently touching an all-time high on Tuesday.
Apple is up slightly in after-hours trading.
Read on AppleInsider
Comments
Even if Apple were to see revenue fall let's say $3 billion from the outcome, in the scope of the almost $400 billion annual revenue, that's not even 1%. With new products coming over the next few weeks, more and more people signing up for various services, that loss can easily be made up.
Beyond that, if Apple really wanted to add to the bottom line, they could start their own search engine. Instead of Google paying Apple billions to be the default search engine in Safari...and then making even more billions on that... Apple could create their own and eliminate the middleman (Google) and rake in even more money and it would be a lot more than whatever might be lost from the App Store fallout.
Beyond that, even if developers give an alternative place to pay, even with a discount, most people aren't going to do it. The convenience of the App Store, and not having to give a credit card number to a whole pile of other sites is going to keep a majority of people right were they are- in the App Store.
The other main reason is that Google is paying Apple billions not to do this. Oh sure, the contract states that Google is looking for default status on Apple products, but the wink-wink nudge-nudge reason is to make it worth Apple's while not to enter the market. I'm sure it's nowhere in the contract since that would instantly be used by the Department of Justice to go after Google for anti-trust.
MRNA & BNTX are strong new holdings, though. If mRNA technology pans out anywhere near as big a thing as it’s been hyped those might be my big winners for the next 10 years.
Epic just plain lost, It is still not allowed on the App Store, Apple could in fact expand the ban to Unreal Engine (it won’t, but it has the court’s permission to do so), and now owes Apple substantial amounts of money. It’s a total loss for Sweeney, full stop.
I also see nothing in the 185 page document stating that Apple cannot have a rule that states the price has to be the same across mechanisms.
I do see in the document confirmation that Apple is still entitled to their commission even if a different payment mechanism is used.
So any alternative payment mechanisms will result in more expense for developers, not less.
Note how Epic are appealing but no news that Apple are. Massive win for Apple.