After the earnings party comes the hangover. The European Commission’s preliminary ruling today accusing Apple of abusing its “dominant market position” in its treatment of music streaming rivals like Spotify crystallizes the regulatory risks facing the iPhone maker. Related issues will be litigated starting next week in the trial of Epic’s lawsuit against Apple, while the U.S. antitrust authorities are investigating the subject as well. (And if you haven’t read this piece on the backdrop to next week’s trial, you really should.)
While Apple may prevail against Epic, only the biggest Apple bulls will bet on the company emerging unscathed from the European and U.S. inquiries. Prudent investors would start calculating how much of the billions of dollars in profits that Apple is thought to generate from its App Store—which in recent years have been a vital bulwark to its otherwise tepid profit growth—will be curbed.