Apple (AAPL) lost an appeal in Germany’s top civil court on Tuesday, opening it up to tighter controls in the country as regulators dial in on big tech on both sides of the Atlantic. German Federal judges backed a 2023 designation of Apple as a “company of paramount cross-market significance for competition,” which is likely to allow regulators to impose stricter antitrust restrictions on the iPhone maker.
Effectively, the ruling means that the scope of Apple’s business is large enough to warrant extra attention from regulators, even if it does not already explicitly be found to hurt competition. The move by the Federal Court of Justice means Apple joins Alphabet (GOOGL) and Meta Platforms (META) on Germany’s list of tech giants who are subject to increased scrutiny and potential controls.
EU Toughens Stance
Moreover, the ruling at the national level in Germany comes amid increased scrutiny of U.S tech giants by European antitrust regulators in the wake of the bloc’s enactment of its Digital Markets Act (DMA) in 2022.
The European Commission is investigating Alphabet’s Google over possible breaches and META has been subject to investigations after it was accused of violating the DMA with its “pay-or-consent” advertising model. The European Commission in November fined META €797.72 million (or about $840 million at the time) over practices unfairly benefiting Facebook Marketplace. In September, the European Court of Justice said GOOGL must pay a €2.4bn fine for abusing the market dominance of its shopping comparison service.
Apple has already agreed to open its tap-and-go mobile payments system to rivals to settle EU antitrust concerns, while last March it was fined €1.84 billion for stifling music streaming competition via restrictions on the App Store.
U.S. DoJ Doubles Down
It’s not just Europe that is facing up to big tech. In November, the US Department of Justice filed a case against Apple for violating antitrust laws, the third such case in 14 years. The DOJ, which said Apple had built up a monopoly vis its walled App Store ecosystem, has also lodged an antitrust suit against Alphabet, doubling down earlier this month with a call to break up Google.
In a revised filing the DOJ calls Google “an economic Goliath” that it claims “has denied users of a basic American value—the ability to choose in the marketplace.” Google must, the DOJ says, divest the Chrome browser to provide “an opportunity for a new rival to operate a significant gateway to search the internet.”
German Court Sees Apple Having Considerable Influence
In a statement on today’s German ruling, the court said it “is intended to enable the Federal Cartel Office to more effectively monitor those large digital companies whose resources and strategic positioning potentially allow them to exert significant influence on the business activities of third parties, distort the competitive process to their own advantage, and transfer their existing market power to ever new markets and sectors.”
Apple’s App Store has come for particularly close attention in Europe amid concerns about market dominance.
Specifically, the German court today noted that Apple’s activities are “crucial for third parties’ access to procurement and sales markets,” and that Apple has “considerable influence” over their business activities as external app developers and other third-party companies rely on Apple’s support to gain access to the large number of Apple device users.
“Combined with the company’s extremely strong market position in the economically important area of smartphones, including operating systems and software applications, including the App Store, this opens up the competitive and strategic opportunities,” the ruling said.
Is Apple a Good Stock to Buy Right Now?
Turning to Wall Street, AAPL stock has a Moderate Buy consensus rating on based on 17 Buys, 11 Holds, and four Sells assigned in the last three months. The average Apple share price target of $249.38 implies about 16% upside potential.
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