iPhone maker Apple (AAPL) has filed a legal case against the European Union’s $587 million fine for allegedly violating the Digital Markets Act (DMA). Apple submitted a countersuit to Europe’s second-highest court today, meeting the July 7 deadline to contest the European Commission’s (EC) ruling issued in April.
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The DMA aims to restrain the power of large tech companies and prevent them from using their monopolistic positions to stifle competition. The EC ruled that Apple breached EU laws by restricting app developers from directing users to better-priced third-party deals outside the App Store. Commenting on the decision, Apple stated, “Today we filed our appeal because we believe the European Commission’s decision – and their unprecedented fine – go far beyond what the law requires.”
Apple Defends Its Stance Against the EU
Apple stated that it has implemented changes to comply with DMA rules and to avoid punitive daily fines. The company is prepared to share the facts with the higher court during the hearing. Apple added that the EC is imposing rules and forcing the company to adopt business practices that are “confusing for developers and bad for users.”
In June, Apple introduced new App Store changes in the EU to comply with the DMA and avoid further penalties. The company launched a new tiered system for its Store Services fee, giving developers the option to choose between basic fees and higher commissions. Under the new system, Tier 1 offers developers access to only basic App Store features for a 5% commission on in-app purchases. Meanwhile, Tier 2 offers higher benefits but is priced at a 13% commission. The added features include automatic app updates, automatic app downloads, and access to tools that help developers promote their app.
The EU had threatened to charge Apple 5% of its average daily worldwide revenue, or roughly 50 million euros per day, for failing to comply with its rules. While Apple has proceeded with filing a case with a higher authority, the EU regulator is collecting feedback from app developers to determine whether to accept Apple’s current changes or to demand more.
Is Apple Stock a Buy Right Now?
Analysts remain divided on Apple’s long-term stock outlook. On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 15 Buys, 10 Holds, and two Sell ratings. Also, the average Apple price target of $226.36 implies 6% upside potential from current levels. Year-to-date, AAPL stock has lost 14.5% and has also dropped in rank behind chipmaker Nvidia (NVDA) and tech giant Microsoft (MSFT) as the world’s most valuable company.
