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Apple is gearing up for the battle of a lifetime.
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The iPhone maker was hit with a landmark antitrust lawsuit by the Department of Justice on Thursday.
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It comes as Apple also grapples with issues in two of its other biggest markets: China and Europe.
Apple has accrued so much power over the years that it’s easy to think of it as a nation-state these days.
It began the year with a valuation of around $3 trillion — a sum big enough to put it among the top 10 richest countries in the world by GDP. Its Infinite Loop campus in Cupertino feels like an island unto itself. Developers and suppliers are bound by its strict codes. And its decisions ultimately impact the one billion-plus consumers who form the population base of iPhone users.
In other words, the Republic of Apple wields power today that few companies can only dream of. But that power is about to face one of its toughest tests yet.
Apple is under attack on three of its most important fronts: Its standing as one of the most powerful companies on the planet is facing threats in the US, Europe, and China.
Apple meets its match
Apple faced a moment of reckoning on Thursday when the US government announced its long-awaited lawsuit against the tech giant. Apple was accused of illegally maintaining a monopoly over the smartphone market.
It’s a case that’s reminiscent of the groundbreaking antitrust battle that brought the US and Microsoft into opposition in the nineties, with Apple now having to defend itself over accusations that it has abused all that power it has accumulated.
Among the biggest claims made by the US Department of Justice’s case was the suggestion that Apple has hurt developers by taking a 30% cut on downloads of apps from the App Store, as well as claims that they’ve made it tough for consumers to leave their ecosystem.
Apple has said that it will “vigorously defend” itself against the allegations and that the lawsuit itself threatened “the principles that set Apple products apart in fiercely competitive markets.” The company also said it risked hindering its ability to create the safe and secure devices that it said its consumers have come to expect.
The US isn’t the only one to take this stance, however.
The EU has also engaged in a battle with Apple over practices that it says have allowed Apple to act as an unfair gatekeeper over its App Store.
This month, Apple was forced to make drastic changes to its App Store to comply with the EU’s Digital Markets Act, which was designed to rein in the power of Big Tech.
Changes made by Apple includes tweaks to the way it takes a cut from apps downloaded from the App Store in the bloc, as well as enabling the launch of third-party digital stores on iOS.
It’s not stopping there, however.
According to a Bloomberg report on Thursday, the European Commission is preparing to announce a huge probe into Apple, as well as Google, as it seeks to determine whether the tech giants are are complying with their new act.
Developers have complained that Apple’s changes do little to dilute its power, as it still gets a say over which third-party app stores are allowed onto its operating system, for instance.
Beyond legal woes, Apple is also facing immense pressure in China, arguably its most important international market.
Apple CEO Tim Cook has been in China this week to open the company’s eighth retail store in Shanghai and will visit Beijing’s equivalent of Davos this weekend. It’s a visit that isn’t just for fun and games, however.
Apple has been battling falling interest in iPhones in China since the start of the year, with sales collapsing by 24% since the start of the year, per Counterpoint Data research.
That’s thanks to rising domestic competition from the likes of Huawei, which released a 5G smartphone last year called the Mate 60 Pro to sway Chinese consumers away from iPhones.
If Chinese tech firms increasingly find success in convincing consumers to buy their phones, it could spell trouble for Apple in a market that Cook prizes. In its latest quarter, some $20.8 billion of Apple’s nearly $120 billion in revenue for the period came from Greater China.
Apple is clearly being squeezed from every side now. How it handles this moment will determine its power in decades to come.
Read the original article on Business Insider