Apple Investigated Again by EU & Consumer Class Action Suits Start

By Patrick Moorhead - April 2, 2024

The Six Five team discusses Apple Investigated Again by EU & Consumer Class Action Suits Start

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Transcript:

Patrick Moorhead: Apple getting sued again and essentially the EU suing company. So last podcast, it’s funny, I forget if it was podcast or interviews that I’ve done or tweet, I said, “Hey, here’s what to expect next in the Apple saga because these things work like an orchestra here.” I said, “Class action lawsuits will hit and then investor lawsuits were hit and then other regions will start suing like Japan and Korea.” And like clockwork, this week, the US class action lawsuits came out that piggybacked on the US Department of Justice investigation on there, and the same week we had the EU, essentially file a suit to investigate Apple for its lack of compliance with DMA.

And I think a lot of this stems from their reaction to Epic. If you remember, Apple banned Epic’s Sweden publishing arm from publishing applications on iOS. EU said, “We’re going to open up something against you for that,” and then a day later, apple reinstated epic. But this is just a long line of bad things that are going to happen to Apple related to them using their monopoly power to stifle competition, and raise prices and limit innovation. So what’s going to be the next step here? You are going to have Japan, Korea, Australia, who will eventually file suit or invoke their DMA like policies. TBD on China. For China, it’s probably going to be a negotiation, but I have to tell you, with Huawei taking market share away from Apple, I could very much imagine China going after Apple and it becomes more like a nationalistic thing. But that of course, is balanced against the million people that China has even doing final assembly for iPhone at Foxconn in South China. So there’ll be a lot of back and forth on this.

Daniel Newman: Yeah, there’s a lot of push and pull there, Pat, right? I mean there is some codependencies that nobody wants to really address. Now, again, we’ve probably created more dependency on China than China’s created on us, but they sure do like their iPhones there, although it appears to be about 33% last quarter that they liked them than the quarter before that, which is very, very interesting.

Patrick Moorhead: It’s staggering.

Daniel Newman: Staggering.

Patrick Moorhead: Bloomberg reported that, right? That’s not official.

Daniel Newman: Actually, I think that was Counterpoint’s data maybe that came out. It might be 30, it might even be a little higher. I think it was 28% the first two months and it dropped, went up to 35 in the third month and 33 net.

Patrick Moorhead: That’s ugly.

Daniel Newman: But don’t quote me on that. You can quote me on that, but make sure you quote my quote that I’m not sure that I bought that quote. It’s a lot. It’s staggering. Look, this is like the pile on effect that we’re getting right now. This is a pile on effect. Apple’s like, it’s like, “He’s bleeding,” it’s like a player that’s gone on tilt in poker, and everybody wants to come and take some money off them. Apple’s got its App Store issues, it’s got its DOJ issues, it’s got China issues, it’s got a questionable interest in its newest product. It’s got a lack of gen AI issue. I mean, are they really going to go to Google to solve their AI strategy? I mean, can you imagine what that would be indicative of? They’ve got a lack of growth problem. They just killed their car. I mean, it’s really funny, but have you ever seen Apple reeling like this? I have not, in a long time, seen Apple reeling like this.

Patrick Moorhead: It has been a long time. They have reeled like this, but they have bounced back.

Daniel Newman: Yeah, back in the first time Jobs got his $100 million loan that saved the company. It’s been a while. I mean-

Patrick Moorhead: Well, even AntennaGate was the big one where Steve Jobs and notoriously got on stage and said, “You’re holding it wrong.” And they gave away free bumpers. And anyways, that was a-

Daniel Newman: Yeah, I mean it’s been imperfect. I think Steve would be rolling over in his grave right now, just even about the product and innovation. I think if you’d have told Steve that, “You guys are going to spend a decade to build an XR product and this is what you’re going to come up with, it’s just this thing that looks…” You know what? I wore that thing. I’m pretty sure I wore something just like it when I was playing laser tag like 20 years ago. But anyways, I just think this is a pile on. I think now I always call the EU, it’s a taxing authority. They don’t care about competition, they care about creating tax. Now, apple did give a massive middle finger to the EU when it rolled out its response to its DMA and to the concessions it was supposed to make. It really didn’t make them very well. But look, this is the classic bifurcation between consumer, which mostly love Apple, love their products, and love to use it and have very little to complain about, and competition where you are trying to create more level playing fields, you’re trying to allow innovators to innovate.

And so we talked a lot about the Apple suits. This is specific to Europe, but this is my opinion. It’s a pile on. I think you hit a good point. Once everyone sees them bleeding, if Europe wins, it starts to see dollars come out, you can expect parts of Asia, there’s a little ala Qualcomm. When Qualcomm was at its worst, and it was just kind of as a, “Follow the sun, we’re all getting a piece.” It seems to be where we’re at with Apple right now. So they’re going to have to keep their heads down. They’re going to have to out innovate and maybe try to piss a few less people off, somewhere in the process.

Patrick Moorhead: Yeah, it’s interesting you see, there’s so much competition for talent in the Valley, and as Apple is trying to dig out of their generative AI hole here, you can imagine the competition for AI talent being fierce. And a lot of that is stock-based compensation. And if you look at the top AI numbers, Apple is just not doing well. Now at WWDC, they’re going to come out with their uber strategy for that. I don’t think that Google will be the on-device AI. They’ve published a paper on models, but Apple doesn’t need to be first in many markets, they just need to do it better and they need to do it better over time. I mean, look at Maps. Maps was a disaster. They didn’t change the name, they just leaned into it. There were a couple other MobileMe was a disaster. They’ve cut very few products. I don’t know. We will see. I mean, it took years for the decline of Microsoft, which started with the US government investigation into the company.

Patrick Moorhead

Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.