Apple Faces Antitrust Probe in China
Apple (AAPL) shares dropped in premarket trading after Bloomberg reported that the Chinese government is considering launching an antitrust investigation into the company's app store policies and fees.
Chinese officials have reportedly held discussions with Apple executives and developers since last year, according to unnamed sources cited by Bloomberg. The antitrust agency may refrain from launching a formal investigation if these talks are successful.
The news follows the announcement that China's antitrust agency has already launched an investigation into Google. These reports coincide with the US's imposition of a 10% tariff on Chinese imports, potentially affecting American tech companies that manufacture devices overseas.
Apple heavily relies on Foxconn, its manufacturing partner in China, to assemble most iPhones. However, the company has been diversifying its supply chain by producing iPhones in India and Vietnam.
Apple faces challenges in China amidst strong competition from Huawei. Revenue from China declined by 11% in the most recent quarter to $18.5 billion, although CEO Tim Cook attributed half of the drop to reduced inventory.
Cook suggested a potential revenue rebound if China approves the rollout of Apple Intelligence. Apple is reportedly in negotiations with ByteDance and Tencent about integrating its AI features into iPhone models sold in China.
China is not the only country scrutinizing Apple for antitrust violations. The US Department of Justice filed a lawsuit last March, causing a 4% drop in share prices. Last year, the European Union fined Apple $2 billion for alleged competition violations.
Despite hopes for reduced antitrust scrutiny under President Trump, recent actions by his administration indicate that American companies may not escape scrutiny in large-scale mergers and acquisitions.