Apple Stock Dips Amid Antitrust Probe Rumors in China
Key Points:
* Apple (AAPL) shares fell premarket after a Bloomberg report suggested an antitrust probe in China over its App Store policies.
* Chinese officials have reportedly been in talks with Apple executives and developers regarding the matter.
* The probe comes after the US announced additional tariffs on Chinese imports, potentially affecting tech companies with operations abroad.
* Apple faces antitrust scrutiny in other countries, including the US and EU.
* The company's revenue from China declined in recent quarters, despite efforts to diversify its supply chain.
* Apple is in discussions with Chinese tech giants ByteDance and Tencent to integrate AI features into iPhones sold in China.
Body:
Apple's stock experienced a drop of up to 2% during premarket trading on Wednesday following a report by Bloomberg. The report indicated that the Chinese government is considering launching an antitrust probe into the company's practices related to its App Store policies and fees.
According to unnamed sources cited by Bloomberg, Chinese officials have been engaged in discussions with Apple executives and developers since last year. The antitrust agency may not initiate a formal investigation if these discussions produce satisfactory results.
This news follows a separate announcement on Tuesday that China's antitrust agency has commenced an investigation into Google (GOOG, GOOGL). Both announcements occur after the US imposed an additional 10% tariff on Chinese imports, potentially impacting American tech companies assembling devices overseas.
Apple, which primarily assembles iPhones in China through its partner Foxconn, has been diversifying its supply chain by producing iPhones in India and Vietnam. However, the company faces challenges in the Chinese market due to competition from domestic smartphone manufacturer Huawei. Apple's revenue from China in the most recent quarter witnessed an 11% decline to $18.5 billion, although CEO Tim Cook attributed approximately half of that drop to reduced inventory levels.
Cook expressed optimism about the potential for a rebound in China's revenue if the country approves the rollout of Apple Intelligence. Apple is reportedly engaged in discussions with Chinese tech giants ByteDance and Tencent about incorporating its AI capabilities into iPhone models distributed in China.
Apple's antitrust scrutiny is not confined to China. In March 2019, the US Department of Justice filed an extensive antitrust lawsuit against the company, resulting in a 4% decline in its shares on the same day. The European Union also fined Apple $2 billion last year for allegedly violating competition laws overseas.
Despite hopes among tech industry advocates that antitrust scrutiny in the US would diminish under President Donald Trump, recent actions by the administration suggest that American companies may not be shielded from scrutiny regarding significant mergers and acquisitions.