Big Tech Antitrust: Will Apple Stock Take A Hit?

Big Tech is under fire again, as Congress could vote on legislation to limit the market power of Apple and its peers. Here are the risks, and how Apple stock could be impacted.
Author:
Publish date:

If the battle with Epic Games over competitive policy in the App Store was not enough, Apple  (AAPL) - Get Report is now facing another war on the antitrust front. On Friday, a group of Democrat and Republican representatives in Congress introduced a bill aimed at curbing the power of Big Tech.

On this subject, the Apple Maven discusses three important topics today:

  1. What is this new proposed legislation?
  2. How could the Cupertino company be impacted?
  3. How might Apple stock suffer in the foreseeable future?
Figure 1: Big tech "FAANG" group.

Figure 1: Big tech "FAANG" group.

Read more from the Apple Maven: Apple Stock Higher After WWDC Week: Key Drivers

What is it?

The most recent “attack” on Big Tech from the federal government’s legislature body came in the form of four proposed bills.

Two of them address the issue of companies favoring themselves against competing products and services on their platforms. Think of Amazon ranking their own offerings higher than its competitors’ on amazon.com, or Alphabet displaying their devices first on a search page.

The other two are tangentially related to the first two. One limits Big Tech’s ability to acquire companies that may compete with other vendors on their platforms. The last pertains to users’ rights and ability to transfer their own data to other, even if competing platforms.

For now, the new legislation is still in the pipeline. Before being considered for a vote on the floor of the House, the proposal would first need to clear the Judiciary Subcommittee. Between now and then, expect lobbying efforts to be deployed to slow the process down or even halt it altogether.

Risks to Apple

In my opinion, all FAAMG companies stand to lose from the proposed legislation – including Microsoft, a company that fought its own antitrust war in the 1990s, but that has remained mostly away from the spotlight this time. Which tech company might suffer most is subject to debate.

Apple would probably “feel the heat” mostly within its services segment. The company has already been accused of being too powerful a gatekeeper of the App Store, a popular application platform through which tens of millions of developers offer their products and services.

Outside the App Store, it is unclear how Apple might be impacted by the legislation. CEO Tim Cook has made his case clear that Apple is not a monopoly in any of the businesses that it is involved in – from smartphones to personal computers and most, if not all, digital services.

Read more: Apple Stock: 3 Key Takeaways From WWDC 2021

Nothing new so far

Interestingly, and despite the news having surfaced during trading hours on June 11, Apple stock barely moved in response. AAPL shares ended the trading day up nearly 1%, very much at the high for the day and ahead of the S&P 500’s 0.2% gains.

In my view, investors have brushed off the news because it is largely aligned with expectations that have been set years ago. Even before the US elections for President and Senators in 2020, it had become clear that the left and right parties in Congress would be united by their desire to limit Big Tech’s power.

I find it unlikely that Apple stock will be swayed primarily by the antitrust efforts in Washington, D.C. – at least for now. Still, I remind investors in Big Tech stocks that antitrust is a key risk to be considered when assessing the investment opportunities in these names.

Read more: How Data Privacy Policy Could Impact Apple Stock

Explore more data and graphs

I have been impressed with the breadth and depth of information on markets, stocks and ETFs provided by Stock Rover. Stock Rover helps to set up detailed filters, track custom portfolios and measure their performance relative to a number of benchmarks.

To learn more, check out stockrover.com and get started for as low as $7.99 a month. The premium plus plan that I have will give you access to all the information that goes into my analysis and much more.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)