Apple and Antitrust
The Justice Department recently announced that it would be investigating Apple for antitrust law violations. Because Apple has dominant market share, the concern from regulators is that the influence on pricing puts Apple in a unique position to control market prices. The Department of Justice is focused on Apple’s efforts to eliminate competition rather than compete fairly.
Apple is not a monopoly. If you walk into a cell phone store, you can buy all sorts of other brands. It's our view that Apple is an aggressive competitor, but not monopolistic.
Keep in mind that these types of investigations take years and sometimes a decade or more to resolve. For that reason, we see the fundamental risk to Apple more in sentiment rather than actual capital impact.
We will continue monitoring this litigation as we do with other large tech companies that are under fire as well. It will factor into our long-term decision-making. External factors matter.
A recent article highlighted this issue. See below:
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“Apple (AAPL) faces regulatory pressures after reports of several investigations, from an antitrust lawsuit brought on by the US Department of Justice (DOJ) to the European Union's (EU) probe into Big Tech players.
Evercore ISI Analyst Amit Daryanani — who has an Outperform rating on the stock with a price target of $220 per share — joins Yahoo Finance Live to discuss how Apple could potentially recover and get unstuck from the rock-and a-hard place the iPhone maker finds itself in the middle of.
Daryanani notes that the EU probe poses "more headline risk than fundamental risk," stating that he doesn't believe it has "a material impact" on Apple. However, he suggests that how "elements in the US play out" will have a more substantial financial impact on Apple, as investors await the fallout from the DOJ investigation and the broader implications of Apple's AI partnership with Alphabet (GOOG, GOOGL).”
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Source: https://finance.yahoo.com/video/apple-faces-headline-risk-regulators-210636899.html
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Note: The above is intended for educational purposes only and does not constitute a recommendation to buy or sell any security or modify any current investment strategy.
Disclosures:
DWM currently holds Apple Inc. (AAPL) and Alphabet, Inc. (GOOG, GOOGL) in DWM managed portfolio strategies.
Adjusted Gross Income (AGI): Total income minus deductions, or "adjustments" to income that you are eligible to take.
