Apple stock falls more than 5%
This morning, Apple (AAPL) fell more than 5% after declining ~7% last week. Today’s losses came after the Supreme Court “gave the go-ahead for a lawsuit by consumers accusing Apple Inc of monopolizing the market for iPhone software applications and forcing them to overpay,” Reuters reports. Let’s take a closer look.
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Supreme Court allows consumers’ lawsuit against Apple
Apple’s premium pricing strategy for its products, including iPhones, iPads, and MacBooks, is well known to consumers. The company also charges a large commission on all applications sold on its App Store. Apple has argued that if the Supreme Court allowed the case to proceed, it could be a risk to the fast-growing e-commerce industry. Nonetheless, the court ruled against Apple and allowed consumers to proceed with their fight against the company.
Why it matters
It likely couldn’t be a worse time for Apple to face such a lawsuit, as the company is striving to expand its service revenue by adding more services. In the last couple of quarters, Apple product sales, especially iPhone sales, have fallen sharply.
Today’s ruling against Apple could just be the start of consumers challenging Apple’s years-long business strategy. Apple’s strategy allegedly forces iPhone users to pay higher prices for apps from the App Store, whereas Android phone users could buy similar apps at much lower prices.