Apple and Google Face Lawsuits, Massive Consequences

Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL) both face patent lawsuits, which target their fastest-growing and strategic businesses. On January 10, Bloomberg reported that medical technologies company Masimo sued Apple. The company accused Apple of trade secrets theft and patent infringements. Specifically, the Masimo lawsuit targets Apple’s smartwatch business.

Previously, home speaker maker Sonos sued Google on January 7. The company alleged technology theft and patent infringements. Notably, the Sonos lawsuit targets Google’s smart speaker business.

Apple and Google lawsuits target important operations

In its lawsuit, Masimo accused Apple of poaching its staff with knowledge of sensitive trade information. The company also accused Apple of infringing ten of its patents while making Apple Watch devices. Therefore, Masimo wants the court to stop Apple from selling watches that feature the disputed patents. The company also wants Apple to compensate it for the alleged unauthorized use of its technology.

The smartwatch business falls under Apple’s wearables category. The category generated revenue of $6.5 billion in the fourth quarter of fiscal 2019, which ended September. The revenue increased 55% year-over-year. The wearables category was Apple’s fastest-growing product category in that quarter.

Moving forward

Although the iPhone is still Apple’s largest revenue source, the smartphone business is struggling. Apple’s iPhone revenue fell about 10% in the September quarter. Amid weakness in the iPhone business, Apple looks to other product categories like wearables to fuel its growth. The wearable market presents a huge revenue opportunity for Apple. The market was worth $19.6 billion in 2015. Now, the wearable market is on course to hit $57.7 billion by 2022. Currently, Apple dominates the wearable device market. The company controls about a third of the global market share. However, the Masimo lawsuit could slow down Apple’s progress in this market.

Case against Google

In the Google case, Sonos accused the company of wireless speaker technology theft. Sonos wants a ban on the sale of Google products that feature the disputed technology. Also, the company seeks financial compensation from Google.

The disputed technology features are in Google’s smart speakers. Notably, Google controls a 17% share of the global smart speaker market. The company is ranked second behind market leader Amazon (NASDAQ:AMZN). Google records smart speaker sales under other revenues, which was its fastest-growing revenue category in the third quarter. Overall, the global smart speaker market presents a $23.3 billion revenue opportunity for Google.

Lawsuits come amid scrutiny of big tech companies

For Apple and Google, the lawsuits could have far-reaching consequences beyond potential revenue loss or fines. For example, the lawsuits could mean more regulatory scrutiny of big tech companies’ practices. Meanwhile, Apple and Google already face antitrust investigations by various US entities, including Congress.