Apple (AAPL) is set to face its first-ever penalty levied under the European Union’s new Digital Markets Act (DMA), which aims to curb anti-competitive behavior by major tech companies. According to a Bloomberg report, the EU antitrust watchdog seeks to impose a fine on Apple due to its restrictive App Store policies.
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The company has been criticized for not allowing app developers to direct users to cheaper payment options outside the App Store. It is worth mentioning that the investigation for potential anti-competitive practices related to alternative app stores was launched in June. Importantly, the EU is expected to announce the penalty as early as this month.
The exact amount of the potential fine remains undisclosed. However, investors should be aware that under the DMA, tech companies may face penalties of up to 10% of their annual global revenue, and up to 20% for repeat offenses. Given Apple’s substantial revenue, the initial fine could reach about $38 billion.
AAPL’s Growing Legal Troubles in Europe
Interestingly, this is not the only regulatory challenge the company faces in the EU. Apple recently lost a decade-long case against the European Commission, which claimed the company received illegal tax benefits in Ireland.
Moreover, Apple was fined €1.8 billion in March 2023 for similar practices related to music streaming services. The EU ruled that Apple had restricted app developers from informing iOS users about cheaper subscription options, leading to higher prices for consumers.
These ongoing regulatory battles highlight the increasing scrutiny that tech giants like Apple face in the EU, as regulators aim to ensure fair competition and protect consumers’ interests.
Is AAPL Stock a Good Buy?
Turning to Wall Street, AAPL has a Moderate Buy consensus rating based on 23 Buys, nine Holds, and two Sells assigned in the last three months. At $245.06, the average Apple price target implies a 9.67% upside potential. Shares of the company have gained 16.5% year-to-date.
