Apple (AAPL) shares fell Wednesday after Bloomberg reported that China is looking to open a formal probe into the company’s App Store fees and policies.
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AAPL stock dropped 2% in the pre-market session with the possible investigation, which could take a bite out of the fees Apple charges customers, coming amid an escalating trade war between Washington and Beijing after the U.S. slapped 10% tariffs on Chinese goods this week.
Apparently, China’s State Administration for Market Regulation (SAMR) is looking Apple slicing off as much as 30% on in-app spending, Bloomberg said. The regulator is also concerned practices such as blocking third-party payment services and app stores.
It could add further headwinds to AAPL stock with the iPhone seeing stiffer domestic competition from the likes of Huawei and the company’s last quarterly results showing an 11% decline in sales in Greater China.
AAPL is China Target in Trade War
China is seeking ways to retaliate against the U.S. after President Donald Trump signed an executive last weekend to raise tariffs on Chinese exports.
Beijing struck back with a slew of its own tariffs on American goods, with levies of 10-15% on LNG, crude oil, coal and farm equipment. There will be some additional tariffs on some US car exports and controls on rare earth metals.
China also opened an antitrust probe into Alphabet (GOOGL) and singled out two further U.S. companies by adding clothing retailer PVH (PVH) and biotechnology company Illumina (ILMN) to its unreliable entity blacklist.
Meanwhile, the Financial Times reported that China’s SAMR is also looking into a possible investigation of U.S. chipmaker Intel (INTC).
As tensions mount on all sides, the European Union is said to be looking at using a powerful trade tool known as the “anti-coercion instrument” (ACI) to target U.S. technology companies like GOOGL and Meta Platforms (META).
Is Apple a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on AAPL stock, based on 18 Buys, 10 Holds and four Sells. The average AAPL price target of $251.63 implies about 8% upside from current levels.
