European Union regulators on Monday accused Apple of violating the EU's Digital Markets Act with its restrictive App Store policies. Apple stock dipped at the market open but shook off the news in later trading.
The European Commission informed Apple of its preliminary view that Apple's App Store rules are in breach of the Digital Markets Act because they prevent app developers from freely steering consumers to cheaper purchase options outside the App Store.
Apple now has a chance to respond to the commission's findings.
The commission also opened a new noncompliance procedure against Apple over concerns that the company's latest contractual requirements for third-party app developers and app stores fall short of compliance with the DMA. Those requirements include Apple's new "core technology fee," which requires developers to pay 0.50 euros (54 cents) each time their apps are downloaded and installed from outside Apple's App Store.
The 27-nation bloc created the Digital Markets Act to ensure fair competition in digital marketplaces in Europe. It designated six companies as "gatekeepers" that must comply with the DMA: Alphabet, Amazon, Apple, ByteDance, Meta Platforms and Microsoft.
Apple Stock Up On AI Strategy
On the stock market today, Apple stock rose 0.3% to close at 208.14. At the start of trading Monday, Apple shares slid a fraction to 206.59.
Apple stock notched its all-time high of 220.20 on June 12 after the company revealed its strategy for artificial intelligence.
However, Apple plans to delay the release of its AI features in the EU because of the DMA rules, the Financial Times reported.
Meanwhile, Apple also faces legal issues in the U.S. In March, the Justice Department sued Apple, accusing the company of violating antitrust laws with its restrictive iPhone and App Store policies. The lawsuit alleges that Apple's conduct makes it harder for Americans to switch smartphones, undermines innovation for apps and imposes extraordinary costs on developers, businesses and consumers.
IPhone Upgrade Cycle Forecast
Elsewhere, Melius Research analyst Ben Reitzes on Monday reiterated his buy rating on Apple stock and raised his price target to 260 from 227.
Apple's new AI features will spur an upgrade cycle for new iPhones, he said.
"The AI, Siri and privacy features are all compelling to the layman — and almost everyone needs a new phone to get them (i.e., an iPhone 15 Pro or better)," Reitzes said in a client note.
He added, "While we have reflected several times on a potential (upgrade) surge akin to the 2014/2015 'big screen' cycle, we really don't recall a precedent like this — with so many new features only available in new phones."
IBD added Apple stock to its SwingTrader list on Monday.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
