Apple at the antitrust hearings: What the analysts are saying

Excerpts from the notes I’ve seen. More as they come in.

Samik Chatterjee, J.P. Morgan: Our Thoughts and Highlights Relative to Congressional Hearing on App Store Practices. Notable companies such as Rakuten and Spotify have filed complaints in the EU regarding App Store practices and fees. These complaints include: a) the disadvantage for ebooks and music services to compete against Apple’s own services which don’t have to pay the same commission; b) policies to restrict app releases; c) prohibiting developers from disclosing that users can subscribe outside of an app to avoid the Apple subscription fee, and d) creating apps that compete with newly introduced apps such as PCalc for the Apple Watch. As highlighted in Mr. Cook’s testimony, Apple’s own software comprises only 60 apps of the 1.7 mn available on the App Store and Apple has been more recently willing to exempt “reader” apps from commissions. The strict policies were justified by Apple as key to providing consumers the security and privacy that Apple has differentiated its products on.

Daniel Ives, Wedbush: Thoughts on Antitrust Hearings; Grandstanding Event with Some Concerns Raised. While there is a lot of noise and political grandstanding during this highly anticipated event, we believe the highlights so far have been: 1) Bezos discussing that Amazon may have improperly used third-party seller data which remains a key concern around competition from regulators, 2) Cook getting grilled around Apple’s App Store and its fees (30%) charged for developers although so far the bark has been worse than the bite, and 3) Facebook and Zuckerberg defending its acquisitions of Instagram and WhatsApp saying its a platform now better for consumers.

Gene Munster, Loup Ventures: Winner, Apple: Apple received 15 questions, about 20% of all questions asked. Cook fielded questions related to the App Store take rate along with policies regulating app availability. Beyond the number of questions, the topics for Tim Cook largely orbited around the App Store, which we estimate accounts for about 5% of Apple revenue. By comparison, the other tech companies fielded questions that impacted the majority of their revenue.

11 Comments

  1. Fred Stein said:
    The scope was overly broad, four companies, each with multiple lines of business. Childish ADHD would be the politest critique.

    Just looking at the App Store, at 5% of Apple’s revenue requires several days and the inclusion of staffer from congress and Apple.

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    July 30, 2020
  2. Fred Stein said:
    Just the App Store, a $13B revenue stream for Apple:

    While $13B is a big number, it is tiny fraction of the software plus digital gaming and content streaming business.

    What did we hear? Complaints from less than 1% of 1% of Apps.

    Meanwhile, people are losing their live, loved one, jobs, homes, education and more.

    1
    July 30, 2020
  3. David Emery said:
    So the Washington Post’s ‘analysis’ was provided by their -fashion editor!- https://www.washingtonpost.com/lifestyle/style/tech-titans-gave-their-house-testimony-virtually-but-it-was-the-congressmen-who-departed-from-reality/2020/07/29/dd9f95fe-d1a8-11ea-9038-af089b63ac21_story.html

    (David T: I have a friend who used to work at Google. He said ‘conservatives like me were very hard to find at Google, and there was substantial prejudice against expressing those opinions.’ That’s anecdotal, but given my own observations of the tech industry, not all that surprising. This is not to say I think there is deliberate bias at Google or Facebook, but I strongly suspect there’s a lot of implicit bias, things that they don’t agree with get extra scrutiny. It’s just a human reaction…)

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    July 30, 2020
  4. Joe Murphy said:
    David E., thank you for the Verge link, explaining the key to purchasing kindle for my Apple devices.

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    July 30, 2020
    • David Emery said:
      Kindle app is free. But you need a laptop to buy books for it (on any platform.) 🙁

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      July 30, 2020
  5. Bart Yee said:
    YOWWW!!!
    Apple posted revenue of $59.7B, up 11% from YOY quarter. International sales accounted for 60% of revenue.
    Earnings per diluted share of $2.58 up 18% (no doubt helped by buybacks. Operating cash flow of $16.3B
    Double digit growth in Products and services plus growth in all geographic segments.

    !!!Approved dividend of 0.82 August 13. Also APPROVED 4:1 STOCK SPLIT!! August 24, 2020.

    WOW!!

    3
    July 30, 2020
    • David Drinkwater said:
      So completely not relevant to this topic. Don’t bloviate.

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      July 31, 2020
  6. Richard Weathered said:
    Got in under the wire and bought a few more shares today

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    July 30, 2020
  7. David Emery said:
    A thought just hit me: Apple’s great strength in computers and tablets, where they face significant competition, are strong arguments in support of Cook’s comments that Apple is not a monopoly in its major markets.

    1
    July 31, 2020

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