Evercore takes a deep dive into Apple's anti-trust risks

"The anti-trust landscape is vast and constantly changing." -- Analyst Amit Daryanani

From a note to clients that landed on my desktop Sunday:

ALL YOU NEED TO KNOW: Risk from potential anti-trust action by both the US and EU remains top of mind for investors. We currently see risk from four different areas:

    1. The EU Digital Markets Act which will likely be passed this year and could go into effect in 2023. The bill will target side loading and third party payments and could have an ~9% EPS impact if it forces Apple to lower its App Store fee.
    2. Apple v Epic is currently in the appeals process and it will likely be multiple years before the case is resolved and could potentially end up in the Supreme Court.
    3. US Senate anti-trust committee has advanced two bills, both of which are risks, but we see greater risk from the Open App Markets Act which would force Apple/Google to allow third party payments in their App Store.
    4. The risk of an anti-trust case being filed by the DOJ will continue to linger, although they appear to be concentrated more on preventing big tech M&A vs anything specific to Apple.

That said, the payment Apple receives from Google each year was highlighted in last year’s DOJ anti-trust report. We estimate this payment is around $10B annually.

Net/net: The anti-trust landscape is vast and constantly changing, which is why getting an expert perspective can be valuable. Our panel will include experts who work on both the policy and legal sides in both the EU and US. Fundamentally, we think AAPL remains a core name to own.

Maintains Outperform rating and market-high $210 target.

Below: Two cool charts...

apple anti-trust evercore deep dive

apple anti-trust evercore deep dive

My take: Evercore's first three deep dives (AAPL Pay, AR/VR, advertising) explored growth opportunities. This one explores one of the ways Apple could contract.


  1. Gary Morton said:
    Who wants the mess that is the Mac app ecosystem on their iPhone or iPad? Certainly not me: unidentified developer warnings, apps that don’t work, apps that have gaping security holes, update chaos, no central clearing point for subscriptions, greater OS compatibility problems, more spam from developers, weak feedback loops for issues or problems, two dozen places to look for user ratings, etc. All over the developed world regulators seem hell bent on ruining a good thing claiming that opening the big bad app stores will make things better for consumers. On the Android side, alternative app stores have been open from the beginning, and consumers have voted with their pocketbooks to use Google Play. Now, allowing side-loading is supposedly the answer to all issues. The proposed legislation feels like a solution in search of a problem?

    May 22, 2022
    • Steven Philips said:
      Or a posture in search of a vote?

      May 22, 2022
  2. Fred Stein said:
    Upvoted Gary.

    Customers will vote with us and with the pocketbooks. ATT already proved that. People value privacy and security.

    The net impact of opening iOS to alternative ‘stores within a store’ will impact total Apps Store revenue by about 20%. There’s no need for precision because macro economics rule the day, now.

    May 22, 2022
    • Robert Paul Leitao said:
      Fred: That’s correct. Macro economic events rule the day and no one wants to take responsibility for potentially negative influences on the economy. There isn’t really a constituency pushing for these regulations and regulators may discover they are in a no-win situation. The fact is the App Store delivers far more revenue to developers than it does to Apple and the company can “reroute” services revenue through other conduits. Apple One in a prime example of a services revenue conduit the company can expand and can do so outside the reach of regulators. By the time regulators act they may notice Apple has already moved the goal posts and changed the contours of the playing field. Thanks to over zealous regulators and sound bite-thirsty legislators, the App Store may not be a primary services revenue driver for Apple moving forward.

      May 23, 2022
      • David Emery said:
        There IS a constituency pushing for these changes. It’s the set of competitors who are well-funded and believe they should achieve through legislation and regulation what they have been unable to achieve through innovation.

        That’s the problem I have with so much of the proposed rules. Who benefits? Competitors. The asserted benefits to the actual consumer are highly speculative, and the downside to the consumer are ignored by the lobbyists advocating for these changes.

        May 23, 2022
  3. Greg Lippert said:
    This is why we can’t have nice things….

    May 23, 2022
    • David Emery said:
      More like, “This is why we can’t have -secure- things…”

      May 24, 2022

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