The U.S. Department of Justice has taken legal action against Apple on Thursday, accusing the company, led by CEO Tim Cook, of implementing anti-competitive business practices. The lawsuit alleges that Apple restricts competitors from accessing certain features of the iPhone and that their actions also impact the “flow of speech” through their streaming service, Apple TV+.
However, even if the DOJ is successful in proving these allegations, it is unlikely that Apple will face significant changes for several years. History has shown that such lawsuits can take a considerable amount of time to reach a trial, let alone a resolution. In fact, the DOJ’s current case against Google, filed in 2020, is not expected to be resolved until 2023, with no expected remedies or financial consequences for up to two more years.
This is not the first time the DOJ has taken legal action against Apple. In 2012, the agency sued Apple for colluding with publishers to increase ebook prices. This lawsuit was not settled until 2016.
“Precedents suggest that resolution of the complaint will take three to five years, including appeals,” Bernstein analysts wrote in a note.
On Friday, Morgan Stanley analysts also weighed in, stating that the current lawsuit could actually work in Apple’s favor. This is due to the fact that many similar allegations have already been addressed by a judge in the ongoing Apple vs Epic case, with the ruling stating that Apple is not in violation of antitrust laws.
Bernstein analysts added, “While the DOJ’s charges are focused on the iPhone, we do not believe it will significantly impact Apple’s financial status or harm the iPhone franchise in any way. The worst-case scenario would involve Apple paying a fine and easing restrictions for competition within the iOS platform, which we believe will have minimal effects on iPhone user retention or Services revenues.”
Morgan Stanley analysts came to the conclusion that the DOJ’s lawsuit poses more of a “headline risk” for Apple rather than an immediate risk event.
They added:
- Though it is a serious matter, this lawsuit is not uncommon for large companies like Apple and is unlikely to have any drastic effects on their operations or profits.
- The case against Google took several years to progress, and we can expect the same timelines for the DOJ’s lawsuit against Apple. In the meantime, we do not anticipate any significant changes for the company.
Ultimately, while this may make headlines for now, it is likely that the DOJ’s lawsuit against Apple will not have any significant impact on the company in the immediate future.
