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Apple stock falls as EU regulators tighten screws and China bans iPhones for government workers

Phil Rosen   

Apple stock falls as EU regulators tighten screws and China bans iPhones for government workers
  • Apple stock dropped about 3% Wednesday following developments with regulators in Europe and China.
  • The European Commission named Apple a "gatekeeper" along with Microsoft, ByteDance, Meta, Amazon, and Alphabet.

Apple stock declined roughly 3% on Wednesday following a pair of regulatory developments in Europe and China.

On Wednesday, the European Commission named Apple as one of six tech companies acting as "gatekeepers" of online services. The other firms included Alphabet, ByteDance, Meta, Microsoft, and Amazon.

According to the EC's Digital Markets Act, which went into effect last November, a "gatekeeper" of a core service is a company with greater than 45 million monthly active users and a market cap of $82 billion.

Businesses given that label have to make their messaging apps work with rival platforms and allow users to decide which services to pre-install on their smartphones.

Apple, alongside the other named companies, now has six months to comply with the EC's demands, or else they can face fines of up to 10% of annual global turnover.

Meanwhile, the Wall Street Journal reported that China has banned iPhone use for government officials while at work, the latest step from Beijing to cut reliance on American and overseas technologies. Already, some government workers faced iPhone restrictions depending on which agency they worked in, but the latest measure extends those more broadly.

As for Apple, the company relies on China as a major market and also a key place of production. Most of its products are made in China, and Apple employs millions of people throughout the country.

The US similarly has banned public employees from using ByteDance's app, TikTok, on work devices and Wifi networks. Plus, US lawmakers have proposed legislation that would ban the Chinese app nationwide.

Wall Street remains bullish on the technology sector at large. Goldman Sachs strategists highlighted in a Monday note that the sector has dominated the stock market ever since Apple became the biggest company in the world about a decade ago.

The bank said technology lowers prices for consumers, which means lawmakers are less likely to target tech firms from that angle.

"In this way the tech sector from a policy perspective may be different from others, such as banks, supermarkets or energy companies, where politicians often argue that the benefits (for example of higher interest rates for savers, or lower food and energy prices) are not being passed on to consumers," Goldman strategists said. "This does not make technology companies immune from regulation, but it is more likely to come from issues around privacy and use of data, or the impact on mental health, than on pricing."

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