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Apple is gearing up for battle as it fights fires on 3 fronts

Hasan Chowdhury   

Apple is gearing up for battle as it fights fires on 3 fronts
  • Apple is gearing up for the battle of a lifetime.
  • The iPhone maker was hit Thursday with a landmark antitrust lawsuit by the Justice Department.

Apple has accrued so much power over the years that it's easy to think of it as a nation-state these days.

It began the year with a valuation of about $3 trillion — a sum big enough to put it among the top 10 richest countries in the world by GDP. Its Infinite Loop campus in Cupertino, California, feels like an island unto itself. Developers and suppliers are bound by its strict codes. And its decisions ultimately affect the 1 billion-plus consumers who form the population base of iPhone users.

In other words, the Republic of Apple wields power that most companies can only dream of. But that power is about to face one of its toughest tests yet.

Apple is under attack on three of its most important fronts: Its standing as one of the most powerful companies on the planet is facing threats in the US, Europe, and China.

Apple meets its match

Apple faced a moment of reckoning Thursday when the US government announced its long-awaited lawsuit against the tech giant. It was accused of illegally maintaining a monopoly over the smartphone market.

It's a case that's reminiscent of the groundbreaking antitrust battle that brought the US and Microsoft into opposition in the '90s, with Apple now having to defend itself over accusations that it has abused all that power it has accumulated.

Among the biggest claims in the US Justice Department's case was the suggestion that Apple hurt developers by taking a 30% cut on app downloads from the App Store, as well as claims that it made it tough for consumers to leave its ecosystem.

Apple has said that it will "vigorously defend" itself against the allegations and that the lawsuit itself threatens "the principles that set Apple products apart in fiercely competitive markets." The company also said the suit risked hindering its ability to create the safe and secure devices that it said its consumers had come to expect.

The US isn't the only government to take this stance, however.

The European Union has also engaged in a battle with Apple over practices that it says have allowed Apple to act as an unfair gatekeeper over its App Store.

This month, Apple was forced to make drastic changes to its App Store to comply with the EU's Digital Markets Act, which was designed to rein in the power of Big Tech.

Changes made by Apple include tweaks to the way it takes a cut from apps downloaded from the App Store in the bloc, as well as enabling the launch of third-party digital stores on iOS.

But it's not stopping there.

According to a Bloomberg report Thursday, the European Commission is preparing to announce a huge investigation into Apple, as well as Google, as it seeks to determine whether the tech giants are complying with the new act.

Developers have complained that Apple's changes do little to dilute its power, as it still gets a say over which third-party app stores are allowed onto its operating system, for instance.

Beyond legal woes, Apple is facing immense pressure in China, perhaps its most important international market.

Apple CEO Tim Cook has been in China this week to open the company's eighth retail store in Shanghai and plans to visit Beijing's equivalent of Davos this weekend. It's a visit that isn't just for fun and games, however.

Apple has been battling falling interest in iPhones in China since the start of the year, with sales collapsing by 24% since the start of the year, Counterpoint research found.

That's thanks to rising domestic competition from the likes of Huawei, which released a 5G smartphone last year called the Mate 60 Pro to sway Chinese consumers away from iPhones.

If Chinese tech firms increasingly find success in persuading consumers to buy their phones, it could spell trouble for Apple in a market that Cook prizes. In its latest quarter, some $20.8 billion of Apple's nearly $120 billion in revenue for the period came from Greater China.

Apple is clearly being squeezed from every side now. How it handles this moment may determine its power in decades to come.

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