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It turns out you can take on Apple and win

Hasan Chowdhury   

It turns out you can take on Apple and win
  • It takes a brave CEO to stand up to Apple.
  • The company is arguably the most powerful tech firm in the world.

It's not easy taking on a company as shrewd and muscular as Apple.

For one, the market values the Cupertino giant at $3 trillion, making it the biggest corporation on the planet. By next year, it could be up to $4 trillion, one analyst estimated this week.

It's not just size that gives Apple power. Its iPhones dominate the US smartphone market with a near-60% share. Its App Store also collects a 30% cut from apps it hosts and purchases made in them. That effectively makes Apple a taxman for smartphone developers.

Despite wielding so much power, Apple does lose sometimes, though.

This week, the tech giant made the decision to stop selling the latest models of the Apple Watch. It followed a ruling from the International Trade Commission in October, which found the Apple Watch Ultra 2 and Apple Watch Series 9 violated a patent from health-tech firm Masimo.

Apple said it would pull the watches from its US online store on Thursday and stop sales from brick-and-mortar stores on Sunday. The company is desperately scrambling to make software changes to fix the issue related to a blood oxygen monitor, Bloomberg's Mark Gurman reported.

It feels weird for a tech company as consumer-focused as Apple to pull one of its fastest-growing product categories from sale, days before Christmas.

But as Masimo CEO Joe Kiani said in an interview this week, "These guys have been caught with their hands in the cookie jar." The penalty, per an estimate by Wedbush Securities analyst Dan Ives, could be $300-400 million in lost sales.

In a statement, Apple said it "strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers."

"Should the order stand, Apple will continue to take all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the US as soon as possible," the company said.

Ben Wood, chief analyst at CCS Insight, told Business Insider, "It is no surprise that Apple is subject to regular litigation given its strong market position."

What is surprising is how Apple looks so caught off-balance.

"Apple has successfully navigated patent issues in the past and its scale makes it a formidable opponent to any company that chooses to make a challenge," Wood said.

History dictates that Apple usually wins when someone tries to stand up to it.

Take Apple's strong protection of the blue bubbles in its iMessage app. Beeper CEO Eric Migicovsky tried to offer a workaround for Android users, who are given an outsider's green bubble, with an app that turned their message bubbles blue.

This may feel like a silly thing for Apple to get worked up over. But three days after Beeper's app was released, Apple cut off its access to iMessage. Apple's ability to do this easily has got US lawmakers so concerned that they're calling for a Department of Justice investigation.

Apple also celebrated a win over Fortnite maker Epic Games in 2021. Epic tried to introduce its own in-app payment system in Fortnite, leading Apple to boot it from the App Store. Though Epic sued in 2020, Apple argued that Epic didn't follow the developer rules it set out.

Spotify boss Daniel Ek has also had a go at taking on Apple. He's been in a long-running dispute with the iPhone maker, which he said unfairly favored its own apps, like Apple Music, over those from competitors.

Ek had a small win last week, four years after he filed an EU antitrust complaint after the EU banned some of Apple's more stringent App Store rules imposed on rivals like Spotify. The ban could also come with a fine of up to 10% of annual sales.

Though Apple will be working on solutions to its Apple Watch problem, Wood thinks a settlement would be a last resort.

If it does settle with Masimo though, it'll make for a notable victory for the little guy standing up to the tech giant.


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