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Apple's (AAPL) In-App Purchase Policy to be Probed by CCI

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Apple Inc. AAPL will face an investigation by the Competition Commission of India (“CCI”), the chief national competition regulator in India, over allegations of violating certain antitrust laws. CCI ordered the probe following a non-profit organization (“NPO”), Together We Fight Society’s, complaint against the tech giant’s App Store payment rules.

Apple has made the in-app purchase system compulsory for the app developers and consumers by imposing up to 30 per cent commission fees for all its App Store contents. Hence, the NPO alleges that the company has been taking advantage of its dominant position in the apps market. It criticizes that this move has not only escalated costs for potential developers but also hurt competition in the market by barring their entries.

The competition watchdog directed that the investigation report must be submitted within 60 days of the order unlike other reports that take several months. Apple is facing another investigation by the European Commission over similar allegations.

However, App Store continues to draw the attention of prominent developers from around the world, helping the company offer appealing new apps that drive App Store traffic. Further, a growing number of AI-infused apps will attract more subscribers on App Store. More than 30,000 third-party subscription apps are available on App Store and the largest of them accounts for only 0.25% of Apple’s total Services revenues.

Besides, Apple is benefiting from continued momentum in the Services and robust performance from iPhone, iPad, Mac and Wearables. The company’s fortunes are currently tied to its most important offering — iPhone. The device plays an important role in expanding the iOS ecosystem.

Apple is reportedly planning to mass-produce iPhone 13 in India beginning February 2022. It is estimated that 20-30% of iPhones produced in India will be exported. It will boost the supply of the iPhone 13, which has garnered significant demand in the local market.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus
Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

The company’s Services portfolio has emerged as its new cash cow accounting for 18.7% of the total revenues. It currently has more than 745 million paid subscribers across its Services portfolio.

Apple’s endeavors to open up its ecosystem through partnerships with the likes of Samsung and Amazon are positive for the Services segment. This, in turn, will help in driving the top-line growth, thus reducing its dependency on just the iPhone.

Zacks Rank & Stocks to Consider

Apple currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader computer and technology sector include the largest global Customer Relationship Management vendor Salesforce CRM and Hewlett Packard HPE, each flaunting a Zacks Rank #1 (Strong Buy), and CACI International CACI carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Salesforce’s fourth-quarter fiscal 2022 earnings has been revised downward by 7.6% to 73 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 28 cents to $4.68 per share in the last 30 days.

Salesforce’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 44.2%. CRM stock has appreciated 2.4% in the past six months.

The Zacks Consensus Estimate for HPE’s first-quarter fiscal 2022 earnings has been revised downward by 6.1% to 46 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 1.5% to $2.03 per share in the past 90 days.

HPE’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.4%. Shares of HPE have rallied 7.3% in the past six months.

The consensus mark for CACI’s second-quarter fiscal 2022 earnings has been revised upward to $4.11 per share from $4.01 over the past 30 days. For fiscal 2022, earnings estimates have been revised downward by 51 cents to $16.42 per share in the last 60 days.

CACI’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.8%. Shares of CACI have increased 4.6% in the past six months.


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