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Congress reportedly moving ahead with plans to break-up big tech

A House panel is reportedly poised to push for major reforms that could break up the tech giants. Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Tech Editor Dan Howley.

Video Transcript

ALEXIS CHRISTOFOROUS: We could be one step closer to the government breaking up big tech. A House committee is reportedly set to propose some sweeping reforms that could force companies like Apple and Amazon to give up their marketplaces. Our Tech Editor Dan Howley is here with the details. Good morning, Dan. So what do we know about what this proposal is, and what could it mean for these companies?

DAN HOWLEY: Yeah, basically what the proposal looks like right now, which is still in draft, is that companies wouldn't be able to operate and compete with the same marketplaces that they operate. So for instance, Amazon sells its Amazon Basics brand and operates Amazon's e-commerce store. Obviously, they then wouldn't be able to sell those Amazon Basics products that compete directly with third party sellers on the platform.

That also goes for the likes of Apple and Google. They wouldn't be able to operate their own marketplaces and then sell products that compete with other apps. So think of something along the lines of perhaps an Apple productivity app or a Google productivity app, maybe Apple TV Plus, things along those lines that come out of the App Store and then compete with something like a Netflix or even a Spotify, so that's really what the draft is looking like right now.

According to Bloomberg, there's Republicans on the panel. However, the House Judiciary Committee subcommittee on antitrust administrative and commercial law, the Republicans on the panel seem to disagree with that kind of remedy. They believe that that's tantamount to breaking up the companies. Obviously, that's not exactly the same, but it's a little bit of a kind of beat on what the companies are looking for exactly as far as, you know, they don't want to be broken up, they still want to operate, and so the Republican side would definitely help them as far as that goes.

BRIAN SOZZI: Dan, we really need to dive into Apple this morning. I'm looking at shares of Logitech getting creamed in the premarket. Sonos under pressure here. Apple's decision to pull some of these third party products from the site, Logitech Sonos, how big an impact is it to these companies?

DAN HOWLEY: It could be a pretty big impact. So what we're seeing here is something like Sonos, as you said, Logitech being pulled from Apple's online and physical retail stores. The products are audio products, so you're thinking headphones, speakers. Sonos' new speaker is not showing up on Apple's online or retail store, and the reason being is Apple is likely to introduce two new products coming up. Those are over the ear headphones. We're thinking they're going to be called the Studios, the AirPod Studios or something along those lines.

And then another kind of HomePod, but a smaller HomePod. You'll remember the HomePod was that speaker that Apple had that sold for around 300, $400. Didn't perform well as far as sales go, because it was really restrictive in terms of what apps could be used with it, and so it just didn't take off. Apple is supposed to be working on a smaller version of that that could be more competitive, but Apple has done this before where they've stopped selling competing products when they introduced their own kind of product. FitBit was one of them before they introduced the Apple Watch.

You'll remember that Fitbit was huge for a while, and then the Apple watch came out and kind of took it over. And now Apple is the largest fitness track or rather wearable seller in the world, whereas Fitbit now is being purchased, or in the midst of being purchased, by Google parent Alphabet. So this could be a big deal for these companies. I do still think that obviously, you know, Apple has a huge amount of market share in the US, but internationally, that's not the case. Android is by far the leader. So anything that would work with the Android platform still would still have robust international sales, one would expect.

ALEXIS CHRISTOFOROUS: Hey, Dan, since we have you, what's the latest on the iPhone 12? When can we expect that to hit stores?

DAN HOWLEY: So there's still some rumors that we could get them perhaps next week, along that timeline. Usually when Apple announces products, it's in close the second or third week of a month. I may expect to get some kind of notice this week, perhaps, about the next iPhone coming. That's going to be the iPhone 12, and again, the big issue there would be the 5G capability for that phone, as well as a redesign for the phone, so it would be a big event.

There's a lot of kind of talk about a supercycle going on where Apple sells more than what they normally sell for the year of iPhones, and that could really boost sales for the long term for them for as much as two years, but then there's the kind of rebound effect that happens. The last time we saw something along these lines was when the iPhone 6 came out, and that was a full redesign of the phone, introduced those two sizes, the 4.8, 4.7 inch and the 5.5 inch displays, and that really kind of gave us where we are now with different types of iPhones. There could be three versions of the 12 here, maybe as many as four depending on what Apple goes along with here, but expect the 5G to definitely be part of the equation.

BRIAN SOZZI: Dan, why does Apple even sell third party product? I was just in the Apple store in New York City about a week and a half ago. It's not just speakers, they have whole entire walls devoted to products that they don't sell. Are they just using these products as tests to see how they do and then ultimately go ahead and launch products of their own?

DAN HOWLEY: It could be. I think mostly it's because they want to show that you don't have to be locked specifically in Apple to be able to use different products. I think that's one of the big complaints that consumers have is that you have to use Apple products with other Apple products, and so showing that you don't necessarily have to do that across the board is a good way for consumers to kind of feel comfortable using Apple products in the long run. I think, you know, that's something where you can go in and get a keyboard that'll work with an Apple product. You can get a mouse that will work with an Apple product, cases galore. So it really I think just has to do with Apple trying to show that it is kind of agnostic in certain areas in sales.

But then obviously when they do see something perform exceptionally well, if you think the Fitbit bits, again, they are going to dive into that market, and, you know, now they dominate, as I said, the wearables market. FitBit's trying to be purchased by Alphabet, and Samsung is there, but they only work really with Android. Huawei not having a presence in the US, more international, they're there as well, but it really is Apple that dominates wearables. And, you know, if they look to another category, and they can produce products as good as the Apple Watch and the AirPods, they'll continue to dominate.

ALEXIS CHRISTOFOROUS: All right, Dan Howley, thank you.