China Targets Apple’s App Store Fees Amid Escalating Trade Tensions
China Considers Investigating Apple’s App Store Practices
Apple (NASDAQ: AAPL) is facing potential regulatory scrutiny in China, adding new risks to its revenue model. Reports indicate that China’s State Administration for Market Regulation (SAMR) is considering a formal probe into Apple’s App Store fees and policies.
- Stock Market Reaction: AAPL stock dropped 2% in pre-market trading following reports of a possible investigation.
- App Store Revenue at Risk: China is particularly concerned about Apple’s 30% commission on in-app purchases, as well as restrictions on third-party payment services and competing app stores.
- Impact of Growing Competition: Apple is already losing market share in China to domestic rivals like Huawei, with Q4 sales in Greater China declining 11% YoY.
This potential regulatory action comes as China looks for ways to retaliate against U.S. trade measures.
China Strikes Back Against U.S. Tariffs
China is exploring multiple economic countermeasures following the U.S. government’s decision to impose a 10% tariff on Chinese imports.
- New Chinese Tariffs: Beijing has raised tariffs on U.S. exports, including LNG, crude oil, coal, and farm equipment, with additional levies of 10-15% on American car exports.
- Tech Industry Targeted:
- Alphabet (GOOGL) is under antitrust investigation in China.
- Intel (INTC) is reportedly facing a regulatory probe.
- U.S. companies PVH (PVH) and Illumina (ILMN) have been added to China’s unreliable entity list.
Meanwhile, tensions are rising globally, with reports that the European Union may use its “anti-coercion instrument” (ACI) to push back against U.S. tech giants like Alphabet and Meta (META).
Is Apple Stock a Buy?
Despite growing geopolitical and regulatory pressures, Wall Street maintains a cautiously optimistic stance on AAPL stock.
- Analyst Ratings: 18 Buys, 10 Holds, and 4 Sells, leading to a Moderate Buy consensus.
- Price Target: The average analyst target of $251.63 implies an 8% upside from current levels.
While Apple remains a dominant global brand, its reliance on China for both manufacturing and sales makes it vulnerable to rising trade tensions and regulatory crackdowns. Investors should monitor developments closely as China’s response to U.S. tariffs unfolds.
