Apple saw its shares tumble by a significant 3.3 percent on Friday, following a ruling by a federal judge that could have far-arching consequences for the tech giant and for the tech industry in general. The dip sent the Silicon Valley biggie’s market capitalization plummeting by a mind-boggling $85 billion. Interestingly, the size of the loss is said to be greater than all except 98 entries on the S&P 500 Index.
An Important Ruling
US District Judge Yvonne Gonzalez Rogers had ruled that Apple can no longer force developers into making use of its App Store payment gateway for their transactions.
In the decision, Rogers had said that Apple has been hiding “critical information” from its users and “stifling customer choice” by indulging in anti-steering activities. Moreover, the judge also holds Apple’s behaviour to be “anticompetitive,” especially when combined with the antitrust allegations against it.
The ruling could have serious and long-lasting implications on Apple’s total revenue, seeing as how it takes a commission cut of up to 30 percent on every transaction that is made by applications on its App Store. This fees alone contributes a major chunk to Apple’s income through its services business, which sees a profit margin of around 70 percent, and had brought in a revenue of a whopping $17.5 billion during the third quarter alone.
Not a Clear Win
The decision came forth as a product of the legal battle between the iPhone maker and Fortnite developer Epic Games, which had alleged the tech giant of enjoying a monopoly over the app store market. While the ruling may indeed help customers get their hands on a wider range of options, Epic Games doesn’t seem to happy about the decision.
This may especially be the case since Judge Rogers has declared that Apple is not necessarily indulging in antitrust behavior, something that Epic has been alleging the tech giant of, from the get-go.
Some Win, Some Lose
The loss seen by Apple also had a negative impact on the stocks of competitor Google Inc.’s parent company Alphabet, with the revenue through Google Play Store being in doubt. At the same time, Unity Software, Robolox, and Electronic Arts emerged as potential winners. The stocks of Apple and Google plummeted back to the key support levels, sending the stocks of Electronic Arts soaring to nearly a buy point.
Stocks did recover modestly on Monday, however, as the stock market attempted to make a comeback.