On Thursday, Evercore ISI reiterated its Outperform rating and $220.00 price target for Apple Inc (NASDAQ:AAPL), despite the recent legal challenges the company faces. The firm believes that although the Department of Justice (DOJ) has initiated a lawsuit against Apple, the tech giant is expected to ultimately succeed.
The legal proceedings are anticipated to generate a stream of negative publicity, but Evercore ISI's stance remains unchanged, expecting Apple to overcome the legal hurdles. The DOJ's track record with anti-trust suits against major technology companies has shown limited success, and the analyst suggests that any significant anti-trust action against Apple in the United States would likely necessitate new legislation from Congress. This is due to the difficulty of arguing that Apple operates a monopoly under current laws, which focus on tangible market definitions and consumer harm standards.
The lawsuit filed by Epic Games against Apple, which targeted similar issues, was dismissed because the judge did not recognize iOS as a distinct market. Furthermore, Apple does not hold a monopoly in the broader smartphone or digital gaming markets. The DOJ's case against Apple is more comprehensive, but it still relies on the definition of the market in question and evidence of direct harm to competition and consumers.
The initial phase of the litigation is expected to be influenced by the presiding judge's perspective. However, as the case progresses through the higher courts, which tend to be more business-friendly, the DOJ's chances of success may diminish. This is especially pertinent given the current composition of the Supreme Court, which is perceived as the most favorable towards business interests.
The entire legal process, including appeals, is projected to extend over a period of approximately three to four years. In light of this, Evercore ISI views the anti-trust issues as more of a headline risk than a financial threat to Apple in the U.S. The firm maintains that, barring the passage of new legislation, it is improbable that Apple will be compelled to significantly alter its App Store fees or policies regarding third-party app stores.
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