China’s antitrust watchdog is reportedly eyeing a formal probe into Apple’s (AAPL-1.52%) fees for app developers, giving CEO Tim Cook another problem to worry about as the U.S.’ trade war with Beijing kicks off.
The State Administration for Market Regulation (SAMR) is looking at Apple’s policies, such as taking as much as a 30% cut of in-app spending and blocking external payment services, Bloomberg News reports, citing people familiar with the matter. The regulator’s officials have spoken with Apple executives since last year, according to Bloomberg.
Although China first began investigating Apple last year, an official probe could heighten tensions with the U.S. President Donald Trump on Tuesday slapped Chinese imports with 10% tariffs, prompting Beijing to hit back with its own tariffs, which begin next week, export controls related to critical minerals, and a series of targeted actions at companies including Google (GOOGL-8.09%).
Apple stock slipped 2% in pre-market trading on Wednesday. Last week, the tech giant reported first-quarter earnings that largely met Wall Street’s expectations, although iPhone revenue failed to meet the mark. The company has had a tough time in China recently as domestic smartphone manufacturers erode its market share with their new devices.
Wedbush Securities analyst Dan Ives said Wednesday that Apple is less worried about a probe’s hit to revenue and more concerned with the “overall tone” for Big Tech. Ives noted that Apple gets less Services revenue in the region compared to others and that the App Store only brings in about $5 billion each year, according to Wedbush’s calculations.
“That said, this is all a game of high stakes poker between Trump and China and Apple is clearly a chip on the table,” Ives wrote in a note. “We believe this is a very contained risk” and that Apple will return to growth in the region by the June quarter, he added.
Apple isn’t the only one facing a potential investigation. The Financial Times, reports that Chinese regulators are looking into opening a formal probe into struggling tech giant Intel (INTC-1.74%). Last October, the Cybersecurity Association of China, an industry group, alleged Intel “constantly harmed” Beijing’s interests.
The SAMR on Tuesday said Google was suspected of violating anti-monopoly laws. In December, the SAMR launched a probe into Nvidia’s (NVDA+2.79%) 2020 acquisition of Israeli chip designer Mellanox Technologies. China’s Commerce Ministry on Tuesday also placed biotechnology firm Illumina (ILMN+1.15%) and Calvin Klein (PVH-0.27%) and Tommy Hilfiger owner PVH Corp. on its “unreliable entity” list, paving the way for sanctions.
And DeepSeek, an artificial intelligence startup, has shaken up Silicon Valley with its latest — cheaply developed — models, slamming major tech stocks. Some tech leaders are questioning whether DeepSeek actually spent as little money as it claims it did developing the model, while Microsoft (MSFT+0.02%) is probing whether DeepSeek had access to OpenAI tech that could be behind some of its abilities
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