- The three-week-old antitrust trial between Apple (NASDAQ:AAPL) and Epic Games will wrap up on Monday, but not before an appearance from a high-profile defendant. CEO Tim Cook will take the stand today before the companies make their closing arguments and Judge Yvonne Gonzalez Rogers issues a final ruling (neither side wanted a jury trial). Other executives from both firms have already testified, including Craig Federighi, Apple's SVP of Software Engineering; Phil Schiller, Apple Fellow and former longtime head of marketing, as well as Epic Games CEO Tim Sweeney.
Backdrop: The legal fight started last year when Epic created its own direct payment method within popular game Fortnite, circumventing fees paid for App Store purchases. Apple then issued a warning to Epic regarding the workaround, but the latter refused to remove it, and Apple kicked the developer off its platform. The current lawsuit then emerged, while companies like Spotify (SPOT) and Match Group (MTCH) have also accused the App Store of being anti-competitive.
While Tim Cook has testified before Congress in the past, today will mark the first time he has ever taken the witness stand in a trial. Apple seems to have the edge in terms of legal precedent in the case, but a loss could inflict heavy casualties on the tech giant's lucrative App Store operation. In fact, Apple's Services Segment, which includes the App Store, Apple Music, iCloud and Apple TV+, brought in an eye-popping $53.7B in revenue during 2020.
Flashback from July 2020: The last time Cook appeared before the House Judiciary subcommittee on antitrust, commercial, and administrative law, he had the following to say. "Apple does not have a dominant market share in any market where we do business. That is not just true for iPhone, it is true for any product category. Our commissions are comparable to or lower than commissions charged by the majority of our competitors and we have never raised the commission or added a single fee." (7 comments)
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| | Top News  Shutterstock The three-week-old antitrust trial between Apple (NASDAQ:AAPL) and Epic Games will wrap up on Monday, but not before an appearance from a high-profile defendant. CEO Tim Cook will take the stand today before the companies make their closing arguments and Judge Yvonne Gonzalez Rogers issues a final ruling (neither side wanted a jury trial). Other executives from both firms have already testified, including Craig Federighi, Apple's SVP of Software Engineering; Phil Schiller, Apple Fellow and former longtime head of marketing, as well as Epic Games CEO Tim Sweeney.
Backdrop: The legal fight started last year when Epic created its own direct payment method within popular game Fortnite, circumventing fees paid for App Store purchases. Apple then issued a warning to Epic regarding the workaround, but the latter refused to remove it, and Apple kicked the developer off its platform. The current lawsuit then emerged, while companies like Spotify (SPOT) and Match Group (MTCH) have also accused the App Store of being anti-competitive.
While Tim Cook has testified before Congress in the past, today will mark the first time he has ever taken the witness stand in a trial. Apple seems to have the edge in terms of legal precedent in the case, but a loss could inflict heavy casualties on the tech giant's lucrative App Store operation. In fact, Apple's Services Segment, which includes the App Store, Apple Music, iCloud and Apple TV+, brought in an eye-popping $53.7B in revenue during 2020.
Flashback from July 2020: The last time Cook appeared before the House Judiciary subcommittee on antitrust, commercial, and administrative law, he had the following to say. "Apple does not have a dominant market share in any market where we do business. That is not just true for iPhone, it is true for any product category. Our commissions are comparable to or lower than commissions charged by the majority of our competitors and we have never raised the commission or added a single fee." (7 comments)
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| Stocks A market comeback on Thursday helped the major averages break a three-day losing streak, while U.S. stock index futures tacked on another 0.3% overnight. Some "buy the dip" action may be happening, though fresh data showed the lowest level of jobless claims since the start of the pandemic in March 2020. According to figures from the Labor Department, 444,000 Americans applied for first-time unemployment benefits in the week ending May 15, down from 478,000 in the previous seven days.
Worries remain: "I think people are still concerned by the volatile moves that we're having in our market," said Jonathan Corpina, senior managing partner at Meridian Equity Partners. "In reality, people are still apprehensive about what the economy will look like one month from now, two months from now, six months from now." Rising inflation and an overheated recovery could trigger the Fed to pare back easy-money policies, while tapering talk was head at the latest FOMC meeting.
Another thing on the minds of investors is the global minimum tax proposal just announced by the Treasury Department. The new corporate level would be at least 15%, less than the 21% rate it has proposed for the overseas earnings of U.S. businesses. "It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion... discussions should continue to be ambitious and push that rate higher," the U.S. Treasury said in a statement. Secretary Janet Yellen today is also scheduled to preside over a meeting of the Financial Stability Oversight Council.
Outlook: While many countries have endorsed a minimum tax (there's been talk at the OECD for years), others may not embrace one unless they can claim a bigger stake in the profits of U.S. tech companies. The debate also touches on the ongoing friction in international taxation: whether to tax companies based on the location of their income or the location of their headquarters. The U.S. didn't have a pure system before or after the 2017 tax act, which leaned toward taxes based on where revenues are generated, though the Biden administration appears to be focusing more on the latter.
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| Financials In line with its motto to democratize financial markets, Robinhood (RBNHD) is rolling out the opportunity for its app users to get in on IPOs through its new product called IPO Access. Traditionally, most IPO shares go to financial institutions or the very wealthy or well-connected. With IPO Access, retail traders will get the chance to buy shares at the IPO price (the product will be gradually introduced to all customers in the coming weeks).
How does it work? App users can request to buy shares of companies at their initial listing price range. "When the final price is set, you'll be able to review, edit, or cancel your request, before shares are allocated to Robinhood customers," according to its blog. The company did warn that IPO shares can be very limited, but added that all Robinhood customers get an "equal shot" at shares regardless of order size or account value.
Footnote: "Here's to democratizing IPOs for all!" Robinhood added in the post that ends with a disclaimer: "IPOs can be risky and speculative investments, and may not be appropriate for every investor." Robinhood, itself, is poised to go public, with Bloomberg reporting that it may file its IPO prospectus next week with an aim to go public toward the end of June. (7 comments) |
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