The United States filed a giant lawsuit against Apple. Yesterday, prosecutor Merrick Garland announced the details of the case. The lawsuit alleges that Apple violated an antitrust law passed in the 1890s in the United States and used illegal tactics to prevent competition. The basis of the case is based on Apple's iPhone, namely the mobile phone product, and it says that Apple has a monopoly on this product, although it is not exactly like that, we will look at the numbers a little later, and that it achieved this monopoly not by relying on superior products and services, but on anti-competitive behavior. These tactics and behaviors make it difficult for customers to abandon Apple products, while allegedly preventing new competition from forming.
To give an example, if you are making a smart watch, as a brand other than Apple, you cannot make it talk to the iPhone or you can use very limited features of the iPhone. This is a very big case. It's the biggest lawsuit we've seen since the antitrust lawsuit filed against Microsoft in 1998. Apple is currently the second most valuable company in the world after Microsoft. It is certain that this case will seriously pressure Apple's stock, and it is clear that new things may emerge for us consumers in the coming days. I'm a total Apple addict. I am one of the people who cannot go outside of Apple, which the American prosecutor mentioned. I have almost all of their products, and I am both a fan and a victim of this super successful yet monopolistic ecosystem that Apple has established.
In this context, this court is also very important to me. I delved into the details, now I will interpret it for you. Those who own Apple stocks or invest in American stock markets in general should read carefully. Because remember, Apple alone makes up a very significant portion of the S&P 500. There are actually five main items in the case. The first of these is that Apple blocks super apps. There are many super applications in China, and you can use social media, make payments, and shop all through a single application. You cannot upload these types of applications to Apple. Apple blocks this and believes it is anti-competitive, the prosecutor believes. Because, he says, thanks to these super apps, consumers can both have a better experience and solve their problems by spending less money. This is the first issue.
The second issue is that Apple is again very obstructive when it comes to cloud streaming games, that is, games played from the cloud. Because Apple gets money from you when you buy the game. He also receives money when purchasing some junk in the game. However, this cannot be done in cloud streaming games. This is what the case covers. Remember, Apple already has a big lawsuit against Epic Games on this issue. The third issue is that Apple's messaging app does not talk well with the Android platform. I've never used Apple's iMessage though. But I know from my friends in America. If you're trying to use iMessage between an iPhone and Android, a lot of things become very difficult. You can send videos in very low resolution. Messages coming from the other party seem to come with a green balloon if it is Android, or a blue balloon if it is Apple, and I think the most important thing is that this security is not provided for your calls made with Android devices. The case focuses on this issue.
Because, for example, you are a family and someone in the family wants to switch to Android. While all members of the family use Apple, communication between them will become difficult when one of them uses Android. Therefore, it keeps the other party away from using Android. This again falls under antitrust, he says. Another issue is that physical products not developed by Apple cannot talk to iPhones. For example, smart watches other than Apple cannot talk to the iPhone, or they can only talk to an iPhone in a very limited way. On the other hand, iWatch developed by Apple cannot work on other devices. So if you want to buy an iWatch, you also have to buy an Apple watch.
The fifth and important item is about digital wallets. Apple Pay is now the world's fastest growing digital wallet. The prosecutor has two problems here. One of them says that Apple's tap to pay solutions are only available for Apple wallets, rival wallets cannot access them. Although there is some progress in that regard. Apple recently started processing Paypal's Venmo payments via tap to pay. Apple probably made such preparations before the lawsuit was filed. I'm sure they knew that a lawsuit would be filed. The prosecutor also claims that Apple receives a 1.5% commission from banks for transactions made through its own wallet, which is true. There is no such thing in other wallets. This again is anti-competitive, he says.
On the other hand, one of the places they focus most on is the Apple Store, the shop where we download Apple applications. He says it's too restrictive there, too. In other words, it is difficult to install an application inside and you are asked for a lot of money for that application. There are high expenses. These things are much more economical on Android. Moreover, it has very strict rules. We cannot upload anything just as you wish. I just gave an example and they continue to take money from all transactions there. For example, one of the interesting examples is the issue in Meta. You downloaded Meta's application on Instagram or Facebook and you want to place an advertisement about one of your own products there. When you try to place this advertisement on iPhone, Apple takes 30% of the advertising fee. So, frankly, I don't see anything fair in this. In other words, if the application is a paid application, it charges money for downloading. It then receives money from all purchases within the application. In fact, in the Meta example, it also deducts commission from an advertisement within the free application. They have already been fighting with Meta on this issue for a long time.
Apple made a very harsh statement after the criminal complaint of the prosecutor's office and said that there is an attack here on the fundamental issues that make Apple Apple. We integrate the physical product with service and software and offer our customers a great experience. We are making innovations in this direction. This is the main factor that differentiates us in the very competitive mobile phone market. We do not accept the case on this issue. We will fight against this with all our strength. Also, this case could be a pioneer. We do not want the state to interfere too much in the affairs of companies. As far as I understand, they want to take other technology giants with them. Because, as you already know, there are lawsuits against all technology companies in America and Europe. Recently, Spotify filed a huge lawsuit against Apple regarding antitrust in the European market.
So what do I think about this case? First of all, there are very valid issues in the case. It is certain that there are many behaviors that are especially anti-competitive, that is, prevent the arrival of an application or device, and this dates back to the Steve Jobs era. There was an advertisement at that time that I will never forget. In that ad, a user was easily transferring a product from Apple to Android. Steve Jobs was crazy about this and tried to prevent it. In fact, the email sent by Steve Jobs regarding this is also included in the case file. Something interesting happened recently at a forum meeting attended by Tim Cook. One of the forum participants there also said: My mother has an Android phone and I have an iPhone, we do not communicate. When asked when will you solve this problem, Tim Cook's answer was buy your mother an iPhone. The prosecution will use all of these and I think there are very strong arguments in the case.
But the basis of the arguments is that Apple is a monopoly. Is Apple really a monopoly in mobile phones? That's a bit controversial. There's a great article published on techcrunch on this subject, and the article says that no, the iPhone is not a monopoly. At least it is not a monopoly, as in the case against Microsoft in 1990. Because at that time, Microsoft was the dominant operating system on 97% of all devices in the world. Also, remember that at that time, Microsoft had a disastrous internet browser called Internet Explorer. A lawsuit had already been filed regarding this. That this browser is a monopoly.
To look at the numbers, when we look at the turnover in the USA, the iPhone's share is 70%, but in terms of units sold, it is 64%. The second biggest player is Samsung. Its market share is 18%. So, there is no such 90% or 95% share here. He says consumers can easily buy an Android device or a Samsung device if they want. When we look globally, Apple is definitely not a monopoly. Total market share is 23%. When we look globally, Samsung is second. Its market share is 16%, but Apple is actually much more profitable than Samsung. Because of all these issues explained by the prosecutor, and also because of the value of the brand, consumers spend more money on Apple products, and Apple earns a lot of money on the services side, especially from these application commissions. In that respect, it is a company many times more profitable than Samsung.
It is certain that the case will last for many years. By the way, we don't have a case yet. The judge will first decide whether there is a case or not. Apple will now express objections within 2 months, if I am not mistaken, and the judge will decide whether to file a lawsuit after listening to the prosecutors and Apple. There are still two months left until that happens. To give an example, the Microsoft case lasted more than 10 years. We have a very long process ahead of us. I am also sure that a company as rich as Apple will bring together the best lawyers in the world on this issue and these lawyers will put a lot of pressure on the prosecution. On the other hand, remember that if the United States files a lawsuit, it is usually the winner. Because the judge there is also part of the same Ministry of Justice. The case ended with agreements with Microsoft.
In other words, he reached agreements with the parties in the lawsuits filed against Microsoft. Interestingly, this was the issue that paved the way for Apple. Today's iPad or iPhone would not have come into our lives if Microsoft had not been the losing party in that case. Microsoft was so dominant. More interestingly, at that time, Bill Gates saved Apple to get rid of this monopoly image. Apple was about to go bankrupt at that time, it ran out of money. Microsoft came and became a partner and kept Apple afloat just to get rid of this antitrust case. Will the lawsuit put pressure on the stock? I think it will create pressure in two directions. At the moment, I do not expect much pressure that the case will be concluded immediately and that Apple will suffer great losses from it. But I predict that Apple's behavior will be super controlled in the coming days.
Because now he has a serious case on his plate. This will also be a limiting factor for Apple. Secondly, I think that the settlement of the case will completely destroy some of Apple's profitable businesses or reduce its profits in those profitable businesses. What consequences might we encounter? For example, commissions in the application store may decrease. Walls placed between iPhones and other devices can be eliminated. The consumer's transition between different platforms is facilitated. For example, I might prefer a Samsung phone because it allows a Samsung phone to talk to an Apple computer easily, etc. So no matter how you look at it, it is clear that this is an attack on Apple's magnificent ecosystem. Therefore, since it will restrict Apple's behavior in the short term, it is certain that its stock will be suppressed in the long term, even if the case ends in a settlement, as there will be certain attacks on Apple's profit model.
On the other hand, Apple is Apple. So Apple products are still great products. Yes, we pay more, but as an Apple fan, I still have a hard time switching to another product. I am sure that Apple will solve all these issues and go about its business, and I think what Apple will do in its future, in artificial intelligence, is more important. As you know, last week they announced an agreement with Google. They are collaborating with Google. They will benefit from Google's artificial intelligence program Gemini. At the Apple developer conference in June this year, they will explain how mobile phones combine with artificial intelligence. I think this will affect the issue more in the long run. Because if successful things are told there, iPhone sales will rise again.
Consumers don't care much about such lawsuits. They gravitate towards wherever they see the best experience. I am also an Apple investor. In fact, I have preferred to collect Apple shares since the beginning of this year. Because I believed that Apple would bring a good solution to this artificial intelligence issue. As of yesterday, I am not selling my shares right now, but I am also stopping buying them. I'm tightening the stop loss levels a bit on the stocks I hold. Currently, Apple is around $170, I will put stop losses close to this. But I don't plan on selling my feelings. Because this is a case that will last for many years. I think what Apple will announce about artificial intelligence in the coming days is more important. But this is not my yacht advice, this is my strategy. It is clear that Apple's stock will be suppressed.
So, if you have Apple shares or are thinking of buying them, I think you should take this into consideration and follow the case closely. Now I have a question for you. What do you think about this? Do you find Apple wrong or right? I'm somewhere in between. In general, I think that states should not interfere too much in company business. Because companies are established by entrepreneurs with great effort, and if you want, you can go in and buy a Samsung, or if you want, you can go in and buy a Xiaomi. Nobody is holding your hand. Apple has offered a superior product-service combination here. That's why we choose to stop there. I think this case is weak in that respect. But I also agree with the prosecutor regarding some behaviors that hinder competition, especially on the part of application developers. I'm kind of somewhere in between.
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