Apple’s stock declined on Wednesday following reports that Chinese regulators are considering a formal investigation into the company’s App Store practices.
Apple shares were down by 2.84% in premarket trading, at the time of writing.
The State Administration for Market Regulation (SAMR) is examining Apple’s policies, including its commission of up to 30% on in-app purchases and its restrictions on third-party payment systems and app stores, as per a Bloomberg report.
As per the report, agency officials have engaged in discussions with Apple executives and app developers since last year.
These talks stem from ongoing disputes between Apple and companies like Tencent Holdings and ByteDance, focusing on iOS store policies.
This tension between the US tech giant and global regulators, including those in Beijing, has been part of a broader trend of scrutiny towards US tech firms, such as Nvidia and Google.
However, if the conversations progress positively, regulators may refrain from formal action against Apple, the publication reported citing sources.
Reaction to Trump’s tariffs?
The scrutiny of Apple’s practices, which is said to have begun before Donald Trump’s presidency, is now intersecting with escalating tensions between Beijing and the Trump administration.
These tensions are threatening to spark a global trade war.
On Tuesday, shortly after new US tariffs on China took effect, the regulatory agency launched a formal investigation into Google, citing allegations of anticompetitive behavior.
The Financial Times reported that SAMR is considering a similar probe into US chipmaker Intel.
Apple has faced similar challenges in other markets, notably the European Union, where it has been criticised for alleged anti-competitive practices.
Last year, EU regulators mandated that the company enable app developers to direct consumers toward third-party alternatives, aiming to increase consumer choice under the recently implemented Digital Markets Act.
Impact on Apple in China
The investigation, if it proceeds, would add to the challenges Apple is facing in one of its most significant markets.
The company is already dealing with strong competition from local brands like Huawei, which are eroding its smartphone market share.
Apple saw an 11% decline in sales in Greater China in the December quarter compared to the previous year.
In Greater China, which includes the mainland, Hong Kong, and Taiwan, sales declined significantly to $18.51 billion, marking the largest drop since the same quarter last year, when sales fell by 12.9%.
Apple reported a 4% increase in overall revenue for its first fiscal quarter but missed Wall Street’s expectations for iPhone sales.
The company posted earnings per share of $2.40, slightly above the estimated $2.35, and revenue of $124.30 billion, just surpassing the $124.12 billion forecast.
The company anticipates growth in the March quarter to be in the “low to mid single digits” on an annual basis, with Services expected to grow in the “low double digits.”
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