Apple has been fined €10 million ($12 million) for “deceptive” and “aggressive” trade practices regarding its iPhones by Italy’s antitrust authority.
According to a statement by the Italian Competition Authority, also known as AGCM, Apple (AAPL) is being accused of two misleading commercial practices. The first relates to the advertisement and promotion of different iPhone models – iPhone 8, iPhone 8 Plus, iPhone XR, iPhone XS, iPhone XS Max, iPhone 11, iPhone 11pro and iPhone 11 pro Max – as being water-resistant for a maximum depth varying between 1 meter and 4 meters, depending on the model.
The regulator criticized Apple for misleading customers, as the tech giant failed to clarify that the water-resistant feature is only applicable in controlled settings and under specific conditions, and not in everyday use of the devices by consumers. For example, the water-resistant property is attainable during specific and controlled laboratory tests with the use of static and pure water.
In addition, Apple’s disclaimer, which states that the iPhones are not covered by warranty in case of damage caused by liquids, was sending a misleading message to consumers, in view of the company’s inadequate disclosure of the conditions and limitations of the water-resistant feature.
The antitrust regulator also deemed Apple’s commercial practice to refuse to assist customers, who claimed their phones were damaged by water or other liquids as “aggressive”, as it hinders them from exercising their lawful rights.
The fine was imposed on the iPhone maker’s subsidiaries, Apple Distribution International Ltd. and Apple Italia Srl.
Meanwhile, Apple shares have served investors well in recent months as the coronavirus pandemic has created opportunities for companies like Apple who are weathering the crisis relatively well and are looking to increase their reach and boost market share. Since the start of the year, the stock has ballooned almost 60%, which turned the iPhone maker into the first US company to surpass $2 trillion in market value. (See Apple stock analysis on TipRanks)
Among the bulls, Wedbush analyst Daniel Ives just reiterated a Buy rating on the stock with a $150 price target (29% upside potential), as he expects Apple to benefit from a major holiday season driven by a surge of consumer demand for its AirPods Pro and ample order demand for the iPhone 12 models.
“We estimate that Apple is on pace to sell over 90 million AirPods units in 2020 and is now on a trajectory to potentially reach 115 million units in 2021 with a new version slated to be unveiled in the April/May 2021 timeframe,” Ives commented in a note to investors. “In the US we are seeing “a clear tick up” for demand around the iPhone 12 Pro versions with the 6.1-inch model the star of the show so far with carrier trade-ins/promotions catalyzing upgrades.”
“For the key China region, demand remains very healthy with strong pent up demand for upgrades heading into holiday season for this latest iPhone 12 5G, which we would characterize as the strongest product cycle for Cook & Co. since the iPhone 6 in 2014,” the analyst summed up.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 24 Buys, 7 Holds and 1 Sell. What’s more, the average analyst price target of $126.61 indicates upside potential of another 8.7% to current levels.
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