iPhone maker Apple (NASDAQ:AAPL) has backtracked on its decision to exclude Epic Games, the developer of the popular game Fortnite, from establishing a games store on iOS. This sudden change of heart comes amidst mounting pressure from European regulators. Notably, the European Union had set March 7 as the deadline for major tech firms to adhere to the Digital Markets Act (DMA).
Last week, Epic Games announced that Apple had terminated its developer account, barring it from developing the Epic Games Store for iOS. An Apple spokesperson justified this action by pointing to Epic’s track record of non-compliance and ongoing legal disputes, which served as reasons for denying their developer account application.
In response, Epic argued that the DMA mandates Apple to permit third-party app stores on iOS. It accused Apple of eliminating one of its main competitors from the Apple App Store, labeling it a notable violation of the DMA.
The Apple vs. Epic Games Saga
The conflict between these two companies dates back to 2020, when Epic Games accused Apple of violating U.S. antitrust regulations by imposing up to 30% fees on in-app purchases made through its iOS devices.
Despite Epic’s efforts, the U.S. Supreme Court declined to hear the case in January 2024, a decision widely viewed as favorable for Apple.
After facing criticism over its App Store policies, Apple announced notable changes to its iOS, Safari, and App Store services in the EU to comply with DMA. Moreover, the company allowed developers in the U.S. to integrate alternative payment methods into apps, subject to a fee of 27% for digital transactions and 12% for subscription-based services.
Is Apple a Buy, Hold, or Sell?
Besides for grappling with legal and regulatory challenges, Apple is witnessing softness in demand for its iPhones in China. Given these headwinds, analysts maintain a cautiously optimistic outlook.
AAPL stock has a Moderate Buy consensus rating, reflecting 16 Buy, nine Hold, and one Sell recommendation. Analysts’ average price target on AAPL stock stands at $204.86, implying 19.99% upside potential from current levels.
