Strong sales of 5G iPhones and services such as the App Store and Apple Music are expected to drive growth at Apple Inc, which reports results on Tuesday, but some investors will be listening to the company’s strategy to ward off anti-trust foes.
The services business faces lawsuits, regulatory scrutiny, including from an empowered U.S. Department of Justice, and a raft of pending legislation in the United States and Europe to lower its commissions on apps and make other changes.
Tom Forte, an analyst at D.A. Davidson & Co, wrote in a note to clients stating: "We believe government action (via antitrust, executive order, and legislation) represents the single greatest risk for shares of Apple. He added that he hoped Apple’s executives would address the risks on the company’s earnings call on Tuesday.
Analysts expect Apple’s services sales to rise 24.1% to $16.33 billion, more than a fifth of its expected overall sales of $73.30 billion, according to IBES data from Refinitiv as of July 26.
Apple also faces the risk that the U.S. Department of Justice could bar Alphabet Inc’s Google paying to be the default search engine on the iPhone, Angelo Zino of CFRA Research wrote in a research note last week. Justice Department officials have cited estimates that Google pays Apple $8 billion to $12 billion per year.
For more on this, read the full Reuters report.