From: allin
Apple is currently navigating significant headwinds, including increased regulatory scrutiny, strategic growth challenges, and shifts in investor sentiment [00:52:21]. Some commentators suggest these issues mark the “beginning of the decay of Apple Peak Apple” [00:52:15].
Regulatory Battles and Antitrust Scrutiny
Apple faces considerable pressure from regulators, particularly in the European Union:
- Epic Games Dispute: Apple terminated Epic Games’ EU developer account, despite initially approving it, reportedly because Epic’s CEO publicly criticized Apple’s Digital Markets Act (DMA) compliance plan [00:50:26]. Critics view this as a “heavy-handed” and “tyrannical” action that proves Apple’s excessive power [00:51:36].
- EU Antitrust Fine: The European Union fined Apple €2 billion and mandated the removal of its anti-steering rules for music apps like Spotify [00:50:37]. Apple had previously restricted music apps from informing users about pricing and discounts, which the European Commission deemed anti-competitive given Apple’s own music streaming service [00:50:52].
Business Strategy and Growth Concerns
Apple’s growth trajectory and strategic decisions are also under scrutiny:
- “GDP Plus Growth”: For the past few years, Apple has been a “GDP plus Growth Company,” meaning its growth is largely tied to global GDP, unlike companies like Facebook or Nvidia that are rapidly taking market share [00:52:26]. This reliance on broader economic growth is considered “not super great for its future prospects” unless Apple can expand its operational surface area [00:52:56].
- Project Titan Cancellation: Apple’s electric car project, Project Titan, a $10 billion endeavor, has been canceled [01:01:09]. The project’s abandonment was partly due to Apple’s inability to progress from its current stage to a full-production Level 5 autonomous vehicle, and its rejection of launching a Level 3 vehicle as “not disruptive enough” [01:02:42]. This decision, seemingly driven by regulatory concerns rather than technical capability, is seen by some as a misstep, suggesting Apple could have used its influence to change laws, as it did in the music industry [01:03:06]. This further shrinks Apple’s portfolio of potential new products in trillion-dollar markets [01:01:07].
- Warren Buffett’s Disengagement: Warren Buffett’s annual letter provides an “important index” of his sentiment towards companies [00:55:05]. His decreasing explicit mentions of Apple in recent letters, from being a “forever holding” to barely being mentioned, is a cause for concern [00:55:09]. This pattern previously occurred with Wells Fargo before Buffett exited his position [00:54:34]. Buffett began selling Apple stock in Q4 [00:55:37].
- Lack of Large Inorganic Acquisitions: Despite its substantial balance sheet, Apple has historically shied away from large inorganic acquisitions [01:01:55]. If Apple cannot execute internally, the market may demand it leverage its balance sheet for external growth, though integrating companies that match Apple’s “discipline and quality” is challenging [01:02:07].
iPhone Stagnation and Future Products
The iPhone, Apple’s primary revenue driver, shows signs of stagnation:
- “Peak iPhone”: iPhone revenue has been flat for several years [00:56:04]. Many users, including long-time upgraders, no longer feel the need to frequently replace their iPhones due to diminishing perceived differences between models [00:56:35].
- Global Market Share: While iOS holds 57% of the US market share, its global mobile operating system share is only 27%, with Android dominating at 72% [00:59:05]. The affordability of Android devices (as low as 25 in India) presents a significant barrier to Apple expanding its share in emerging markets [01:00:15].
- Services Growth: While services revenue is growing through offerings like Apple One, iCloud storage, Apple Arcade, and Apple Music [00:56:18], they may not fully compensate for flat iPhone growth [00:56:28].
- New Product Outlook: The Apple Vision Pro is a potential future platform, but its high price point limits its ubiquity [01:01:13].
- AI Integration: Apple needs to significantly enhance its AI capabilities. Integrating an LLM into Siri for a “snappy” experience would be a major upgrade to the iPhone via software [01:04:54]. While Apple is subtly adding AI features to its photos app, similar features have been available on Google Photos for years [01:05:31]. Implementing AI chips that enable powerful LLMs locally on devices could motivate users to upgrade their hardware [01:06:00].
- Cloud Strategy: Apple has a massive opportunity to launch a major cloud competitor to AWS, Azure, and GCP, offering subsidized hardware access to its developers. This could also help justify its 30% revenue share in the App Store [01:04:00].