Apple is having a tough week. Thoughts and prayers go out to the three trillion dollar company. Here's what's going on with Apple:
1) Apple + Alibaba – Apple's plan to partner with Alibaba to bring Apple Intelligence to its products in China is raising concern from both Congress and the White House who are worried that such a deal would help China become even more competitive against US AI companies.
Representative Raja Krishnamoorthi of Illinois said that the “serious concerns” are that the partnership will help Alibaba collect data to refine its models and that the deal allows Apple to “turn a blind eye” to the fundamental rights of Chinese iPhone users. However Apple sees the deal as a crucial step to remaining competitive in China, which accounts for about 20% of its total sales.
2) Apple Sales in China – Meanwhile, Apple needs to do whatever it takes to maintain its market share in China, as sales in the country are slipping. Last week Chinese retailers began offering discounts of up to 2,530 yuan ($351) on Apple's iPhone 16 models in an effort to spur sales as first-quarter shipments fell further in the country. Apple's smartphone shipments in China dropped 9% for the first quarter, while domestic competitors Xiaomi and Huawei posted gains of 40% and 10% respectively.
However Apple says the discounts are simply part of its regular strategy of discounting phones ahead of China's annual “618” shopping festival on June 18th. Does Apple know that it's May?
3) India Manufacturing – President Trump asked Apple CEO Tim Cook to halt the company's manufacturing expansion in India and instead up their production in the United States. Trump said:
“I had a little problem with Tim Cook yesterday. He is building all over India. They [India] have offered us a deal where basically they have agreed to charge us literally no tariffs. I said ‘Tim, we are treating you really good, we put up with all the plants you built in China for years. We are not interested in you building in India. India can take care of themselves'.”
In the fiscal year ending in March, Apple's iPhone production in India reached $22B, a 60% increase YoY, and Apple planned to move even more production to India by the end of the year.
Apple also said it plans to spend $500B over the next four years to expand facilities in the US, including a new factory for advanced server manufacturing in Texas that is scheduled to open later this year.
4) Apple vs Epic Games – Epic Games is escalating its efforts to pressure Apple to allow its Fortnite game into the App Store, with a new court filing asking the judge to require that Apple “accept any compliant version of Fortnite onto the US storefront.”
The two companies have been engaged in a years-long legal battle over Apple's App Store policies, particularly the commissions Apple charges for in-app purchases, and last month, Epic Games scored a major victory when Judge Rogers ruled that Apple was in “willful violation of an injunction on anti-competitive pricing,” which seemed to have paved the way for Fortnite to return to the App Store. However Apple said it will appeal the ruling and is continuing to block Fortnite in the US and EU.
Apple disputes the fact that it's blocking Fortnite outside the US and said that it simply asked Epic to “resubmit the app update without including the U.S. storefront of the App Store as to not impact Fortnite in other geographies.”
But why block Fortnite in the US at all? Epic argues in its filing that Apple is denying it “the ability to take advantage of the pro-competitive rules it helped usher in,” and punishing the company “by shutting it out of the very market it has fought so hard to open — while sending a clear message to other developers not to challenge Apple’s practices.”