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Investing.com - A court order for Apple to immediately open up its lucrative App Store to more competition is worth "watching", but will likely have a low impact on the iPhone-maker’s finances, according to analysts at Morgan Stanley (NYSE:MS).
In a decision late last month, U.S. District Judge Yvonne Gonzalez Rogers said that Apple had knowingly failed to comply with a 2021 injunction which was designed to give app firms more ability to drive consumers towards possibly cheaper payment options.
Apple and one of the tech giant’s executives were also referred to federal prosecutors for a potential criminal contempt investigation, with Gonzalez Rogers arguing that Apple had been purposefully misleading in order to "maintain a revenue stream worth billions" of dollars.
Gonzalez Rogers said Apple must end a new 27% fee it had imposed on app developers when Apple customers made purchases outside the App Store. Apple was also banned from using so-called "scare screens" which looked to keep consumers from using third-party payment options.
California-based Apple, which has denied being in violation of the court’s order, filed an appeal on Monday challenging Gonzalez Rogers’ decision.
In a note to clients on Tuesday, the Morgan Stanley analysts led by Erik Woodring flagged that Apple shares (NASDAQ:AAPL) have been under some pressure recently due in part to concerns around "changing U.S. App Store rules". Given the key role services plays in the group’s wider finances, these worries "should be investigated seriously", the brokerage added.
But the analysts noted that their research indicated that, in a worst case scenario, just 1.5% of Apple’s per-share income would be a risk if 20% of iPhone users choose to pay outside the App Store. They said this number effectively amounted to a "rounding error" that could be offset by a 5% price increase across Apple’s services division, which include offerings like Apple TV+ and iCloud.
Meanwhile, the mix of iPhone owners who believe they would circumvent the App Store for other payment options is declining, the analysts said. As a result, they argued that recent market concerns around the effect of the U.S. court ruling "could be overblown".