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The next iPhone is expected to reach the market this month.
Greg Baker/AFP via Getty Images
Last month,
Apple
opened Pandora’s box when it announced plans to implement a new technology that would identify and report collections of child-abuse images on iPhones. It seemed like everyone had a problem with that seemingly good idea: privacy advocates, security researchers, politicians, customers, and even Apple’s own employees
On Friday, The Wall Street Journal reported that Apple (ticker: AAPL) has decided to put those plans on hold. It was anything but a predictable choice.
The company has spent weeks publicly defending the technical wizardry of its plans. And for decades, Apple has forged a reputation for marching to the beat of its own drum, regardless of criticism, as it has built the future it wanted through its product designs and technical innovation.
Now, the company appears to be taking public disapproval more seriously. All of a sudden, it is trying to fix multiple issues at once.
Though Apple didn’t respond to a request to discuss its decision regarding the iPhone software, it isn’t hard to see why it might have changed its mind. The largest U.S. tech companies find themselves in a challenging position. Although they are as powerful as they have ever been, each has come under increased scrutiny, as Barron’s outlined in a recent cover story.
The Biden administration has made a point of reining in Big Tech, and there are mounting legislative efforts afoot in Washington, D.C.. Some aim to break apart the companies.
Pressure abroad has been continuing for years, but a shift came Wednesday as Apple caved on its App Store fees. Following a ruling by Japan’s Fair Trade Commission, Apple said it was easing rules worldwide to allow the likes of
Netflix
(NFLX) and
Spotify Technology
(SPOT) to bypass fees on in-app purchases.
The magnitude of those costs has long been a point of contention with developers large and small. Epic Games, a developer backed by
Tencent Holdings,
has battled Apple in court over the fees, while Utah’s attorney general is leading an antitrust suit against rival store operator Alphabet (GOOGL).
For now, investors don’t appear worried about Apple’s latest moves.
Apple’s next iPhone launch, slated for the third week in September, matters more to Wall Street, given that the stock practically lives and dies on the success of the ubiquitous glowing rectangles. Wedbush analyst Daniel Ives called the App Store issues a “containable regulatory risk.”
And the outlook for the iPhone looks promising. Ives said that there are a quarter of a billion people who haven’t upgraded their phones in more than 3½ years. That means Chief Executive Tim Cook, and shareholders, have reason to look forward to when the iPhone 13 goes on sale. Ives described it as “massive, pent up demand.”
Shares of Apple were up 0.2% to $153.97 on Friday.
Write to Max A. Cherney at max.cherney@barrons.com
