Apple allowing 3rd party app stores is 'more bark than bite,' Morgan Stanley says
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A potential move by (NASDAQ:AAPL) to allow third-party app stores on iPhones and iPads to meet certain rules in the European Union would likely wind up being "more bark than bite" and have a limited impact on the tech giant, investment firm Morgan Stanley said on Wednesday.
Analyst Erik Woodring, who has an overweight rating and $175 price target on Apple (AAPL), noted that consumers "overwhelmingly" prefer the App Store compared to alternatives. He added that side-loaded apps have seen "limited" adoption on other platforms, as a result of the increased steps needed to download them.
As such, Woodring said a "worst" case scenario would see a 1% revenue hit and a 2.5% hit to earnings per share if Apple (AAPL) made such a move. 
"We see limited risk to App Store revenue from greater App Store competition on iOS, and believe that Apple potentially appeasing EU regulators could actually remove a long-standing overhang on Apple's stock," Woodring wrote in a note to clients.
On Tuesday, it was reported that Apple (AAPL) employees in both software engineering and services were working to open up the company's platforms in a move that could let people download third-party software outside of the App Store and let companies avoid paying Apple (AAPL) commission rates up to as much as 30%.
The potential move would mark a long reversal of Apple's (AAPL) policies, as the tech giant has long been critical of third-party apps, citing security and privacy risks. It would also be seen as a major win for the European Union and developers, many of whom have complained that Apple (AAPL) and Google (GOOGL) (GOOG), which also has its own app store, have taken commissions that are exorbitant.
For now, any potential change would be limited to Europe, but if it were to go global, Woodring added that there is a "very low likelihood" of consumers abandoning the App Store for alternatives, as its customers have prioritized security, centralization and convenience.
"Net, while there are still more details we need to learn on what changes could potentially be at hand, ... we don't believe [the] report presents material risk to App Store revenue/growth, and we'd be buyers of any negative stock reaction to this news," Woodring explained. 
On Tuesday, Apple (AAPL) announced it was expanding the availability of its Emergency SOS satellite feature on its iPhone 14 line, bringing the service to several countries in western Europe.