How much does Apple make from the Apple Store?
Apple (AAPL) is a global leader in smartphones and other consumer technology with a market value of $ 2.28 billion.
Apple shares are up 80% in 2020 but have added just 5% since early 2021.
What is essential to know in recent years, the service sector has become a growing priority for the company in the sale of both Apple’s services.
Apple Music, iCloud, Apple TV +, Apple Fitness, and others, and the growth of the Apple Store app store due to the commissions that the company charges each transaction in it.
It was on the issue of the Apple Store commissions and the company’s monopoly in the field of all applications for devices on the iOS OS that carried out a legal investigation since August 2020 after a lawsuit filed by the developer Epic Games.
Epic’s sensational antitrust lawsuit drew attention to Apple’s App Store revenues. The company does not specify but adds to the general service category, which includes selling its services.
Year (ended September 26, 2020) sales of Apple services (Services) grew to $ 53.8 billion from $ 46.3 billion in the previous year. At the same time, this segment grew at a higher rate of 16% compared to 2.8% in sales of Apple appliances.
Even if we do not consider the unstable 2020, in 2019 fin, Apple’s services gross margin was 63.7% year-on-year, nearly double the 32.2% gross margin in the company’s product segment.
Materials from the Epic – Apple court case showed that Apple for 2019 fin. According to The Wall Street Journal, they earned more revenue from mobile games for a year than significant video game developers Nintendo, Activision Blizzard (ATVI), Microsoft (MSFT), and Sony combined. According to the analysis, Apple’s operating profit from games in fin. 2019 was $ 8.5 billion, which is $ 2 billion more than the combined operating income of video game developers in the same period.
According to other data disclosed by Bloomberg, App Store profit in 2019 was even higher at 78%. This figure is from testimony in the trial of expert witness Epic Games Ned Barnes. According to the calculations of the witness, the profitability increased from 75% in 2018 to 78% in 2019.
Considering Apple charges 15-30% commission on all App Store purchases, profits in the 70-80% range don’t seem so incredible. Billions of dollars go through in-app purchases each year, and Apple’s costs of running the App Store seem relatively small: server and labor costs for the App Review and App Store editorial teams.
According to court records, gaming transactions accounted for 68% of total App Store revenue in 2020, making the App Store “primarily a gaming store and secondarily an app store,” Judge Yvonne Gonzalez Rogers said in her final ruling.
The mobile games market has grown significantly in recent years. An industry report submitted to the court said online games themselves account for $ 100 billion, accounting for 59% of global gaming revenues.
Sensor Tower data for the first half of 2021 shows that Apple’s app store is still seeing significant growth, with consumer spending growing 22.1% over the same period in 2020.
And although the figure is below last year’s growth rate of 29.3% (comparing the first half of 2020 with the first half of 2019) and below the 30% growth rate of the competitor – Play Market from Google (GOOGL, GOOG), in monetary terms, the Apple Store receives more.
While Google Play earned $ 23.4 billion in the first half of 2021, according to Sensor Tower, the App Store almost doubled in $ 41.5 billion in commissions for in-app purchases and subscriptions.
All of this speaks to how quickly the revenue and profit share of this Apple business is growing.
At the same time, it could threaten Apple’s role in the gaming market today as politicians and regulators consider limiting the tech giant’s reach.
Apple shares plummeted in mid-September after Judge Gonzalez issued a permanent injunction that forced Apple to allow developers to include links to alternative payment methods in their apps.
Apple will comply with the court ruling, as the company said it could appeal it. However, if developers do get the option to waive Apple commissions and alternative payments in their apps, it will be a big plus for them and will mean the loss of billions of dollars for the Apple Store.
Apple’s unjustified claim to lower commissions or allow competing app stores to host iPhone or iPad apps remains open to question.
Apple shares lost 9.44% over the past month and closed down 2.46% on Monday amid a general decline in tech stocks on rising Treasury yields.
