Apple's Planned App Store Changes Will Barely Affect the Company's Bottom Line, Says Analyst

As a result of legal and regulatory pressures, Apple recently announced some upcoming changes to its App Store policies, such as letting developers email customers about payment options available outside of their iOS app and allowing "reader" apps like Spotify and Netflix to include an in-app link to their website for account signup.

app store vs developers
Apple said the changes "will help make the App Store an even better business opportunity for developers," but Morgan Stanley analyst Katy Huberty believes there will be "minimal financial impact" to Apple. In a research note, she said the changes would result in just a 1-2% hit to Apple's earnings per share in the 2022 fiscal year in a worst case scenario.

For example, while "reader" apps will be able to provide a single link to their website to help users set up and manage their account, which could result in more customers subscribing to an app directly instead of through Apple's in-app purchase system, Huberty notes that Spotify and Netflix already disabled the ability for new users to subscribe to their services through Apple's in-app purchase system since 2016 and 2018 respectively, meaning Apple hasn't collected a commission on new subscriptions to either app for at least three years.

Huberty added that App Store revenue from the top 10 "reader" apps accounts for less than 8% of overall App Store revenue, suggesting the financial risk to Apple from these developers circumventing the in-app purchase system is "fairly small."

"We view the top 10 or so apps as those that are most likely to have the scale, brand, marketing budget, and customer loyalty to absorb the friction of circumventing the App Store payments platform," she wrote. "Assuming a worst case scenario in which Apple stopped collecting economics from all of the top 20 reader apps translates to downside risk of 4% of Services revenue, 1% of total company revenue, and about 2% of FY22 EPS forecast."

"In other words, we believe the recent App Store headlines are more attention grabbing than the ultimate financial impact to Apple's revenue or profitability," she concluded.

Huberty believes Apple has no intention to bring these changes to gaming apps either, despite having faced a lawsuit from Fortnite maker Epic Games, which accused Apple of having a monopoly over the sale of apps and in-app purchases through the App Store. A decision in that lawsuit is expected to be announced soon.

Top Rated Comments

Wildkraut Avatar
19 weeks ago

Those poor devs Making tens of millions
Poor Apple making trillions
Score: 8 Votes (Like | Disagree)
Infinite Vortex Avatar
19 weeks ago

Apple said the changes "will help make the App Store an even better business opportunity for developers,"
That's all well and good to say that now but the number of times they've been in court to prevent it along with all of their long standing "justifications" to never have offered it without a court order makes Apple's statement ring a little bit hollow.
Score: 8 Votes (Like | Disagree)
dguisinger Avatar
19 weeks ago

How should Apple charge for access to the Xcode developer's tool and the Apple App Store if not thru a commission on sales? Or recognizing that, within the product's sale space, there is a monopoly so Congress should pass a law setting all online commission rates the same. This would include Google and XBox etc.
How could Apple charge for Xcode, a tool it needs internally to build its own operating system, that ships on its massively successful and profitable iPhone which would die off if there were no 3rd party apps-for-that. How could Tim Cook ever possibly afford to eat without double-dipping on recouping costs?
Score: 7 Votes (Like | Disagree)
PC_tech Avatar
19 weeks ago

How should Apple charge for access to the Xcode developer's tool and the Apple App Store if not thru a commission on sales? Or recognizing that, within the product's sale space, there is a monopoly so Congress should pass a law setting all online commission rates the same. This would include Google and XBox etc.
Isn’t that what the 99 people pay them a year is for?
Score: 6 Votes (Like | Disagree)
Wildkraut Avatar
19 weeks ago

I have to say, as someone who's used Visual Studio for 20 years.... the few times I've tried to use Xcode, .... I HATE XCode. The IDE just doesn't behave the way I expect an IDE to behave.
Same here, I use it because there is no 100% way around it "yet".
It should be called Xpuzzler and not Xcode, good for noobs but bad for coders.
Score: 6 Votes (Like | Disagree)
Wildkraut Avatar
19 weeks ago

oh, another example why we need to spend way more money on basic education. No company ever has made a trillion dollars, probably not even cumulatively. that is a really big number, like it is a 1000 billions, which is 1000 millions, which is a 1000 thousands.
Just like not every dev makes tens of millions. :p
Score: 6 Votes (Like | Disagree)

Related Stories

app store blue banner

Apple Letting 'Reader' Apps Offer Links for Account Sign Ups Outside of the App Store to Close Japan Investigation

Wednesday September 1, 2021 5:09 pm PDT by
Apple today announced that the Japan Fair Trade Commission (JFTC) has agreed to close its App Store investigation in exchange for changes to how "reader" apps like Netflix operate. Reader apps allow users to browse previously purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video. Going forward, developers that create "reader" apps will...
app store blue banner

Some Developers Say Apple Letting Apps Like Netflix and Spotify Share a Link to Web for Account Sign-Up Isn't Enough

Thursday September 2, 2021 9:12 am PDT by
Apple on Wednesday evening announced that, starting in early 2022, it will allow developers of "reader" apps to include an in-app link to their website for users to set up or manage an account. "Reader" apps allow a user to access previously purchased content or subscription-based content for digital magazines, newspapers, books, audio, music, and video, according to Apple, such as Netflix,...
iOS App Store General Feature JoeBlue

Apple to Allow In-App Third-Party Payment Options for First Time in the Netherlands

Saturday January 15, 2022 12:39 am PST by
Apple has announced that it will allow third-party payment options for in-app purchases for dating apps in the Netherlands, in the first ever concession of its kind. In a message posted on its developer site late on Friday, Apple announced that it will comply with a Netherlands Authority for Consumers and Markets (ACM) ruling that compels the company to allow third-party payment services to...
iOS App Store General Feature JoeBlue

Developers Now Able to Submit Claims for $250 to $30,000 Payments From Apple in Lawsuit Settlement

Friday January 14, 2022 12:24 pm PST by
Apple in August announced plans to pay $100 million to settle a class-action lawsuit levied by U.S. developers, and as of today, the website that will allow developers to submit a claim for a payout has gone live. The $100 million that Apple provided is being distributed as part of a "Small Developer Assistance Fund," and developers can claim between $250 and $30,000 based on their historic...
app store blue banner

Apple Pays $100 Million to Settle Developer Lawsuit and Agrees to Multiple App Store Changes

Thursday August 26, 2021 5:08 pm PDT by
Apple today announced plans to make several changes to the App Store in order to settle a class-action lawsuit that was brought against Apple by developers in the United States. Under the terms of the deal, Apple will let developers use communication methods like email to tell customers about payment methods available outside of iOS apps, and it will expand the price points that developers...
Mac App Store General Feature

Apple Must Let Dating Apps Offer Alternative Payment Methods in App Store, Dutch Regulator Says

Friday December 24, 2021 9:10 am PST by
Apple must let dating apps like Tinder and Match offer payment methods other than Apple's in-app purchase system in the App Store in the Netherlands, or else it will face fines, the Dutch competition regulator announced today. Specifically, the Authority for Consumers and Markets (ACM) said Apple will have to pay a penalty of five million euros per week, up to a maximum of 50 million euros,...
wordle

Clones of Popular 'Wordle' Game Flooding App Store, Including One Charging $30 Per Year [Updated]

Tuesday January 11, 2022 1:39 pm PST by
If you're a regular internet user you've probably heard of popular web-based daily guessing game Wordle, created by Josh Wardle. The game, which is entirely free to play, was introduced last fall and has been spreading like wildfire. Wordle asks players to guess a five letter word by identifying which letters are in the word and are located in the right location. Players get six guesses per...
Mac App Store General Feature

Apple's Arguments Against Sideloading on iOS: All Your Questions Answered

Thursday November 11, 2021 10:38 am PST by
Sideloading is a fancy word for downloading an app binary from non-official platforms or the open internet and installing it on a device like a normal app. The practice is allowed on Android, granting users the flexibility of downloading apps from official or non-official app stores and the open internet. The iPhone, on the other hand, is a polar opposite. Since the launch of the App Store...

Popular Stories

maxresdefault

Review: M1 Max MacBook Pro After Three Months

Wednesday January 19, 2022 11:30 am PST by
It's now been a few months since the M1 Pro and M1 Max MacBook Pro models launched in October, and MacRumors video editor Dan Barbera has been using one of the new machines since they debuted. Over on the MacRumors YouTube channel, Dan has shared a three month review of his MacBook Pro to see how it has held up over time and how it's changed his workflow. Subscribe to the MacRumors YouTube ...
airpodsinear 1

AirPods Save Woman's Life With Feature Everyone Should Know

Friday January 21, 2022 2:13 am PST by
Apple's AirPods have been credited with saving a woman's life after a potentially fatal fall, People reports. When a 60-year-old florist in New Jersey tripped and hit her head in her studio, she lost consciousness and awoke heavily bleeding. With nobody around to call for help, she realized she had her AirPods in, and used a "Hey Siri" command to call 911. An operator was able to stay on the ...
iphone se 2020 top

New iPhone SE Likely to Launch in April Based on Production Timeframe

Wednesday January 19, 2022 6:44 am PST by
Apple suppliers will begin producing display panels for the third-generation iPhone SE this month, with final assembly of the device likely to start in March, according to information shared by display industry consultant Ross Young. Based on this production timeframe, Young believes the third-generation iPhone SE is likely to launch in the second half of April, or perhaps in early May at...
iphone 13 earpods

Apple to Stop Including EarPods With Every iPhone Sold in France From Next Week

Friday January 21, 2022 3:21 am PST by
Apple will no longer include EarPods with every iPhone sold in France, starting on January 24, according to a notice posted by a French carrier (via iGeneration). Apple was previously required to include EarPods in the box with the iPhone due to a French law that required every smartphone sold in the country to come with a "handsfree kit," but the law has now been changed in favor of reducing the ...
Spring 2022 Apple Products Feature

New iPad Air, Macs, and iPhone SE With 5G Likely to Be Announced at Apple Event This Spring

Thursday January 20, 2022 8:32 am PST by
Earlier this week, Bloomberg's Mark Gurman tweeted that Apple "will be holding a spring event" to announce a new iPhone SE and other hardware. In a recent edition of his newsletter, Gurman said the event is likely to occur in March or April. Gurman did not elaborate on what "other hardware" will be announced at Apple's purported spring event, but rumors suggest at least four products are...
appleeducation

Apple's US Education Store Now Requires Institution Verification to Buy Discounted Products

Wednesday January 19, 2022 2:22 am PST by
Apple is now requiring that customers in the United States verify that they're active students, teachers, or staff members at an educational institution in order to access education discounts on products. Previously, little verification was needed for customers to purchase products through Apple's education store in the United States. Apple's education stores offer models of the iPad and Mac ...
AirPods 3 New Firmware Feature

Apple Updates AirPods 3 Firmware to Version 4C170

Tuesday January 18, 2022 11:46 am PST by
Apple today released a new 4C170 firmware update for the AirPods 3, an update from the prior 4C165 that was made available in December. Apple does not offer details on what's included in new firmware updates for the AirPods‌, so we don't know what improvements or bug fixes the new firmware brings. There is no standard way to upgrade the ‌AirPods‌‌ software, but firmware is...
appleprivacyad cleaned

iOS 15 Patched Security Hole That Potentially Exposed Users' Private Apple ID Information to Third-Party Apps

Thursday January 20, 2022 3:32 am PST by
Apple patched two significant security vulnerabilities when it released iOS 15 that could have potentially exposed users' private Apple ID information and in-app search history to malicious third-party apps and allowed apps to override user Privacy preferences, Apple has revealed in a recent support document update. With most iOS, macOS, tvOS, and watchOS updates, Apple provides a list of...
apple watch series 7 aluminum colors yellowbg

Apple Watch Charging Bug Fixed in watchOS 8.4 Release Candidate

Thursday January 20, 2022 4:01 pm PST by
The watchOS 8.4 release candidate that was seeded to developers and beta testers this morning addresses an ongoing bug that could cause some Apple Watch chargers not to work properly with the Apple Watch. Back in December, we reported on a growing number of charging issues that Apple Watch Series 7 owners were facing. Since watchOS 8.3, there have been a number of complaints about...