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
11 months ago

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

iOS App Store General Feature Dock

Dutch Regulator Says Apple's Plan for Third-Party In-App Payments is Insufficient, Fines Apple 5 Million Euros

Monday January 24, 2022 6:33 am PST by
The Dutch Authority for Consumers and Markets (ACM) has ruled that Apple's plan to allow App Store dating apps to use third-party payment methods for in-app purchases does not sufficiently meet the requirements of a previous ruling. As a result, the ACM has hit Apple with an initial 5 million euro fine as a consequence, and fines will continue to be assessed at 5 million euros per week up to a...
iOS App Store General Feature Dock

Indie Developer Dogged By Scammy Clone Apps Again Highlights the Holes in Apple's App Store Review Process

Monday February 21, 2022 9:29 am PST by
Apps that copy concepts and features from other apps are nothing new in the ‌App Store‌, but scammy like-for-like clones of genuine apps remain a perennial problem that Apple still hasn't resolved, as indie developer Kevin Archer recently discovered. Archer is responsible for 2Stable's Authenticator App, a feature-rich app that stores and generates secure two-factor authentication tokens...
app store blue banner

Developers Complain as App Store Feature Promotes Rip-Off Apps

Thursday August 5, 2021 6:12 am PDT by
Apple has featured a number of apps with disproportionately expensive subscriptions on the App Store, arousing the ire of some developers. The App Store feature on the Australian App Store, first highlighted by Beau Nouvelle on Twitter, is called "Slime relaxations" and reportedly features apps that are non-functional and seek to charge disproportionately costly in-app purchase...
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...
app store blue banner

Apple Updates App Store Guidelines as Part of Agreement With U.S. Developers

Friday October 22, 2021 1:00 pm PDT by
Apple today announced it has updated its App Store Review Guidelines with three key changes related to outside-of-app communications, collecting contact information within an app, and in-app events featured in the App Store. In late August, Apple announced it had reached a $100 million settlement that, pending court approval, would resolve a class action lawsuit from U.S. developers who...
iOS App Store General Feature JoeBlue

Dutch Regulators to Meet With Dating App Providers to Assess Apple's Plan for Alternate In-App Payment Options

Monday January 17, 2022 9:55 am PST by
The Authority for Consumers and Markets (ACM) in the Netherlands plans to assess Apple's announced plans for allowing dating apps on the App Store in the country to use third-party payment methods, ensuring those plans "meet the requirements" of a previous ruling. Over the weekend, Apple announced that it would exclusively allow dating apps on the App Store in the Netherlands to use...
cydia vs apple feature

Judge Dismisses Cydia Creator's Lawsuit Against Apple For Now

Wednesday January 5, 2022 9:33 pm PST by
U.S. District Judge Yvonne Gonzalez Rogers today granted Apple's motion to dismiss a lawsuit filed against the company by Jay Freeman, creator of an alternative App Store known as Cydia for "jailbroken" iPhones and iPads. The case might not be over yet, however, as Freeman was given the option to file an amended complaint by January 19. Freeman sued Apple in late 2020, alleging that the...
iOS App Store General Feature Dock 2

Apple Defends App Store Changes in the Netherlands as Fines Reach €30 Million

Monday February 28, 2022 9:32 am PST by
Amid an ongoing dispute with the Authority for Consumers and Markets (ACM) in the Netherlands over the App Store, Apple has defended its plan to require app developers to submit an additional app binary for the Dutch storefront if they wish to use a third-party payment processing method. The ACM has ruled that Apple must allow dating apps in the Netherlands to use third-party payment...

Popular Stories

macbook air m2

Exclusive: Apple Plans to Launch MacBook Air With M2 Chip on July 15

Wednesday June 29, 2022 5:23 pm PDT by
The redesigned MacBook Air with the all-new M2 Apple silicon chip will be available for customers starting Friday, July 15, MacRumors has learned from a retail source. The new MacBook Air was announced and previewed during WWDC earlier this month, with Apple stating availability will begin in July. The MacBook Air features a redesigned body that is thinner and lighter than the previous...
original iphone 2007

15 Years Ago Today, the iPhone Went On Sale

Wednesday June 29, 2022 4:43 am PDT by
Fifteen years ago to this day, the iPhone, the revolutionary device presented to the world by the late Steve Jobs, officially went on sale. The first iPhone was announced by Steve Jobs on January 9, 2007, and went on sale on June 29, 2007. "An iPod, a phone, an internet mobile communicator... these are not three separate devices," Jobs famously said. "Today, Apple is going to reinvent the...
maxresdefault

Video Comparison: M2 MacBook Pro vs. M1 MacBook Pro

Tuesday June 28, 2022 2:45 pm PDT by
Apple last week launched an updated version of the 13-inch MacBook Pro, and it is the first Mac that is equipped with an updated M2 chip. As it's using a brand new chip, we thought we'd pick up the M2 MacBook Pro and compare it to the prior-generation M1 MacBook Pro to see just what's new. Subscribe to the MacRumors YouTube channel for more videos. For the video comparison, we're using the...
iPhone vs Galaxy Larger

Apple Executive Says Samsung Copied the iPhone and Simply 'Put a Bigger Screen Around It'

Tuesday June 28, 2022 8:59 am PDT by
The Wall Street Journal's Joanna Stern today shared a new documentary about the evolution of the iPhone ahead of the 15th anniversary of the device launching on June 29, 2007. The documentary includes an interview with Apple's marketing chief Greg Joswiak, iPhone co-creator Tony Fadell, and a family of iPhone users. One segment of the interview reflects on Android smartphones gaining larger...
iPhone 11 Pro vs iPhone 14 Pro

iPhone 11 Pro vs. 14 Pro: New Features to Expect if You've Waited to Upgrade

Monday June 27, 2022 11:22 am PDT by
With many customers choosing to upgrade their iPhone every two or three years nowadays, there are lots of iPhone 11 Pro users who might be interested in upgrading to the iPhone 14 Pro later this year. Those people are in for a treat, as three years of iPhone generations equals a long list of new features and changes to look forward to. Below, we've put together a list of new features and...
Mac Studio IO

Apple Begins Selling Refurbished Mac Studio Models

Thursday June 30, 2022 7:42 pm PDT by
Apple today began selling refurbished Mac Studio models for the first time in the United States, Canada, and select European countries, such as Belgium, Germany, Ireland, Spain, Switzerland, the Netherlands, and the United Kingdom. In the United States, two refurbished Mac Studio configurations are currently available, including one with the M1 Max chip (10-core CPU and 24-core GPU) for...
rootbug

Major macOS High Sierra Bug Allows Full Admin Access Without Password - How to Fix [Updated]

Tuesday November 28, 2017 12:33 pm PST by
There appears to be a serious bug in macOS High Sierra that enables the root superuser on a Mac with a blank password and no security check. The bug, discovered by developer Lemi Ergin, lets anyone log into an admin account using the username "root" with no password. This works when attempting to access an administrator's account on an unlocked Mac, and it also provides access at the login...