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
20 weeks ago

Those poor devs Making tens of millions
Poor Apple making trillions
Score: 8 Votes (Like | Disagree)
Infinite Vortex Avatar
20 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
20 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
20 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
20 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
20 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...
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...
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...

Popular Stories

intel vs m1 max chip purple

Benchmarks Confirm Intel's Latest Core i9 Chip Outperforms Apple's M1 Max With Several Caveats

Wednesday January 26, 2022 8:56 am PST by
Benchmark results have started to surface for MSI's new GE76 Raider, one of the first laptops to be powered by Intel's new 12th-generation Core i9 processor. Intel previously said that its new high-end Core i9 processor is faster than Apple's M1 Max chip in the 16-inch MacBook Pro and, as noted by Macworld, early Geekbench 5 results do appear to confirm this claim, but there are several...
General Dropbox Feature

macOS 12.3 Will Include Cloud Storage Changes Affecting Dropbox and OneDrive

Tuesday January 25, 2022 3:31 pm PST by
Dropbox today announced that users who update to macOS 12.3 once that software version becomes available may temporarily encounter issues with opening online-only files in some third-party apps on their Mac. In a support document and an email to customers, Dropbox said it is actively working on full support for online-only files on macOS 12.3 and will begin rolling out an updated version of...
Apple Watch Red Yellow Green Feature 1

Apple Launches Black Unity Braided Solo Loop With 'Unity Lights' Watch Face

Wednesday January 26, 2022 6:05 am PST by
Apple today announced the Black Unity Braided Solo Loop for the Apple Watch, as well as a new downloadable watch face, to celebrate Black History Month. Following the launch of the limited edition Black Unity Apple Watch Series 6 and Sport Band in 2021, Apple today launched the Black Unity Braided Solo Loop as part of its celebrations for Black History Month this year.Apple is launching a...
ios 15

Apple Releases iOS 15.3 and iPadOS 15.3 With Fix for Safari Bug That Leaks Browsing Activity

Wednesday January 26, 2022 10:00 am PST by
Apple today released iOS 15.3 and iPadOS 15.3, the third major updates to the iOS and iPadOS 15 operating systems that were released in September 2021. iOS and iPadOS 15.3 come almost two weeks after the release of iOS and iPadOS 15.2.1, minor bug fix updates. The iOS 15.3 and iPadOS 15.3 updates can be downloaded for free and the software is available on all eligible devices over-the-air in ...
iOS 15

Everything New in iOS 15.4 and iPadOS 15.4: Face ID With a Mask, Emojis, Apple Card Widget, Universal Control and More

Thursday January 27, 2022 12:08 pm PST by
Apple today seeded the first betas of iOS 15.4, iPadOS 15.4 to developers for testing purposes, adding a slew of new features to the latest iOS operating systems. iOS 15.4 is the biggest update that we've had to iOS 15 to date, and it brings Universal Control, Face ID with a mask, new emojis, and tons more. Face ID With a Mask With iOS 15.4, there is now an option to unlock your iPhone...
mobeewave

Upcoming iOS Update Will Allow iPhones to Accept Credit Cards Directly Using NFC

Wednesday January 26, 2022 6:00 pm PST by
Apple is working on a new payments service that will allow iPhones to accept payments directly on device with no additional hardware, reports Bloomberg. Right now, iPhones can accept credit cards with add-ons like the Square Reader, but Apple's new technology will eliminate the need for a third-party product. Individuals and small businesses will be able to accept payments with the tap of a...
macOS Monterey on MBP Feature

Apple Releases macOS Monterey 12.2 With Safari Vulnerability Fix

Wednesday January 26, 2022 10:19 am PST by
Apple today released macOS Monterey 12.2, the second major update to the macOS Monterey update that launched in October. macOS Monterey 12.2 comes over a month after the release of the 12.1 update, which brought SharePlay support. The ‌‌‌macOS Monterey 12.2‌‌ update can be downloaded on all eligible Macs using the Software Update section of System Preferences. Apple has also...