App Store: Apple to lose billions of dollars a year following Epic Games lawsuit
The App Store will find itself deprived of part of its profits. After the courts ruling in the Epic Games lawsuit, Apple is going to have to go without billions of dollars in annual revenue. Indeed, video games represent the bulk of the profits generated by the app store.
A few days ago, the lawsuit between Apple and Epic Games resulted in a first verdict. After months of legal battle, Judge Yvonne Gonzalez Rogers has finally vindicated Epic Games. Apple is now obliged to allow game developers (and applications in general) to integrate a redirect link on their iOS apps.
With this relaxation, developers will be free to redirect users to other payment methods. De facto, they will be able to bypass App Store tax of 30% on all purchases made. Indeed, Apple has always collected a commission on all subscriptions taken out through an iOS application. The Cupertino giant will have to say goodbye to this solid financial windfall.
Apple is going to lose billions of dollars, so what?
Bloomberg reporter Mark Gurman reports that the courts’ decision will deprive Apple of billions of dollars in profits every year. Apple made $ 6.3 billion last year in the United States from commission charged on subscriptions and in-app purchases. According to data provided by Sensor Tower, 70% of the revenue generated by the App Store comes directly from video games. On the application store, the video game sector represents 3.8 billion dollars in revenue per year. This is obviously why Apple has always refused to open up to alternative payment systems.
Conversely, the firm is committed to allowing “reader” type applications, such as Netflix or Spotify, to sell subscriptions without paying the tax. Obviously, this recent concession aimed to keep the essential: the commission on video games, which represents much more annual profits.
While apple stock market recorded a slight decrease following the verdict, the company wants to be reassuring. The group believes that it is still too early to determine how and when exactly the changes will be implemented. Apple agrees to exchange judge Yvonne Gonzalez Rogers for more information.
As Mark Gurman points out, the income generated by the App Store only representsa tiny fraction of the billions of dollars raised each year by the brand. In the first quarter of its staggered 2020-2021 fiscal year, Apple raked in $ 111.4 billion in revenue and net income of $ 28.7 billion.