Apple to see little impact from EU regulations, says investing firm

AppleInsider

J.P. Morgan says Apple won't see much immediate impact on App Store revenue due to how its new fee structure is arranged, but regulators around are likely eyeing the solution.

Apple's EU changes won't have impact on revenue

Apple has changed how it does business in the EU due to the Digital Markets Act. Amongst other changes, it reduced its overall commission from 30% to 17% and added a fifty-cent fee on all apps downloaded after a developer passes 1 million downloads.

According to a finance note seen by AppleInsider from J.P. Morgan, these changes will have little impact on Apple. The fifty-cent fee will balance out the reduced commissions, and Europe only accounts for about 6% of App Store revenue.

Changes to the App Store market in the EU are restricted to that region. However, regulators around the world may seek to achieve similar results. The United States, for example, is already "firing on all cylinders" in an antitrust investigation on Apple's App Store.

The implementations for Apple's App Store changes in the EU won't go into effect until iOS 17.4 is released in March. The beta for the update released earlier Thursday.



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xyzzy-xxx

I believe Apple will be selling more iPhones in Europe, currently many people are thinking the platform is not open enough.

tundraboy

A lot of developers, both legit and non-legit, must be disappointed.  They probably thought the EU forcing Apple to open up to side loading and 3rd party app stores means that iOS will turn into a free-for-all platform where any app can be installed and that Apple won't charge a commission anymore.  Unfortunately for them, the EU is not stupid enough to force Apple to abandon its focus on security and privacy or to impose price controls in the form of requiring commission-free app installation.

Devs dreaming of squatting on iOS for free have been living on Cloud Cuckoo Land.  Forbidding Apple to charge iOS app developers is like forcing malls to lease retail space for free.  Maintaining an app platform, just like maintaining a physical mall, is not a cost-free proposition.

Marvin

xyzzy-xxx said:

I believe Apple will be selling more iPhones in Europe, currently many people are thinking the platform is not open enough.

Thing is, hardly anyone thinks like this, except bureaucrats. It's the same with the US political obsession with 'big tech'. Consumers haven't been complaining about this, the lawmakers are in their own bubble. Apple has some of the highest customer satisfaction ratings for all their products, the only ones who have been asking for more freedom is billionaire companies who don't want to pay any commission, all while their own businesses collect commission on their own products and services.

Consumers don't complain about not being able to install a particular app on their device or the commission fee that they never see on their $0.99 purchases. Nor will the prices change, the billionaire companies will just keep more.

Companies like Match.com have been complaining about it, they made $3.1b in 2022, $848m from Europe:

https://d18rn0p25nwr6d.cloudfront.net/CIK-0000891103/de338546-2c7e-4e51-adf0-c83bb15ab356.pdf

They had 30% costs ($959m) attributed mainly to the commission fee. This is more than their net income ($360m). It looks like Apple and Google make more profit from their product/service than they do, which can't sit well with their shareholders.

There isn't a large mass of Apple consumers waiting for more freedom. Google has had it for years and it's only used by Amazon and Chinese app stores, consumers stick with the store that's on their device because it's safe and easy.

What will probably happen is there will be a store for Epic, one for Match, one for Microsoft (including Candy Crush now) and they will each host their own products to avoid paying a fee.

I suspect European App Store revenue is higher than 6%, for Match.com it's 27%. Generally, there are 3 big markets - US, Asia, Europe, split roughly 50:25:25. This will impact a portion of 25% of Apple's App Store revenue. It could be a significant portion if all the billionaire companies skip out on the bill but small vs Apple's overall revenue.