There was a Supreme Court ruling yesterday, which allowed a lawsuit from a group of iPhone users who accused Apple of overcharging for apps. The ruling didn’t express an opinion on the merits of the case it only affirmed the plaintiffs right to sue Apple and for the case to proceed in a lower court. The plaintiffs argue that developers mark up app prices to recoup a 30% commission which Apple imposes on most App Store sales. They’re asking for financial damages and allege anti-competitive behavior. It could take a couple of years before there is any concrete action to follow yesterday’s ruling. The plaintiffs still have to prove Apple had monopoly power and abused it and that the 30% Apple charges app developers is an anti-competitive overcharge. Google, which operates its own app store, Google Play, allows Android users to access apps from other sources. Apple could take that same approach.
Apple typically charges a 30% fee which is typically reduced over time. Services revenue is ~20% of total revenue. Fees from app developers is a subset of that.
Sarah Kanwal Equity Analyst, Director
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