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Apple’s App Store profits on commissions from digital sales Revenue $32 B Operating Costs $7 B [1] Estimated Profit $25 B Operating

• ksec 8mo ago
  Are those number App Store revenue or services revenue ? Because both seems to be inaccurate.
• andrekandre 8mo ago
  > developer tools Xcode also now one of the worst ide in mobile/desktop development and an embarrassment for a company of apple's size and profits them taking more and rents from their store-related operations is hard to justify from software product-quality perspective; its like a slap in the face
• wosined 8mo ago
  But people still use/buy it so why would they cut the cost?
  • deleted 8mo ago
    [deleted]
  • vincnetas 8mo ago
    and that exactly what monopoly allows you to do.
  • nabla9 8mo ago
    There is no ideological argument for voluntary action here. The entire goal is to force regulators to step in. The debate over 'good vs. bad companies' is just online noise and rhetorical trik, no one on either side of the political spectrum wants these systems to be fixed voluntarily with corporate altruism.
    • NewsaHackO 8mo ago
      But what are they even doing for regulators to have to step in? Making profits from someone selling their product in your market seems pretty valid to me. Are you saying this is anticompetitive to other possible app store storefronts like Google Play or something?
      • gabaix 8mo ago
        They are not allowing other marketplaces, or creators themselves, to run apps on Apple devices directly.
        • NewsaHackO 8mo ago
          Why should they have to allow third parties to run apps on their platform? The fact that it is a clear security risk already gives them justification, but even looking past that, Apple is not the only platform that bars users from running third-party software or marketplaces on their products. For example, playstation, xbox, and switch all disallow running unauthorized games on their platforms. What makes Apple different?
      • nabla9 8mo ago
        No. This is a result of a market failure caused by monopoly power. Regulators must make sure market capitalism works. I'm not sure what is the basis for your question but using market definition where Google Play and Apple Store are in the same market is not correct (market definition is essential part of any monopoly regulation). Markets are defined by choice of practice, not by choice in principle.
        • 8mo ago
• nabla9 8mo ago
  The operating cost is the maximum Apple can come up with when their accountants attribute everything they possibly can to digital sales for the sake of legal argument. R&D shouldn't really be included, and Apple uses those same tools and APIs themselves. I think the actual profit margin is closer to 90%, and Apple could maintain a 20% margin with just a 3–4% fee.
  • rob74 8mo ago
    I'd say that in the case of Patreon, any fee for Apple is unjustified. Apple can justify their fee on app purchases/subscriptions in the app store, but Patreon is not an app subscription, the money goes mostly from the patrons to the people they support. Ok, Patreon takes a cut to cover their operating costs, and also make a profit (not sure how profitable they are currently), but I really can't see how Apple, who don't have anything to do with this process except for listing the Patreon app on the app store, can justify taking a cut.
    • saimiam 8mo ago
      If a user almost exclusively uses the Patreon ios app to consume the artist’s content and likes to live inside the ios ecosystem for frictionless payments using the card on file/privacy/UX/whatever, then I feel apple should get to set the terms of engagement. If you were a chain store in a high end mall where customers cars were all parked for free by valets, mall staff knew their names, and generally made them feel special, you’d not balk at a higher commission to be paid to mall for access to their customers, right? Airports come to mind for this. I believe apple lets you set whatever price you want on their store, just not tell customers that they could get a lower price elsewhere/on the vendor’s website (I don’t follow App Store policies very closely so my info is probably out of date).
      • rubyfan 8mo ago
        I don’t think anyone suggests Apple should get nothing for their app store services, just that it shouldn’t be 30% of every transaction processed through every iOS app.
• blahgeek 8mo ago
  > Apple could take just 7% cut and still make 20% profits. We can say this to any company, "$X could reduce price by $Y and still make $Z profits", but it doesn't really make any sense. Making profits is what makes a company a company instead of a non-profit organization.
  • bryanrasmussen 8mo ago
    it sounds like it does make sense because if they are making $Z profits then they are still making profits and are not non-profit. there could also be cases where cutting back to $Z profits might be preferable in case not doing so were to prompt legislation causing someone to be forcibly cut to $Z-1 or even $0 profits from a particular profit source. Which it has been my observation that when someone is saying "X could reduce price by $Y and still make $Z profits" it often coincides with saying therefore company X should be legislated on this particular profit source. Note: $X didn't make much rhetorical sense.
    • rubyfan 8mo ago
      >there could also be cases where cutting back to $Z profits might be preferable in case not doing so were to prompt legislation causing someone to be forcibly cut to $Z-1 or even $0 profits from a particular profit source. Not in an environment where regulatory capture costs so much less than any change legislation could bring. The remedy in almost every recent monopoly case has been remarkably nothing. Politicians don’t actually want change, they want the threat of legislation so that industries bring truckloads of money to line their pockets.
  • croes 8mo ago
    It makes sense that regulators can step in without destroying a company.
  • vasco 8mo ago
    When parts of a market become dominated by one or few companies operating in a limited choice environment, consumers can't just opt to not use both Apple and Play store. You need to choose one in practice. At this point the regulators should investigate what the barriers are to new entrants and if it's too costly and nobody has managed to cut in the last few years, establishing some rules is probably a good thing. This happens as industries mature and become critical, it happened in transportation (most bus, train companies), energy, water supply, trash, etc, depending on the country and market conditions.
• chrisan 8mo ago
  > even Apple's own executives were sometimes surprised by the internal financial reports. Was this recorded or just people drawing lines between Epic's expert witness claims and the executives trying to down play them?
• uyzstvqs 8mo ago
  The problem is the monopoly over distribution channels. Regulation needs to force devices to allow A) downloading and using packages & executables from the internet, and B) any app to download and install other apps. Regulating the fees for one central app store is no solution.
  • stouset 8mo ago
    > downloading and using packages & executables from the internet Oh boy, now my mom can get the full experience of having malware on her phone too!
    • samrus 8mo ago
      I hate the classic apple users' "mom" argument. Why are all your moms morons? And why do you want to fuck up the entire mobile landscape to baby proof it for them. Im not gonna ruin my experience with technology because you dont expect your mom to be able to wipe her ass without apple's help
      • linkregister 8mo ago
        There is nothing stopping you from using non-Apple hardware to escape restrictions on downloading unreviewed software.
        • array_key_first 8mo ago
          There are many things impeding you from doing so and you know it, because Apple designed it that way. Walled garden, remember?
      • stouset 8mo ago
        I hate the classic “everyone should be an expert at IT and it’s their fault and they had it coming due to their own ignorance if they make mistakes” argument far more than you hate mine.
    • rpdillon 8mo ago
• SwtCyber 8mo ago
  What really makes it uncomfortable is that Apple isn't just a neutral marketplace. They control the OS, the distribution channel, and the payment rails, so creators and platforms like Patreon can't realistically opt out
  • randallsquared 8mo ago
    While inconvenient and likely to reduce patrons, the article does describe how they can opt out: use the web to do any payment activity.
  • chii 8mo ago
    They could opt out - by sticking to web platforms. Apple cannot charge for that. However, apple does attempt to gimp the web platforms on mobile to "subtly" push for apps.
    • sidewndr46 8mo ago
      Why could Apple not charge a percentage for any user using their mobile device? Why would it be limited to app store?
      • direwolf20 8mo ago
        Because they don't control those. Apple could choose to only allow users to access websites that pay them a bit 30% fee, but users would notice the web was turned off on their device. They don't notice when the app store does it.
        • sidewndr46 8mo ago
          I don't think people would notice if Apple just made the website behind a paywall. Most people are not going to be aware that they can access the same content without paying a fee to Apple. They may only even have an Apple device to access the internet, so they'd just see it as normal
• deleted 8mo ago
  [deleted]
• u8080 8mo ago
  But those profits made possible by actually having other infrastructure parts existing(OS, hardware, marketing, etc).
  • eloisant 8mo ago
    The $160 billion of cash Apple is sitting on doesn't contribute to any infrastructure.
• absynth 8mo ago
  This is all money that is reducing expenditure elsewhere. I get it: capitalism and economics. Yet I still think humanity could do better and I think capitalism itself suffers. Economics theory is broken if it thinks this is good for society in general.
• patanegra 8mo ago
  One company's margin, is other company's opportunity.
  • ulrikrasmussen 8mo ago
    The problem is that Apple owns the platform and half of the mobile ecosystem. You can't just launch a competitive marketplace which could compete alongside Apple's app store, nor can you launch an alternative operating system. You have to launch a whole new smartphone stack complete with operating system, app distribution and app ecosystem.
    • Ylpertnodi 8mo ago
      Or not use apple.
      • observationist 8mo ago
        This. Doing business with almost any major company is unethical, but Apple sits near the top of the big tech companies people shouldn't do business with. They are not a force for good in the world.
      • ulrikrasmussen 8mo ago
        I also don't use Apple, and I try to avoid the only other alternative by using GrapheneOS instead of an official Android build. But at some point everything is going to be so closely tied to Google as well that that way of living is also going to become too painful, and at that point "or not use Apple or Google" is a bit like saying "or not use the roads".
  • eviks 8mo ago
    Indeed, that's why the former blocks the latter: not to lose margins to those opportunities
• jszymborski 8mo ago
  > The debate over 'good vs. bad companies' is just online noise and rhetorical trik... Agreed, there are bad privately held corps, and worse privately held corps, with badness usually proportional to their size and profit.
• danielvaughn 8mo ago
  I really think I might be done with Apple. The only thing keeping me using them is how much I hate Android. The _millisecond_ a competitor arrives, I'm dropping my iPhone like a bad habit.
  • vlod 8mo ago
    Off topic, but is there anything specific that you hate about Android? I find it acceptable. I'm trying to cut down my phone usage so maybe I'm more tolerant.
    • goatking 8mo ago
      Not OP, but: "acceptable", that's the problem. Also I dislike Google more than Apple.
      • Zak 8mo ago
        I'm wondering what adjectives you hope to apply to a phone operating system. I'm content with mine when I don't have to think about it, for which "acceptable" seems about right, and discontent when I do.
  • RDaneel0livaw 8mo ago
    I keep hoping and wishing for a daily drivable linux phone that's compatible with all the us networks to come along. I'll keep hoping and wishing. Someday I hope we will get there!
  • drnick1 8mo ago
    GrapheneOS on a Pixel is that competitor. Open source, more secure than Apple, compatible with nearly all Android apps. It's all the positive aspects of Android without the downsides (Google).
    • eloisant 8mo ago
      > compatible with nearly all Android apps The "nearly" is the issue. Opting out of the Apple/Google duopoly comes at a great cost.
• micromacrofoot 8mo ago
  I don't think Apple could actually, unless they could prove to shareholders that it would create more value
  • Herring 8mo ago
    > shareholders Yeah that has to be a good 95% of why businesses do bad things. The last thing Apple wants is for people to think they've plateaued. Stock starts going down to normal P/E ratios, expensive engineers leave, etc.
• dimitrios1 8mo ago
  > force regulators to step in > force > regulators That's my whole problem, personally. What we need much, much less of in this world is government force, especially during these trying times of government force and outreach (something I expected my more left side of the isle colleagues to have finally realized by now). COIVD really was a test of how much governmental draconianism we would take, and we failed spectacularly, and not only that, but are demanding more government. So no, we don't need more regulation, especially given this country's history of regulatory capture. We need new solutions.
  • deleted 8mo ago
    [deleted]
  • Atreiden 8mo ago
    We don't need "more" government, we need the government to do its job. We need the regulators who have been legally appointed to oversee these areas to actually respond to these behaviors. Regulatory capture is the issue, but the solution isn't less government. It's getting corporate money and lobbying out of the government (Citizens United is to blame for most of our woes), increase the enforcement of anti-corruption laws, and get antitrust back on the table. I want big corporations to be scared. I want them to fear for their own survival, and to tread lightly lest the sword of damocles fall upon them.
    • dimitrios1 7mo ago
      I'm with you, I like your answer, especially the last bit. But how to get there we may disagree. The existing avenues have proven unfruitful. Regulating more has just lead to more control in the hands of the elites and those with resources, who know how to game the system, and more draconianism for us smaller folks. "Rules for thee, but not for me" Anarchy/Libertarianism isn't the answer either, its too impractical, unrealistic. I won't pretend I'm smart enough to know what the answer is, but I am experienced enough to know whats laid before us hasn't worked and isn't working. Consumer protection regulatory bodies have been made toothless over the course of decades, I don't think I can trust them again anyways after what has happened in recent years. Financial regulatory bodies only purpose is to make life as difficult for the smaller guys. We have non-existent data and tech regulation. You know what would happen if we actually got some? It would be written by the same tech oligarchs. We would just have a new revolving door. Like how the Verizon CEO become the FCC chair. We will get Larry and Sundar passing our regulation. Elon and Mark funding the think tanks that write the legislation. It's all rotten. It's time for new ideas.
• thegrimmest 8mo ago
  Advocating for regulators to step in is already a value judgement. Why is "high profitability" a cause for regulatory scrutiny? The optimal behaviour in any ecosystem (corporate or natural) is to defend as much territory as is within your power, not to keep only to what covers your "needs". Why have you deemed this behaviour, which is emergent anywhere competition between organisms exists, as in need of regulation? Apple is succeeding largely on merit, within the bounds of civilized, peaceful competition. Shouldn't we all just be grateful for the contributions they have made to our civilization?
• pier25 8mo ago
  Plus more than $20B for the Apple developer fee without which you cannot publish the their stores.
• ghtbircshotbe 8mo ago
  They could lower the rates even more and still afford the government bribes and solid gold tchotchkes, but the whole point of the bribes is to not do that.
• CGMthrowaway 8mo ago
  That's not how business works. The App Store in current form would not exist without all the collective investment that went into all of Apple's hardware, for instance. Microsoft Office: Revenue $45B Operating Costs $12B Profit $33B Operating Margin 75% Google Search Ads: Revenue $175B Operating Costs $45B Profit $130B Operating Margin 75%
  • devmor 8mo ago
    > That's not how business works. The App Store in current form would not exist without all the collective investment that went into all of Apple's hardware, for instance. While technically true, this argument doesn't provide any merit to the discussion. The App Store backed purchase for the Patreon subscription would not exist at all without the creator's work and investment in creating their form of content. In the absence of the App Store, the creator would still have access to their patrons via mobile web and payment via the methods already provided by Patreon. The app is merely a convenience - it's a hard sell that this convenience is worth 30% of the creator's revenue through the platform.
    • CGMthrowaway 8mo ago
      > The App Store backed purchase for the Patreon subscription would not exist at all without the creator's work and investment in creating their form of content. Both parties are getting the chance to set whatever price they want. Up to the market to resolve supply/demand equilibrium
      • devmor 8mo ago
        Creators on Patreon are already loosely bound to the market of other creators. Not all creators are affected by this change. The app store payment cut harms only creators who have disproportionately high percentages of patrons that primarily consume their content from iPhones - a demographic that they have no control over. If they wish to increase their price to make up for this, they then are forced to risk turning away their other, non-iPhone-primary patrons. Notably, Patreon is forbidden by Apple from making this pricing scheme transparent and up-charging only iPhone users to keep the creator whole. The only party with power here is Apple - and they are using it to strongarm.
• dmix 8mo ago
  Those margins are pretty normal in software, especially a mature product like that.
• matt-p 8mo ago
  Let's be honest if this was a European company it would be capped by law at 5-10%. Problem is who has an incentive to do the right thing here? Not apple and certainly not the US government (most of this revenue comes from outside the US).Nobody can defend it, yet nobody wishes to stop it.
  • eloisant 8mo ago
    The US government should absolutely do that, but they won't because they defends the interests of big companies rather than the interests of small companies or US citizens.
• funkyfiddler369 8mo ago
  > no one on either side of the political spectrum wants these systems to be fixed voluntarily with corporate altruism Right on. But that's exactly the wiggle room where voters could pull some of those cards like "climate change mitigation (of consequences)", "climate change preparation", "upcoming waves of climate change refugees", "AI dividing the population", "Universal Basic Income", all of which are things companies like Apple won't do anything for (or against) while their goods are still mostly for proper earners and not for people who buy stuff at a discount (I'm exaggerating). Since corporate altruism is definitely not on the menu, government institutions and NGOs will have to pick up way more than they are currently prepared for. We are in a strange phase of calm before the storm, despite all those wars and conflicts--or in spite of them, I don't know. Shits' gonna hit the fan sooner or later and it's up to the voters to demand adequate preparation. Big Corps caused significantly more damage than they had to cause for all those profits, whether as a side effect or not, and they did that long enough. Job cuts, whether due to AI or not, will remain a thing while no "new" giants will rise for quite a while ... and corporations will sing the song "it's what the people want" only as long as voters will stay quiet. Sure, bribes, corruption and blablabla, but it doesn't change how votes work and none of it changes how the devoted clerks in the administration do their jobs and write laws (if they have to have to) ...
• ripped_britches 8mo ago
  I’m surprised they were surprised because operating costs should be pretty much nil. What do they do, pay a few thousand app reviewers, a few hundred software engineers? Pretty sure if they had to, they could operate App Store for a few tens of millions of dollars per year.
• jama211 8mo ago
  Well said. Glad to see this at the top. Google also takes 30%. And I think steam too. This is 100% a regulatory issue.
  • Manuel_D 8mo ago
    But competitors to Steam exist: Epic Games Store only takes a 12% cut. Publishers have an option to use other distributors but choose not to.
    • eloisant 8mo ago
      > Publishers have an option to use other distributors but choose not to They can choose to sell in the store where all users are, or in the store nobody goes.
      • Manuel_D 8mo ago
        Correct, but that means that publishers are choosing to distribute via Steam, despite the existence of other options, because Steam's superior features, user base, etc. justify paying that premium. They could distribute on Epic games, or even self-distribute like how Blizzard does, but they choose Steam. It's not analogous to iOS that has no other options for distribution.
    • jama211 8mo ago
      Sure, and you can buy an android phone and use the play store instead and still get charged 30%. Or you could sideload, but let’s be real 99.9% of users aren’t gonna do that, and similarly most gamers are gonna buy everything on steam. The exceptions here prove the rule I’m afraid, if anything.
• godelski 8mo ago
  I think what confuses me is that Apple is taking so much profit that it reduces their profits. It's a classic direct-indirect management problem. Think about Android for a second. It costs nothing to put an app on their app store. People can make apps for themselves and then just publish because either "why not" or it's an easy way to distribute to friends and family. So basically it is making app creation easy. Meanwhile Apple charges you $100/yr to even put something up on the store, makes it hard to sideload, and consequently people charge for apps, which Apple rejoices as they get a 30% cut (already double dipping: profiting from devs, profiting from the devs' customers). BUT WE'RE TALKING ABOUT SMARTPHONES A smartphone is useless without apps! People frustrated they can't find the apps they want on iPhone? They switch to Android. People on Android want to get away from Google but they can't do half the shit they want to on iPhones (and the other half costs $0.99/mo)? They bite their tongue or rage quit to Graphene. The only reason this "fuck over the user" strategy works is because there's an effective monopoly. All of this is incredibly idiotic as the point of a smartphone is that it is a computer that also makes phone calls. We have made a grave mistake in thinking they are anything but general purpose computers. All our conversations around them seem really silly or down right idiotic when you recognize they are general purpose computers. And surprise surprise, the result is that seeing how profitable and abusive the smartphone market can be leads to a pretty obvious result: turn your laptops and desktops into smartphone like devices. Where everything must be done through the app stores, where they lock you out of basic functionalities, where they turn the general purpose computer into a locked down for-their-purposes computer. The thing that made the smartphone and the computer so great was the ability to write programs. The ability to do with it as you want. It's because you can't build a product for everyone. But the computer? It's an environment. You can make an environment that anyone can turn into the thing they want and they need. THAT is the magic of computers. So why are we trying to kill that magic? It doesn't matter that 90% of people don't use it that way, and all those arguments are idiotic. Like with everything else, it is a small minority of people that move things forward. A small percentage of players account for the majority of microtransactions in videogames. A small percentage of fans buy the majority of merchandise from their favorite musicians. And in just the same way, it is a small number of computer users (i.e. "powerusers") that drive most of the innovation, find most of the bugs, and do most of the things. I mean come on, how long did it take Apple and Google to put a fucking flashlight into the OS? It was the most popular apps on both their stores for a long time before it got built in. Do you really think they're going to be able to do all the things?
• musicale 8mo ago
  Apple's App Store business model is the same as Nintendo's eShop business model. Obviously Epic would like to pay lower platform fees to Apple than it pays to Nintendo, but there is no logical reason why it should.
• throwaway85825 8mo ago
  All of this could be solved easily if developers were allowed to pass on the apple tax to consumers and advertise discounts for not using the App Store. No one wants to pay more for nothing.