App Store Profit Margin
Juli Clover (March 2024):
With the App Store and app ecosystem undergoing major changes in the European Union, The Wall Street Journal today shared a profile on App Store chief Phil Schiller, who is responsible for the App Store.
Though Schiller transitioned from marketing chief to “Apple Fellow” in 2020 to take a step back from Apple and spend more time on personal projects and friends, he is reportedly working close to 80 hours a week.
Ben Lovejoy (April 2024):
Phil Schiller has told a court in an antitrust case that he doesn’t know for sure whether the App Store is profitable, and never considered the return on investment when launching it.
He’s also explained the reason that there are very few written records of decisions made around the launch of the store is because Apple co-founder Steve Jobs felt that meeting notes were unnecessary – and the company still doesn’t record minutes for meetings between senior execs …
[…]
“Are you telling His Honour you made the decision without any investigation into what stream of revenue would be produced by imposing a commission of 30 per cent?” Mr Young asked.
“Correct.”
I thought I had already discussed this at the time, but I can’t seem to find the post. I believe Schiller that he doesn’t get a specific report on the App Store’s profitability. What would be the benefit of having an official record? At the same time, surely the numbers are obvious enough that he could say with certainty that it’s profitable.
Ben Lovejoy (Hacker News, Mastodon):
Apple’s incoming CFO didn’t get much time to settle in before he found himself in court defending the company against a class action lawsuit. Kevan Parekh yesterday claimed that the company that it has no clue about its App Store profit margin.
[…]
Apple is facing two lawsuits in the UK, each alleging that the company abuses its monopolistic control over the sale of iPhone apps to charge excessive commissions.
[…]
It’s been independently estimated that Apple’s profit margin on the App Store is in the 75% to 78% range.
An expert witness in the Epic Games lawsuit back in 2019 estimated that the figure was 78%. A British expert in the current case calculated a figure of “more than 75%.”
Parekh told the court that these estimates are not accurate but then pleaded ignorance about what the correct number was.
Apple and Google make more profit from iOS and Android games than the creators who make the games.
Previously:
- The App Store Era Must End
- Kevan Parekh Replaces Luca Maestri
- App Store Business Reorg
- Creator Platforms and the App Store
- Apple Going After Patreon
- U.S. Sues Apple Over iPhone Monopoly
- Google Accused of Violating Retention Obligations
- Another Apple-Funded App Store Study
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> Parekh told the court that these estimates are not accurate but then pleaded ignorance about what the correct number was.
Instead of being CFO, he should join the App Store Review Team. He seems a natural at being able to state that something is wrong without providing any proof.
If that’s his true testimony in a court of law, he seems not competent to be a corporate financial officer. Apple shareholders should be aghast.
In this presentation on The State of Videogaming it says on p40 that mobile gaming nets the app store 20B in a year. https://www.matthewball.co/all/stateofvideogaming2025
So yes, I'm sure the app store is profitable.
One of my favorite quotes goes something like, it’s very difficult to get a person to understand something when their paycheck depends upon them not understanding it.
