Regulators and lawsuits have pressured Apple into finally announcing upcoming changes for the App Store. These include letting developers email customers about payment options available outside the iOS app and allowing apps like Spotify and Netflix to use in-app links that redirect to their respective websites for user signup. However, a Morgan Stanley analyst believes this will have a “minimal financial impact” on Apple.
Apple claimed that the changes are a step to “make the App Store an even better business opportunity for developers.” In a research note, Morgan Stanley analyst Katy Huberty claims these changes would boil down to just a one or two percent drop in Apple’s earnings per share for the 2022 financial year. Huberty speculates that this would be a worst-case scenario.
Huberty’s report notes that since 2016 and 2018 respectively, Spotify and Netflix prevent users. From signing up using Apple’s in-app purchase system. This means that Apple hasn’t collected a dime from new subscriptions to either platform for at least three years. So, a new change allowing Netflix and Spotify to provide an in-app link that redirects to their respective websites for account management doesn’t really change much in the functional aspect.
Huberty apparently has reason to believe that Apple won’t bend these rules for gaming apps despite battling a lawsuit filed by Fortnite developer Epic Games. For the unversed, Epic accused Apple of having a monopoly over the sale of apps and in-app purchases through the App Store.
The analyst’s report noted that the combined revenue from all “reader” apps such as Spotify and Netflix accounts for a meager 8 percent of the App store’s total revenue. This means that the financial risk Apple faces from these developers circumventing App Store payment systems is “fairly small”.
The report said, “We (Morgan Stanley) view the top 10 or so apps as those that are most likely to have the scale, brand, marketing budget, and customer loyalty to absorb the friction of circumventing the App Store payments platform.”
Huberty added “Assuming a worst-case scenario in which Apple stopped collecting economics from all of the top 20 reader apps translates to the downside risk of 4% of Services revenue and 1% of total company revenue.”[Via MacRumors]