Apple’s App Store changes will barely affect the company’s business

Apple is under immense pressure from regulatory bodies across the globe for its various anti-competitive practices. In a recent development, the company announced that it would allow app developers to email customers about the available payment options. Prior to the move, the company did not allow developers to contact users directly through email. Another big change is the ability for developers to add a single link in their apps to allow users to sign-up but it will only be limited to “reader” apps.

While the changes to the App Store policies are improvements over the previous rules, it is very unlikely to affect the company’s business on a large scale. Morgan Stanley’s analyst Katy Huberty says that these changes will have “minimal financial impact” on Apple’s business. She adds that, as a worst case scenario, the company’s earnings per share could only be affected by 1-2% in the fiscal year of 2022.

Reader apps will benefit from the move

“We 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,” said Morgan Stanley’s analyst Katy Huberty. “Assuming a worst case scenario in which Apple stopped collecting economics from all of the top 20 reader apps translates to downside risk of 4% of Services revenue, 1% of total company revenue, and about 2% of FY22 EPS forecast.”

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The “reader” apps include video streaming services like Netflix and Spotify. Such apps will now be able to offer a link inside the app to allow users to directly visit their website to sign-up and pay for the service as well.

“In other words, we believe the recent App Store headlines are more attention grabbing than the ultimate financial impact to Apple’s revenue or profitability,” adds Huberty.

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