The App Store is a major source of revenue for Apple and it continues to grow further as the number of apps grow day by day. The division also makes up for a good chunk of profits for the company. However, Apple has never revealed the exact revenue and profit figures of the App Store.
Apple’s ongoing battle with Epic Games revealed that the App Store had a profit margin of 78% in 2019, according to Bloomberg. The global tech company, however, told senators that the company does break down revenue and profit figures for its products and services separately.
Profit margins increased from 2018 to 2019
The App Store margin figure was revealed by Epic Games expert witness Ned Barnes. According to Barnes, the App Store had a profit margin of 75 percent in 2018 which then increased to 78 percent in 2019, based on his calculations. From 2018 to 2019, the profit margins rose by three percent, according to Barnes.
The game maker Epic Games is trying to prove in the court that Apple is a monopoly in the market. It wants the iPhone and the iPad maker to reduce the fee it charges to app developers across its platforms. The game maker has also suggested that the iPhone and the iPad also have alternative app stores to download apps, apart from just the App Store by Apple.
According to Epic Games witness expert Ned Barnes, the App Store on the iPhone and the iPad has a very high profit margin. He adds that an Apple employee had told him about the internal documents not showing the “full picture”. Apple has always said that it takes 15-30 percent cut of all the in-app purchases. However, according to Barnes, the profit margins are actually much higher.
Epic Games’ popular game Fortnite was kicked off the App Store last year. The game maker had tried to bypass Apple’s payment system to avoid paying fees to Apple.