Study: Apple only cashes in on 10 percent of app sales

The image painted by politicians, judges, regulators, and critics has become ingrained in many people's minds: Apple as an unloved tax collector that diligently raises its hand and collects from providers of apps and digital services for passing the iPhone as often the only way to reach customers. And they do this even though they only raise the barrier and have long since made a profit on their expenses for maintaining their ecosystem. The big tech giants, also known as gatekeepers, are the focus of regulators at the EU Commission. The tone has also long since become harsher in the US home market. Only there, as in the case of Epic, the dispute tends to take place in court.

With an international study, Apple apparently wants to regain control of the interpretation of how much the iPhone manufacturer really earns from the use of the devices by buyers. At the very least, the paper by economists from Boston University and the Analysis Group, which was supported by Apple, is apparently intended to broaden the view. The company does not reveal how far-reaching the support was, i.e., whether the study was financed by Apple or merely supported with data. However, the conclusions and opinions expressed are solely those of the authors, the 17-page paper emphasizes.

The researchers took a closer look at developer turnover and sales. The result supports Apple's efforts to cast its share in a different light: Apple does not collect any commission at all for more than 90 percent of these sales, it says.

1.3 trillion US dollars in sales worldwide

What's more, the analysis reinforces the claim that the iPhone ecosystem is a major economic factor. There is talk of turnover and sales amounting to 1.3 trillion US dollars worldwide in 2024 alone – and no, the author did not fall for the typical translation error that the English billion is “only” a billion in German.

At 1.014 trillion dollars (78 percent), physical goods and services sold via apps account for the largest share of total revenue – such as grocery deliveries or online shopping. As a rule, Apple does not earn any money here as these transactions are not processed via the company's own payment system.

Digital goods and services, for which Apple charges its controversial 15 to 30 percent commission, only accounted for 131 billion dollars (10 percent). In-app advertising generated a further 150 billion dollars (12 percent), from which Apple also receives no direct revenue.

The app ecosystem is a growing economic factor

The study also shows how the smartphone has continued to grow as an economic factor in recent years: since 2019, revenue has more than doubled, from 514 billion to the current 1.3 trillion dollars. Physical goods and services grew particularly strongly by 162%, driven by the increased demand for food deliveries and online shopping. The ridesharing segment recorded the strongest growth with an increase of 334%, followed by digital payment services (+241%) and food delivery services (+222%). Even the slowest growth segment, food delivery services, increased by 57%.

There are clear regional differences: China dominates with a total turnover of 539 billion dollars, followed by the USA (406 billion) and Europe (148 billion). In Europe, the UK is in the lead with 55.1 billion US dollars. Germany is listed at USD 21.5 billion – with the largest shares in the online retail (USD 5.9 billion), travel (USD 5.7 billion) and in-app advertising (USD 2.9 billion) sectors. In China, physical goods even account for 90% of app store sales, significantly more than in other regions. In contrast, the USA leads in digital goods and in-app advertising – the areas in which Apple actually collects commissions. The company generated more than twice as much revenue here as in China or Europe.

However, it is questionable whether Apple will be able to convince the regulators with its study. The figures show the total volume, but not Apple's actual profit margins in the most lucrative segments. And for developers outside the European Union, there is hardly any way around Apple when it comes to reaching iPhone users.

(mki)