PhonAndroid App Store: Apple will lose billions of dollars a year following the Epic Games lawsuit

The App Store will be deprived of part of its profits. After the court ruling in the Epic Games lawsuit, Apple will have to do without billions of dollars in annual revenue. Indeed, video games represent the bulk of the profits generated by the app store.

A few days ago, the trial between Apple and Epic Games resulted in a first verdict. After months of legal battle, judge Yvonne Gonzalez Rogers finally agreed with Epic Games. Apple is now obliged to allow game developers (and applications in general) to integrate a redirect link on their iOS apps.

With this relaxation, developers will be free to redirect users to other payment methods. De facto, they will be able to bypass the 30% App Store tax on all purchases made. Indeed, Apple has always collected a commission on all subscriptions taken out through an iOS application. The Cupertino giant will have to say goodbye to this solid financial windfall.

Apple will lose billions of dollars, so what?

According to information from Mark Gurman, journalist at Bloomberg, the court ruling will deprive Apple of billions of dollars in profits every year . Apple generated $6.3 billion last year in the United States from commission taken from subscriptions and in-app purchases. According to data provided by Sensor Tower, 70% of revenue generated by the App Store comes directly from video games. On the application store, the video game sector represents 3.8 billion dollars in revenue per year. This is obviously why Apple has always refused to open up to alternative payment systems.

On the other hand, the firm has undertaken to allow “reader” type applications, such as Netflix or Spotify, to sell subscriptions without paying the tax. Obviously, this recent concession aimed to keep the essential: the commission on video games, which represents much more annual profits.

While Apple's stock market fell slightly following the verdict, the company is reassuring. The group believes that it is still too early to determine how and when exactly the changes will be implemented. Apple agrees to trade Judge Yvonne Gonzalez Rogers for more.

As Mark Gurman points out, the revenue generated by the App Store represents only a tiny fraction of the billions of dollars amassed each year by the brand. In the first quarter of its staggered 2020-2021 fiscal year, Apple raked in $111.4 billion in revenue and net profit of $28.7 billion.

Source: Bloomberg