Apple's efforts to squeeze more revenue from the App Store are gaining momentum, according to a recent report from Bloomberg. Mark Gurman, writing in his Power On newsletter, reveals that newly appointed Apple CEO John Ternus and services chief Eddy Cue are behind the push to raise margins from the App Store, which already generates a significant portion of the company's services revenue. Apple's App Store has become a critical component of the company's business, with the platform generating an estimated $50 billion in annual revenue. The report suggests that Apple is exploring various strategies to increase its share of the $1.4 trillion global mobile app market.
Gurman notes that Apple's efforts to increase margins from the App Store are part of a broader strategy to boost its services revenue, which has become a key driver of the company's growth. Apple's services segment, which includes the App Store, Apple Music, Apple TV+, and iCloud, generated $54 billion in revenue in 2022, up from $38 billion in 2018. The company's services revenue is expected to continue growing, driven by the increasing popularity of its ecosystem and the growing demand for digital services.
Apple's efforts to increase margins from the App Store are also seen as a response to the growing competition in the mobile app market. The App Store faces stiff competition from Google Play, which is owned by Alphabet Inc., and other mobile app stores. Apple has been exploring various strategies to differentiate its App Store and increase its market share, including the introduction of new features and tools for developers.
The implications of Apple's efforts to increase margins from the App Store are far-reaching and significant. For developers, the increased revenue share could provide a welcome boost to their earnings, but it could also create new challenges and complexities. The App Store has become an essential platform for many developers, and changes to the revenue share could impact their ability to monetize their apps.
The increased revenue share could also have implications for the broader mobile app market. The App Store is a critical component of the mobile ecosystem, and changes to the revenue share could impact the competitiveness of other mobile app stores. This could lead to a shift in the balance of power between Apple and other companies in the mobile app market.
The impact of Apple's efforts to increase margins from the App Store could also be felt in the research community. Researchers have been studying the App Store and its impact on the mobile app market for years. Changes to the revenue share could provide new insights into the dynamics of the mobile app market and the strategies that companies use to compete.
Why it matters: this intelligence reflects a shift that researchers and analysts should follow closely.
Billy Odell Tucker-Robinson is the founder and host of Banking With Billy, an independent financial intelligence platform covering markets, stocks, AI, crypto, and world news. Billy operates a 24/7 live AI radio and Stock TV platform, hosts a growing Discord community, and produces daily content on YouTube @BankingWithBilly.
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