Technology Apple's $85 Billion-a-Year Services Business Faces Legal Reckoning


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Aug 17, 2017
Apple faces mounting regulatory scrutiny that threatens over $85 billion in annual services revenue. An antitrust trial against Google in the U.S. revealed multi-billion dollar payments to Apple to be the iPhone's default search engine. A plaintiff victory may halt the payments, estimated at one-quarter of Apple's services income. Meanwhile, Apple's App Store dominance draws Biden administration and EU oversight, with the EU enforcing changes.

The landmark Google case and actions across Apple's two biggest markets represent growing legal and regulatory headwinds challenging the company's services growth strategy. FT adds: In the EU, Apple is preparing to allow "sideloading," which enables iPhone users to bypass its store and download apps from elsewhere. This will breach, for the first time, the walled-off ecosystem that the company has protected since Steve Jobs unveiled the iPhone in 2007.

Apple has dragged its feet on this issue, since it maintains the practice will create security risks to its system. Sideloading could have an impact on the App Store, where Apple charges developers as much as a 30 per cent fee on digital purchases. Games account for more than half of that revenue. Google's Play Store, which charges a similar fee, is also in the spotlight after it lost a landmark trial against Epic Games in California in December.

Apple draws between $6bn and $7bn in commission fees from the App Store globally each quarter, according to Sensor Tower estimates. Competitors are pushing to earn some of that share and launch rival app stores and payment methods on Apple devices. Microsoft is talking to partners about launching its own mobile store.

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