Apple defends App Store amidst anti-trust investigations

On Monday, Apple promoted a new study from the economic consulting firm Analysis Group which found that the App Store was responsible for $519 billion in the estimation of the total billings and sales of physical as well as digital products and services in 2019.

Apple says that, of that sum, $61 billion constitutes digital items of which the company may receive a 30 percent share or a 15 percent share in the case of longer-lasting subscriptions. This includes the largest category in the App Store, mobile games, as well as in-app purchases, various subscriptions, and the total sale of paid apps.

The study is careful in saying that the presented figure is not the same as the total App Store billings. Analysis Group says that it accounts for some items like video streaming subscriptions which might be purchased somewhere else but essentially are based on the consumption of the media on an iOS device, as well as other applications purchased by larger enterprises for employee use.

Another $45 billion is dedicated to In-app advertising, of which, a large portion is the contribution of mobile gaming. Everything else such as ride-hailing software like Uber, to food delivery apps like DoorDash, to mobile retail apps like Best Buy and Target are contributing to the remaining $413 billion and the study suggests that Apple takes no share from this revenue generated by the App Store.

These figures are typically accurate with Apple, given the company’s known fast-growing services business and given that how it makes on a weekly and monthly basis from the App Store. It is nonetheless interesting to see the detailed breakdown of the company’s commerce and earnings.

These numbers are important for Apple because the company wants the developers as well as the regulators to think of the App Store as a growing economy that is, according to Apple is, “dynamic, competitive, and flourishing.”

Apple is now another large tech company like many, which is under the lens of tech-focused task forces within the Department of Justice in Washington and the Federal Trade Commission, who take a much closer look on the regulations of companies like Amazon, Apple, Facebook, Microsoft, Google to monitor and see if they have too much power and if they use that power to disrupt healthy competition among the companies.

Apple has faced criticism time and time again for its mandatory 30 percent share, enraging companies that run competing services, like Spotify, and accusations and facing lawsuits from developers who say that it runs the App Store like a monopoly. Apple is now being investigated under the European Union after its rival filed a formal antitrust complaint against it.

This added pressure seems to have led to some new consumer-friendly features like Siri support for Spotify. Apple’s relationship with developers these days pivots on whether it is a kind dictator that is at risk of overstepping its bounds or, as Apple may see it, as an interdependent benefactor in a cooperative ecosystem.

Besides the regulations, there are some very interesting figures in the report, which beats the app categories by a margin. It reveals that traveling like Expedia, Trivago, various airline apps are the reason for generating $57 billion in booking, sales, and traveling while ride-hailing and food delivery apps generated $40 and $31 billion respectively.

But the biggest generators of revenue according to the study is the retail industry’s mobile equivalents including mobile apps of large chains like Walmart and Target.

It is reported that of the $519 billion that the App Store supported in 2019, the largest share at $413 billion was contributed by the sales of physical goods and services. Within the same category, the vast majority of sales were generated by m-commerce apps, and of those, retail accounted for the largest share at $268 billion. Retail apps include stores such as Target and Best Buy, as well as virtual stores that sell physical goods such as Amazon and Etsy. This however does not include grocery delivery which is considered as another whole category.

Various types of m-commerce apps were the largest sources of sales from physical goods and services. Travel apps, including Expedia and United, accounted for $57 billion in revenue while ride-hailing apps like Uber and Lyft added $40 billion in sales. Food delivery apps including DoorDash and Grubhub accumulated $31 billion.

There is also a fascinating geographic breakdown that says that the US accounts for less than half of the $519 billion generated at just $138 billion with China contributing the larger portion estimated at $246 billion.

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