The info come from the evidence of court from an Epic Games expert witness that the App Store give the profit margin of 78 percent to Apple

There is no doubt that Apple Company is one of the most powerful companies the world with its iPhone which was ranked as the best-selling smartphone in the world in the last quarter of the year 2020. According to a report, it was the first company to touch the trillion-dollar figure in worth and now its total worth is around $2.3 trillion. It is not hidden that App Store is a huge source of revenue and profit for Apple, but still, Apple has not revealed the exact figures that break out how profitable the App Store is for the company. Apple told the Senators that this company does no calculate the profit based on a single product or service.

According to the evidence from Epic Games expert witness Ned Barnes based on the documents acquired from the iPhone maker that App Store had an operating profit margin of 78% in the year 2019, the researcher told that he had acquired these documents from the files of Apple CEO Tim Cook and these were organized by Apple’s Corporate Financial Planning and Analysis Group. However, Apple Company is debating the precision of Barnes calculations and requested the court to limit the public discussion of App Store profit as the head of the company into a high-stakes trial Monday in Oakland, California. Barnes further disclosed that the profit margin of the App Store increased from 75% in the year 2018 to 78% in the year 2019.

Epic is also trying its best to expose Apple about its monopoly over iPhones and iPads and therefore, it is forcing the court to put pressure on Apple to lower the fees and permit other payment systems and other app stores to operate on iOS. Epic has hired a witness that is going to support its urgings and Apple will surely hold the witness in its defense. Apple will definitely argue in its defense that these figures are not correct, but Barnes told that the employees said to him that the internal documents do not show the complete details so he made extra calculations which resulted in higher-margin percentage of 79.6% for both year 2018 and 2019. Apple takes the 15% to 30% profit of all in-app purchases in the 70% to 80% sort does not appear that unavailable. Billions of dollars go to the account of Apple Company but the cost of managing the apps on the App Store does not look big including the service cost and labor for App review and App Store editorial team.

As a witness on the behalf of Apple, Richard Schmalensee, a Massachusetts Institute of technology expert said that the calculation of Barnes is not credible because it is in separation in one section of the iOS ecosystem in a way that artificially increases the apparent operating profit margin of that segment, he further said that any accounting portion of App Store’s stand-alone profitability is also illogical and therefore, incredible as a pointer of anything.



H/T: Bloomberg

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