But Apple has insisted those numbers aren’t accurate because they don’t reflect expenses spread throughout the company’s operations. An accounting expert hired by Epic estimated that its profit margins range from 70 percent to 80 percent, based on a review of confidential Apple documents. Epic’s lawyers have repeatedly cited those comments as evidence that Apple reshaped the store to fuel its earnings growth once the popularity of mobile apps became clear.Įxactly how profitable the App Store is has been a point of contention throughout the three-week trial. Shortly after the store opened, Jobs publicly said Apple didn’t expect the App Store to be very lucrative. Apple has drawn upon its commissions and exclusive in-app payment system to help more than double the annual revenue of its services division from $24bn in fiscal 2016 to $54bn last year. Since beginning with just 500 apps in 2008, the store has ballooned to 1.8 million apps, most of which are free. The App Store ranks among Apple’s biggest successes during Cook’s reign. The questioning is likely to dissect the strategies Cook has drawn up since taking the CEO job nearly a decade ago, just a few months before Jobs died of cancer in October 2011. That is roughly twice the number of active iPhones, iPads and iPods that rely on Apple’s store for apps.Īpple’s ironclad control over the App Store is already under investigation by regulators and lawmakers in Europe and the United States.Įpic Games lawyers are expected to spend several hours grilling Cook on the stand. It also argues that App Store commissions mirror fees charged by major video game consoles - Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s Switch - as well as a similar app store run by Google for more than three billion mobile Android devices. Apple says it has invested more than $100bn in such features. That extends to just showing a link that would open a web page offering commission-free ways to pay for subscriptions, in-game items and the like.Īpple fiercely defends the commissions as a fair way for app makers to help pay for innovations and security controls that have benefitted both iPhone users and app developers, including Epic. Created by Jobs a year after the iPhone’s 2007 debut, the App Store has become a key revenue source for Apple, a money-making machine that helped power the company to a $57bn profit in its last fiscal year.Įpic is trying to prove that the store has morphed into a price-gouging vehicle that not only reaps a 15 to 30 percent commission from in-app transactions, but blocks apps from offering other payment alternatives. The technology company is counting on Cook’s appearance to put the finishing touches on Apple’s defence against an antitrust case brought by Epic Games, maker of the popular video game Fortnite.Įpic is trying to topple the so-called “walled garden” for iPhone and iPad apps that welcomes users and developers while keeping competition out. Apple CEO Tim Cook will take the witness stand Friday to defend the company’s iPhone app store against charges that it has grown into an illegal monopoly - one far more profitable than his predecessor Steve Jobs envisioned when it opened up 13 years ago.
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