As iPhone sales slip, Apple is positioning its digital-services business as its new profit engine. But a brewing backlash against the big commissions Apple earns from all purchases and subscriptions made via iPhone apps could undercut the app store.
FILE - This March 19, 2018, file photo shows Apple's App Store app in Baltimore. As its iPhone sales slip, Apple has been touting its growing digital-services business as the engine that will keep profits up. But there may be a catch. Apple currently pockets a generous commission on all subscriptions and other purchases made on iPhone apps.
Investors are now hanging onto Apple services as a “life preserver in the choppy seas” just as it’s about to float away, Macquarie Securities analyst Benjamin Schachter concluded after the Netflix move. Apple didn’t respond to the AP’s inquiries about its app fees. It has previously defended the system as reasonable compensation for reviewing all apps and ensuring its store remains a safe and secure place for e-commerce. Google charges similar fees in its own app store, although its overall business isn’t as dependent on them.
Netflix declined to discuss its reasons for ending new subscriptions through the app store. But its move drew more attention to an app store tax that other technology companies have already attacked as an abuse of the power that Apple has amassed since opening its app store years ago.
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