Moscow, may 14 — “News. Economy” Defeat Apple in the Supreme court may ultimately hinder the development of the service industry. It can be rotated so that Apple will be forced to reduce the size of the fee. But these fees make up the bulk of the service business Apple — and a significant portion of the total gross profit. While Apple is betting on a service business as a growth driver.
The Supreme court ruling increases the likelihood that Apple will lose the case or will eventually be forced to deal with it in a disadvantageous conditions. In any case, it is likely that Apple will eventually have to reduce the percentage fees in the App Store.
Recall that the U.S. Supreme court has allowed the App Store to file antitrust lawsuit against Apple. A group of plaintiffs accusing kopeiskogo tech giant is abusing its position in the market of mobile software, when apps are distributed exclusively through its own store.
The users of iOS devices are required to use the App Store, which charges a 30% Commission from app developers. Developers, in turn, lay the 30% to the cost of the application, causing the client to pay the difference. Judge Brett Cavanaugh on Monday, supported by four judges-liberals, recommended denial of the application for the Apple on the termination of a claim for a 30% Commission.
It is worth noting that while this case is in its early stages, and therefore still not been established for certain, whether Apple violated Federal antitrust law. However, the court’s decision could set a precedent, which would mark the beginning of the war between Apple and offended users, who have leverage on the company.
The plaintiffs will be able to demand billions of dollars in compensation for the damages if they win the lawsuit. According to Apple, the Supreme court ruling, allowing the case to continue, will pose a threat to e-Commerce is a rapidly growing segment of the U.S. economy, estimated in hundreds of billions of dollars a year.
The App Store is the basis of business services, which CEO Tim cook is betting.
For many years business telephone with Apple were quite stable, and the company managed to sell more devices, while increasing the price tag on the iPhone. But in the beginning of this year, the company warned investors that sales of the iPhone down amid falling sales in China in the context of the ongoing trade war.
Apple compensated for the fall in iPhone sales continuing growth of its business to digital services, which the company sees major growth driver. Services segment, which includes products such as the AppStore, Apple Pay, Apple Care and Apple Music has generated in the last quarter record revenue of $11.5 billion, which is 16% higher than a year ago. Currently it is the second largest source of Apple’s revenue, outpacing Mac and iPad.
Apple seeks to expand this segment even more: the company held a conference where they presented the new services that will be launched soon or is already available: Arcade gaming service, streaming service Apple TV+ news Apple News+ etc.
Despite the growing catalog of service offerings, the App store remains the biggest part of the business services, providing around one third of the income from this business, according to analysts on wall street. Moreover, only one App Store will bring 12% of the total gross profit of the company this year, forecast at KeyBanc Capital Markets. This is an impressive figure considering that the entire service business, Apple accounted for only 16% of the total sales for the first six months of the current financial year and shows how profitable is the App Store for the company.
But the Supreme court decision could kill the cash cow. We are talking about where the owners of Apple devices can download apps. The Apple ecosystem is built in such a way that the only way to get iPhone apps download through its App Store. The plaintiffs in the case argue that the fees are higher than they would be Apple owned a monopoly on the app store.
Judge has not yet decided whether Apple has a monopoly, abused if she has it, or what is the penalty for it; instead, they simply ruled that consumers have the right to sue Apple, and their business can continue.
But this decision is a significant obstacle for Apple, as it increases the likelihood that the case will indeed be transferred to the court. It is easy to see how this can become a big problem for Apple.
For the plaintiffs will not be a problem to prove that Apple has a monopoly on distribution of iPhone apps. They also should not be too difficult to prove that the price that Apple will charge as a Commission as the owner of the site AppStore, makes these applications more expensive, as the developers lay the Apple Commission in the final application cost.
For example, Spotify charges $3 more clients who have subscribed to the service through the Apple app store than with those who subscribed directly through the web site. Spotify admits that this is done in order to cover the cost of royalties to Apple. And Spotify is not the only company-the plaintiff, which may indicate that they had similar practice pricing.
In other words, there is a big chance that Apple will lose the case. But even if this does not happen, the fees in the app store, the company may change. Meanwhile, a growing number of app developers have decided to completely abandon the Apple platform, offering customers a subscription through their own web sites.
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