As reported earlier this week by Bloomberg’s Mark Gurman, Apple is making moves to allow third-party app stores on the iPhone and iPad in the European Union, to comply with the EU’s Digital Markets Act, which goes into full effect in 2024. The changes are expected to debut alongside iOS 17.
Now, a trio of analysts at investment bank Morgan Stanley say third-party app stores and sideloading would pose a “limited risk” to App Store revenue.
Importantly, the proposed changes in the Digital Markets Act (DMA) are regulator-driven, not consumer-driven. From the consumer perspective, we see very little demand for alternatives to the App Store given the unmatched security, ease of use (centralization), and reliability the App Store provides. According to our Fall 2022 Smartphone survey, less than 30% of iPhone owners are extremely likely to purchase a mobile app directly from a developer website vs. the App Store.
The analysts say Apple’s overall revenue shouldn’t be greatly affected, as iPhone users have “long prioritized the security, centralization, and convenience that the App Store brings.”
They say a catastrophic worst-case scenario where Apple somehow lost all of its App Store revenue in Europe due to competition from third-party app stores, analysts estimate Apple would take only a 4% hit to its services revenue and a 1% hit to its total revenue. If third-party app stores spread globally, analysts forecast an approximately 9% hit to services revenue and around a 2% hit to total revenue.
The analysts expect the impact on Apple’s revenue to be far less, as it’s likely Apple would still receive a commission on purchases made through third-party app stores.
(Via MacRumors)
