2024.07.10 08:29
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Bank of America: Apple's App Store revenue in Q3 expected to grow by 13% year-on-year, EU DMA has little impact on user download behavior

Apple's App Store revenue in the third quarter is expected to increase by 13% year-on-year to $7.5 billion, mainly driven by downloads on iPhone and iPad. It is estimated that game revenue will account for 51% of total revenue, while Apple News revenue will see a year-on-year growth of 42%. The EU's Digital Markets Act has little impact on user download behavior, as the number of users downloading apps from other app stores is relatively small

According to the Zhītōng Finance and Economics APP, analysts from Bank of America cited data from Sensor Tower in a report on Tuesday, stating that driven by a 3.2% year-on-year increase in downloads on iPhone and iPad, Apple's (AAPL.US) App Store revenue in the third quarter is expected to increase by 13% to $7.5 billion. The analyst maintained a "buy" rating on Apple with a target price of $230.

When reporting its service revenue, Apple did not separately list the revenue from the App Store, but analysts and others will provide estimates. Analysts expect that Apple's upcoming third-quarter financial report, to be released early next month, will show a 14% year-on-year growth in service revenue.

Data from Sensor Tower shows that after concerns about Apple's sales data in China earlier this year, Apple's sales in China rebounded in April, with a 10% increase in App Store revenue in China in June. In addition, the data shows that game revenue from the Apple App Store in the third quarter is expected to increase to $3.9 billion, accounting for 51% of the total App Store revenue; Apple News revenue is expected to account for only 1% of the total App Store revenue, but it has the largest increase among various apps, with a year-on-year increase of 42%.

Earlier this year, the EU's Digital Markets Act (DMA) officially came into effect. The law requires Apple to allow EU users to use other app stores or download apps directly from third parties, thereby allowing developers to bypass the commission they need to pay to Apple after users download apps. At the same time, Bank of America analysts pointed out that user behavior "has basically not changed," and the number of people using other app stores to download apps is relatively small.

It is worth mentioning that last month, the EU accused Apple of violating the relevant provisions of the DMA. In the preliminary investigation results, the European Commission stated that Apple failed to allow app store developers to freely introduce other payment methods outside the Apple ecosystem, which violates the DMA's anti-manipulation rules. Margrethe Vestager, head of the EU's antitrust agency, stated that Apple faces "many very serious" issues in complying with the DMA, and its "core technical usage fee" does not meet the requirements of the DMA.

According to the strict penalty provisions of the DMA, if Apple is found guilty, the company may face fines of up to 10% of its global annual revenue, which could amount to hundreds of billions of dollars; if Apple violates the DMA again, the fine could even rise to 20% of its global annual revenue.

Faced with strict EU regulations and potential huge fines, Apple has stated that it will delay the launch of certain features in the EU, such as Apple Intelligence and other generative AI functions, as the company is concerned that the interoperability requirements of the DMA may force it to compromise product integrity in a way that jeopardizes user privacy and data security