$72.3B in sales, but given they get less than 30% of that, their cut is less than 21.7B. Put that in perspective of their total revenue of 294B that year the app store represents only ~7% of their total revenue. And I suspect the app store is actually a fairly costly business to run - a lot of effort goes into the decor of the walls around garden. I'm thinking app review, even content serving.
Not arguing that it's not a profit center - but in perspective, I suspect apple's reasons for defending it are not primarily the direct financial benefits of it - it's probably mostly about the indirect benefits.
True... although hardware probably has far higher costs. I found a site giving apple's net profits for 2020 at $64 billion. If their gross was $294B, that means their profit margin on average was 21% for their sales. If the app store is almost pure rent, and you are overestimating the costs of things like reviewing and it is only a few billion dollars to run, then it could have a far higher profit margin than everything else. Perhaps even 80 or 90%? If so, that $21.7 billion gross is almost pure profit and becomes something like a third of all their profits...
oh... also the article does try to take into account the varying rates apple charges and notes that despite the exceptions the true figure is likely much closer to 30% than the lower rates.
> $72.3B in sales, but given they get less than 30% of that, their cut is less than 21.7B. Put that in perspective of their total revenue of 294B that year the app store represents only ~7% of their total revenue.
If you have a company with a single line of business and they were to lose 7% of revenue that is going to be a large hit. There are many industries where that exceeds the entire profit margin of the company.
But more than that, they don't have a single line of business. Suppose that a conglomerate the size of Apple had totally monopolized the world market for lithium mining. Well, that's a $350M/year industry -- it's barely 0.1% of Apple's revenue! Why should they even bother to monopolize it? The answer is, for the same reason anybody else would. Maybe the CEO of the conglomerate doesn't much care, but the head of the mining division cares about it a lot, and so do all of the customers in that industry. And antitrust violations in service of maintaining the monopoly are just as illegal and just as harmful whether it's a subsidiary of a conglomerate or an independent monopolist.
Or to put it another way, 20 billion dollars is 20 billion dollars. It motivates putting in 20 billion dollars worth of effort to hold onto it, regardless of what you're doing on the other side of the building.
> And I suspect the app store is actually a fairly costly business to run - a lot of effort goes into the decor of the walls around garden. I'm thinking app review, even content serving.
Content serving cost is negligible. Review could be arbitrarily expensive, but the experience of developers seems to imply that they're not spending a lot of resources being diligent about it -- policies applied inconsistently, updates often denied for indiscernible reasons etc. Reviewers seem to be only making a cursory inspection or relying on some kind of inadequate automated scanning tools.
Moreover, they have each developer paying $100/year, which should cover that level of review on its own, if the goal was funding the reviews and not extracting rents. Their policies imply the reverse. If the goal was to cover reviews then apps with more downloads should have lower per-download fees, since the fixed cost of reviewing the app can be amortized over more units. And yet "subsidizing" small developers doesn't fit either, because if that was your goal the first thing you'd do is stop charging $100/year to hobbyists and side projects with little or no revenue.
What they appear to be doing is providing a "discount" to hardly anyone. They continue extracting $100/year from the long tail of small timers who aren't making any money, continue extracting 30% from anyone who actually succeeds, but get to put "15%" in their PR knowing that the eligible people only represent a tiny proportion of their collections.
> I suspect apple's reasons for defending it are not primarily the direct financial benefits of it - it's probably mostly about the indirect benefits.
Which are also an issue, e.g. by thwarting competition between browser engines.
Not arguing that it's not a profit center - but in perspective, I suspect apple's reasons for defending it are not primarily the direct financial benefits of it - it's probably mostly about the indirect benefits.