Apple Hints at Earning More From Third-Party AI Apps
On its quarterly earnings call, Apple's CFO suggested the company may grow services revenue through third-party apps and AI partnerships. No specifics were given.
Apple's chief financial officer, Kevan Parekh, said on Monday's quarterly earnings call that the US technology company sees opportunities to lift services revenue through third-party apps and partnerships tied to artificial intelligence (AI). The topic matters because App Store commission revenue has been squeezed by regulation and legal rulings, even though the services business overall keeps growing.
Parekh said Apple believes AI gives customers a compelling reason to upgrade and switch devices to get the latest capabilities. He also pointed to opportunities across third-party apps and partnerships, alongside first-party ones. He did not explain what those opportunities might look like.
What investors are asking
Reuters reported on Monday that investors are wondering whether Apple could profit by distributing third-party AI agents through the App Store and taking a share of the revenue they generate.
Pressure on the App Store
Apple has traditionally kept tight control over payments in its marketplace, taking a cut of every transaction. A lawsuit by game developer Epic Games ultimately forced it to let apps redirect users to outside payment systems, and other legal challenges worldwide have added pressure. Third-party estimates in August suggested an 18% drop in US commission revenue, with declines also in Brazil and Japan after new regulations took effect there.
Parekh said App Store performance in the September quarter was similar to the prior year, but the company recorded a record number of paid subscriptions, with double-digit growth for third-party apps. Mobile gaming, however, continued to face headwinds, which he expects to persist into the next quarter.
Outlook
For the December quarter, Apple expects services growth of 8% to 9%. The forecast reflects sequential headwinds, mainly from third-party licensing and an additional half percentage point of foreign exchange impact.
TechCrunch has asked Apple for further comment.
