Apple-Backed Study Sheds Light on Physical Sales Through App Store

Apple on Monday released the results of a study that found its App Store spurred $458 billion (roughly Rs. 34.76 lakh crores) in sales last year from categories such as retail of physical goods, ride-hailing, and advertising from which the iPhone maker takes no commission.

The study, backed by Apple, marks the first time the company has sought to quantify App Store activity that does not produce a commission for Apple. Commissions from the App Store, which is the only way developers can distribute apps to iPhones owned by consumers, have become a key sales driver for Apple as iPhone sales level off.

But Apple's study suggested the App Store has a broader impact. The App Store generated $519 billion (roughly Rs. 39.38 lakh crores) in billings and sales in 2019, according to the study, conducted by economic research consulting firm Analysis Group. Of that amount, $413 billion (roughly Rs. 31.34 lakh crores) was from physical goods and services.

The study found $45 billion (roughly Rs. 3.41 lakh crores) came from in-app advertising. The remaining 15 percent of overall App Store activity - about $63 billion (roughly Rs. 4.78 lakh crores) - came from digital goods and services such as music and video subscriptions or in-app purchases in games.

Apple takes a commission of between 15 percent and 30 percent for digital goods and services purchased through the App Store. That practice has drawn antitrust scrutiny in the United States and Europe, with rivals such as Spotify saying the practice hurts their business.

To avoid paying Apple's commissions, rivals like Spotify must ask their customers to sign up for subscriptions on their own website, which adds multiple extra steps compared with paying inside the App Store. Spotify has alleged that created an uneven playing field.

In a conference call with journalists, Apple representatives said the company commissioned the study to gain a better understanding of the physical goods and services activity in its App Store.

General retail apps on iPhones and iPads, including Amazon, generated an estimated $268 billion (roughly Rs. 20.33 lakh crores) in sales and billings, followed by travel apps at $57 billion (roughly Rs. 4.32 lakh crores) and ride-hailing apps at $40 billion (roughly Rs. 3.03 lakh crores).

© Thomson Reuters 2020