Home News Apple’s App Store Had 78% Margin in 2019, Epic Expert Says

Apple’s App Store Had 78% Margin in 2019, Epic Expert Says

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Apple Inc.’s App Store had operating margins of almost 78% in fiscal year 2019, according to testimony from an Epic Games Inc. expert witness based on documents obtained from the iPhone maker.

The figure comes from Ned Barnes, a financial and economics researcher, who said he obtained documents “prepared by Apple’s Corporate Financial Planning and Analysis group and produced from the files of Apple CEO Tim Cook.”

Apple is disputing the accuracy of Barnes’s calculations — and urging a judge to restrict public discussion of App Store profit — as the companies head into a high-stakes trial Monday in Oakland, California.

Epic, maker of the blockbuster game Fortnite, is trying to show that the App Store is run like a monopoly with its commission on developers of as much as 30%, while Apple insists it doesn’t abuse its market power.

Epic is also suing Apple in the U.K. and Australia while Apple faces scrutiny from antitrust regulators in the U.S. and abroad.

The companies are relying heavily on dueling economists as they make their case to U.S. District Judge Yvonne Gonzalez Rogers, who is conducting the three-week trial without a jury.

As part of the pretrial information-sharing process, Barnes said that an Apple employee told him that the numbers from the company’s internal documents don’t show the full picture. Barnes said he then made additional calculations, which resulted in higher margin estimates of 79.6% for both 2018 and 2019.

In a statement Saturday, the Cupertino, California-based technology giant said Epic experts’ “calculations of the operating margins for the App Store are simply wrong and we look forward to refuting them in court.”

Barnes said he also obtained documents prepared inside Apple that show profit and loss estimates for fiscal year 2020. He said Apple had been tracking App Store profits for years and that he also obtained such statements for 2013 through 2015.

Apple generates revenue from the App Store by charging either a 15% or 30% commission to developers for paid app downloads, in-app-purchases and subscriptions.

Read more: Apple Trial Threatens to Reveal App Store’s Commission Bounty

Analysts believe that Apple’s margins on the App Store may have grown since 2019. Sensor Tower estimates the App Store generated $22 billion in commissions last year for Apple, while Bernstein analyst Toni Sacconaghi believes Apple will run the App Store this year with a gross profit of 88%.