U.S. court ruling impacts Apple's App Store, Bank of America warns high-profit business faces risks
Bank of America analysts warn that a recent U.S. court ruling regarding the Apple App Store may pose risks to its high-profit business. Although maintaining a "Buy" rating on Apple, the analysts noted that the ruling increases uncertainty and could lead to billions of dollars in revenue losses for Apple globally. The ruling allows developers to bypass the App Store for payments, affecting Apple's commission income
According to the Zhitong Finance APP, Bank of America (BofA) analysts have stated that a recent ruling by a U.S. federal judge regarding Apple Inc. (AAPL.US) App Store may pose "gradual risks" to its high-margin revenue sources. This ruling not only directly impacts Apple's U.S. business but could also affect global operations, potentially amounting to billions of dollars.
The BofA analyst team, led by Wamsi Mohan, maintained a "buy" rating on Apple in their latest report, citing its strong earnings resilience, potential for margin expansion, and room for future market expansion. However, they noted that this ruling forces Apple to confront an increasing risk of uncertainty.
U.S. District Judge Yvonne Gonzalez Rogers ruled on Wednesday that Apple violated a court order requiring it to allow more open competition in the App Store. The case will be referred to federal prosecutors for further action.
This ruling means that developers will be able to direct users to bypass the App Store to download apps or make payments on other platforms, and Apple will not be able to collect commissions of up to 30% from these transactions.
Currently, this ruling only applies to the U.S. market, but analysts warn that if other jurisdictions worldwide adopt this standard, Apple could face significant losses in commission revenue.
According to market research firm SensorTower, BofA estimates that Apple's App Store generates annual revenue of approximately $31 billion, with the U.S. market contributing about 35% (around $11 billion), Europe accounting for about 9%, China for 24%, and the remaining 32% from other regions globally.
Analysts cited court documents indicating that under a "zero-commission" model, Apple itself estimated that the proportion of users opting for alternative payment methods would be between 10% and 25%, potentially resulting in "hundreds of millions to billions of dollars" in revenue losses.
Considering the high-margin nature of the App Store, BofA analysts noted that for every $1 billion in lost revenue, Apple's earnings per share (EPS) would decrease by approximately $0.05.
If all major developers (who account for about 50% of App Store revenue) choose to exit the Apple ecosystem, analysts expect a revenue impact of $5 billion on Apple, representing about 1.2% of total revenue, with EPS potentially decreasing by $0.25, a drop of 3%.
If this trend extends globally, losses could reach $16 billion, accounting for about 4% of total revenue, with EPS declining by $0.80, a decrease of 10%. Analysts pointed out that these estimates are based on relatively aggressive assumptions, and the actual impact will depend on the outcomes of subsequent appeals and court enforcement.
Apple stated that it will comply with the court's order but also plans to appeal. Despite the ongoing negative news, Apple's stock price remained relatively stable on Thursday, indicating that investors remain optimistic about its long-term prospects. As of the time of writing, Apple's stock price rose by 0.33% to $213.24
