Analyst comments on the "Apple Tax" ban: Apple's earnings per share may decline by 2% to 3%

According to the Zhitong Finance APP, a federal appeals court upheld a ruling requiring Apple Inc. (AAPL.US) to allow its app store to support "link payments." Although this ruling may not have as significant an impact on revenue as some fear, analysts say it could lead to a 2% to 3% decline in earnings per share.

Analysts at Evercore ISI stated in an investor report: "We do not expect all developers to immediately leave the Apple ecosystem, and the data from the Apple App Store in May supports this view, but the data from June will be the real test. We believe that despite the increased fees, some developers will still choose to remain within the ecosystem because Apple's billing system offers convenience, trust, and a frictionless experience that they find appealing. We also believe that Apple has ample reason to appeal to the appellate court, claiming that the lower court's ruling is an unjust deprivation of Apple's private property."

The appeals process could take up to two years or longer. Although the order took effect on April 30, Evercore ISI noted that total revenue from the Apple App Store grew by 13% in May, while revenue in the U.S. market increased by 10%.

Evercore ISI stated: "The annual sales of the Apple App Store are approximately $21 billion. In the ongoing lawsuit between Apple and Epic Games, the judge ruled that Apple must allow third parties to conduct transactions on the iOS system and cannot charge fees for these transactions. This puts at risk the estimated $7 billion in revenue Apple earns from charging U.S. developers. If this $7 billion were to disappear entirely, it would mean a 6% reduction in earnings per share, but we believe the actual impact will be less than that."

Additionally, JP Morgan also estimated that this ruling could have a negative impact of 2% to 3% on Apple's earnings per share.

JP Morgan analyst Samik Chatterjee stated in a report released on Thursday: "While the denial of the extension request is a disadvantage for Apple, we still believe the severity of its impact is likely far less than what investors are currently concerned about."

Meanwhile, Morgan Stanley cited the results of its latest survey of U.S. iPhone users, indicating that Apple's earnings per share are at risk of 2%. The survey found that 28% of respondents are "very likely" to bypass the app store's payment process.

Chatterjee added: "If real-world behavior aligns with our survey results, then 10% of the revenue from the Apple App Store, 3% of the revenue from the services business, and 2% of Apple's earnings per share will be at 'risk.'"

He further noted: "Based on the data points from our latest AlphaWise survey, we estimate that the revenue loss caused by this ban could be around $3.7 billion. Assuming that 28% of the revenue from the U.S. App Store will go through external links (including in-app purchases and subscription services), and Apple's commission rate is 0%, this would negatively impact earnings per share by 16 cents (or 2%) in the worst-case scenario Evercore ISI also pointed out that the gaming business accounts for a large portion (65%) of revenue from U.S. app stores, much of which comes from one-time purchases of $0.99. If users switch to other payment platforms like Stripe (which charges a 3% fee per transaction plus a fixed fee of $0.30), the payment amount would exceed the 27% fee charged by Apple.

Apple emphasized that in over 90% of transactions conducted through the Apple App Store in 2024, developers do not have to pay any commission. Apple CEO Tim Cook stated, "It’s incredible to see so many developers design outstanding apps, build successful businesses, and attract Apple users from around the world."