Apple hints at third-party app revenue push, without saying how
Apple's services business remains at record levels, but TechCrunch describes it as facing growing pressure. The App Store, the central part of that business, has dealt with regulatory pressure and a slump in mobile gaming, both of which have hurt services growth.
On Monday's earnings call, Apple signaled that it may look to boost services revenue through third-party apps. The signal came when chief financial officer Kevan Parekh was asked how AI could "contribute to revenue growth over time." He said: "On the product side, you know, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities, and we also feel there’s opportunities across third-party apps and partnerships as well as first-party opportunities."
Parekh did not elaborate on what sorts of opportunities might be available through third-party apps. TechCrunch has reached out to Apple and says it will update the story if Apple responds. Reuters reported Monday that investors are wondering whether Apple could profit by distributing third-party AI agents through the App Store and taking a cut of the revenue they generate. That is investor speculation, not an Apple announcement.
The background is a squeeze on App Store commissions. Apple has traditionally controlled payments inside its marketplace tightly and taken a cut of all App Store transactions. A lawsuit by Epic Games ultimately forced it to allow apps to redirect users to outside payment systems, and other legal challenges around the world have further hampered the business. Third-party estimates in August suggested an 18% drop in U.S. commission revenue, with declines also in Brazil and Japan after those countries introduced new regulations. Those are outside estimates, not Apple's own figures, and no numbers were given for Brazil or Japan. Even so, Apple's services business as a whole continues to grow.
Parekh also addressed the App Store directly. He said some factors had affected its performance, that in the September quarter performance was similar to the prior year, and that Apple had "a record number of paid subscriptions with double-digit growth for third-party apps on the App Store." He added that Apple saw headwinds in mobile gaming, which it has discussed before, and expects them to continue. The source gives no exact figure for the subscription growth.
Looking ahead, Parekh said Apple expects services growth of 8 to 9% in the December quarter. He said that outlook reflects Apple's best estimates of sequential headwinds, primarily from third-party licensing and an additional half percentage point of foreign exchange impact.
Key facts
- CFO Kevan Parekh said on Monday's earnings call that Apple sees "opportunities across third-party apps and partnerships as well as first-party opportunities" in AI, and did not say what they are.
- Reuters reported that investors are wondering whether Apple could take a cut of revenue from third-party AI agents distributed through the App Store; Apple has not announced such a plan.
- Apple guides to services growth of 8 to 9% in the December quarter, citing sequential headwinds from third-party licensing and an extra half percentage point of foreign exchange.
- Parekh said September-quarter App Store performance was similar to the prior year, with a record number of paid subscriptions and double-digit growth for third-party apps.
- Third-party estimates from August suggested an 18% drop in U.S. App Store commission revenue, with declines also in Brazil and Japan.
Why it matters
The App Store is the central part of Apple's services business, and regulation and legal fights have been eroding its commission income in some markets. Against that backdrop, any hint of a new way to earn from third-party apps draws attention. Parekh tied the idea to AI: he described it as a reason for customers to upgrade and switch devices, alongside opportunities in third-party apps, partnerships and first-party products. The comment is a direction, not a plan.
Who it affects
Developers of third-party apps, including any building AI agents, are the obvious audience, since the speculation is about Apple taking a cut of revenue those agents generate. Investors are watching because services growth is guided at 8 to 9% for the December quarter. Customers are touched indirectly: Apple frames AI as a reason to upgrade.
How to use it
There is nothing to adopt yet. Apple has not announced a program for distributing third-party AI agents or taking a share of their revenue, and Parekh gave no specifics. Developers and analysts can watch for follow-up from Apple; TechCrunch says it will update its story if Apple responds.
How solid is it
The quotes come straight from Parekh on the earnings call. The reading that Apple "may look to boost services revenue through third-party apps" is TechCrunch's interpretation, and the outlet itself says it is not entirely clear what the remark means. The AI-agent idea is investor speculation reported by Reuters. The 18% U.S. drop is an unnamed third-party estimate from August, not an Apple figure.
Risks and caveats
Parekh did not say which opportunities he meant, and the source does not name any apps or partners. Apple is still dealing with regulatory pressure, the Epic Games ruling that lets apps point users to outside payment systems, and a slump in mobile gaming that it expects to continue. The December-quarter outlook already includes headwinds from third-party licensing and foreign exchange. Whether any third-party revenue push can offset lower commissions is not addressed in the source.
“On the product side, you know, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities, and we also feel there’s opportunities across third-party apps and partnerships as well as first-party opportunities.”
— Kevan Parekh, Apple's chief financial officer, on the earnings call