Yes, you read the title correctly. This came up as Apple’s new CFO, Kevan Parekh, was quickly thrust into legal proceedings, facing a class-action lawsuit shortly after assuming his role. During the proceedings, Parekh testified that the company lacked precise knowledge of its App Store profit margins.
Estimated Profit Margin on the App Store
Independent estimates suggest Apple’s App Store had an impressive profit margin, ranging from 75% to 78%. In the 2019 Epic Games lawsuit, an expert witness placed the figure at 78%. And more recently, a British expert in the current case calculated the margin at “more than 75%.”
This kind of profitability would be exceptional, surpassing Apple’s overall margins, which hover around 37%. This significant margin lends credence to the argument that Apple leverages its dominant position in the iPhone ecosystem to charge excessive commissions for app sales.
Apple’s Stance: Lack of Specific App Store Metrics
Apple consistently maintains that it lacks precise knowledge of the App Store’s profit margin. The company attributes this lack of clarity to its accounting practices. Apple reports its Service revenue as a single category, making it impossible to isolate the App Store’s specific contribution.
This stance echoes Phil Schiller’s 2021 testimony, where he admitted uncertainty about the App Store’s profitability. Furthermore, Apple claims to not record meeting minutes between senior executives, hindering any internal documentation of App Store profitability discussions.
