Apple's service business remains at record levels, but it is facing increasing pressure. The core part of this business—Apple's App Store—has been under regulatory pressure, and at the same time, the sluggish mobile gaming market has also dragged down the growth of its service business.
However, during the earnings conference call on Monday, Apple hinted that it might boost service revenue through third-party apps. What exactly does this mean? Unfortunately, it's not entirely clear at this time.
When discussing how AI will "contribute to revenue growth over time" in the future, Apple's Chief Financial Officer Kevan Parekh stated: "At the product level, we believe AI provides a compelling reason for customers to upgrade their devices and switch to new products in order to access the latest features. We also see opportunities in terms of third-party applications and partnerships, as well as first-party opportunities."
Without further clarification, it's not known what opportunities may be available through third-party applications. However, Reuters reported on Monday that investors are speculating whether Apple might distribute third-party AI agents through App Store and profit from the revenue generated by these products.
Regulatory and legal changes have eroded the commission revenue of App Store in some markets, despite the overall growth of Apple's service business. For example, estimates from third parties in August showed that Apple's commission revenue declined by 18% after the introduction of relevant changes in the United States; similar declines were observed in Brazil and Japan after new regulatory regulations were implemented. Apple has always exercised strict control over the payment systems within its app store and takes a cut from all App Store transactions. However, a lawsuit filed by Epic Games ultimately forced Apple to allow apps to direct users to external payment systems. Additional legal challenges around the world have further weakened this business segment.
During the financial report conference call, Parekh mentioned the difficulties faced by Apple App Store, and once again discussed the company's idea of expanding its service business into new areas.
Parekh indicates: "We also observed that certain factors affected the performance of App Store. In the September quarter, the performance of App Store was similar to the same period last year, while App Store set a record for the number of paid subscriptions from third-party applications, achieving double-digit growth."
He also stated, "At the same time, we have indeed observed some headwinds in the mobile gaming sector, which we have discussed before, and we expect this situation to continue throughout the summer quarter."
Parekh added, "Looking ahead, we expect the service business to grow by between 8% and 9% in the December quarter. This outlook takes into account our best estimates of the headwinds from month-to-month comparisons, mainly due to third-party authorization, as well as the additional 0.5 percentage point impact of exchange rates that I just mentioned."
TechCrunch indicates that more information has been sought from Apple; if Apple responds, the report will be updated.











