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Apple Hints at Future Revenue Growth from Third-Party AI Apps
Key points
- Apple CFO mentioned third-party AI apps as a revenue opportunity.
- App Store faces regulatory pressure and mobile gaming decline.
- Details on how Apple will monetize third-party AI apps are unclear.
- Services growth is projected to be 8-9% moving forward.
Apple's Services Business Faces Headwinds
Apple's services business, particularly the App Store, is experiencing challenges. Regulatory pressures and a downturn in mobile gaming have affected its growth. Recent third-party estimates suggest an 18% drop in U.S. App Store commission revenue, with similar declines in Brazil and Japan due to new regulations. A lawsuit by Epic Games also led to changes allowing apps to redirect users to external payment systems.
Exploring New Revenue Avenues with AI
During a recent earnings call, Apple's CFO, Kevan Parekh, suggested that artificial intelligence could contribute to future revenue growth. Parekh stated that AI offers a compelling reason for customers to upgrade and switch to newer devices. He also highlighted potential opportunities within third-party apps and partnerships, alongside Apple's own first-party AI developments.
Unclear Strategy for Third-Party AI Monetization
The specific methods Apple plans to use for generating revenue from third-party AI apps were not detailed. Investors speculate that Apple might profit by distributing third-party AI agents through the App Store and taking a share of their revenue. This approach could help offset declines in traditional App Store commission revenue.
Continued Services Growth Expected
Despite the challenges, Apple reported a record number of paid subscriptions with double-digit growth for third-party apps in the App Store. The company anticipates its overall services growth to be between 8% and 9% in the upcoming period, indicating continued expansion in this segment despite specific App Store pressures.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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Reporting from
Apple's CFO, Kevan Parekh, indicated that the company sees opportunities for revenue growth from third-party AI apps and partnerships, in addition to first-party AI initiatives. This comes as Apple's App Store faces regulatory pressures and a slump in mobile gaming, impacting its services growth.