During the quarterly earnings call, Apple CFO Kevan Parekh stated that the company is beginning to feel the impact of regulatory changes to the App Store business model in the US and abroad. Services revenue grew 12% to $30.7 billion, but the pace is below expectations due to two main factors: regulatory adjustments and weakness in mobile gaming.
Regulatory changes weigh on App Store revenue
According to Parekh, compliance with new regulations in various jurisdictions has led to revised commission structures and policies. In particular, the European Union's Digital Markets Act forced Apple to allow alternative payment methods and third-party app installations, reducing revenue from the standard 30% commission on in-app purchases. Parekh noted that the impact is still limited but growing, and Apple is closely monitoring regulatory developments in other regions such as Japan and the United Kingdom, where similar investigations are underway.
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Weakness in mobile gaming further hampers performance
Another factor negatively affecting Services growth was the slowdown in the mobile gaming market. Parekh observed that despite new game releases, user spending on games within the App Store declined compared to the same period last year. This trend is common across the industry, as shown by recent reports from companies like Google, which recorded a similar drop in the Play Store. Apple has tried to offset this with increased subscriptions to Apple Music, Apple TV+, and iCloud, but the gaming downturn still dampened the overall margin.
Future strategies to counter the decline
To address these challenges, Apple is focusing on expanding high-margin services such as App Store advertising and financial services via Apple Card. Additionally, the company announced new investments in artificial intelligence to improve app discovery and personalize user experience. However, analysts remain cautious: regulatory changes are expected to increase, and competition in the digital services sector is intensifying. A recent example of how technology is evolving is Google Chrome, which has accelerated patching to twice a week after AI uncovered over a thousand bugs, highlighting the importance of continuous updates for platforms. Meanwhile, streaming services like Disney+ and Hulu have revealed their August 2026 lineup, betting on exclusive content to attract subscribers. Apple will need to innovate to maintain its leadership in digital services while balancing regulatory compliance and profitability.
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For further details, consult the Wikipedia page on the App Store, which describes the platform and its regulatory evolution.
