Apple's Services is in danger of losing out on App Store revenue, with regulatory interference perhaps becoming a bigger problem sooner rather than later.
A Form 10-Q filed with the U.S. Securities and Exchange Commission came under scrutiny due to a disclosure from Apple. In it, Apple discusses the issue of alternative app storefronts to the main App Store, and of developers monetizing their apps with external linking.
"If third-party developers use alternative methods of distribution and payment for their apps and digital content, including direct-to-consumer distribution models, the company may earn a lower commission on such sales," Apple states in the filing. At worst, it adds, it "may not earn a commission at all."
To the Financial Times in an August 18 report, this is viewed as a sign that Apple's regulatory battles around the world are impacting its $100 billion Services business.
To back this up, the report relies on Sensor Tower data about U.S. consumer spending. The report claims that spending through the App Store fell 6% year-over-year in the second quarter, versus 9% growth one year prior.
Other data from Appfigures says that Apple's U.S. commission revenue has gone down 18% so far in 2026. Sensor Tower said that U.S. consumer spending in the App Store had been "significantly impacted" by things like the Epic Games lawsuit rulings.
That said, the focus is chiefly on the U.S. in the report. Later, Sensor Tower data for global consumer spending in the App Store said rose just 3% year-over-year for the June quarter.
While this is down from 13% growth one year prior, it's still growth.
Still strong revenue
The App Store claims form only part of the overall Services revenue picture. The arm covers more elements, including advertising, AppleCare, Apple Music, video, iCloud, and payment services.
In the third-quarter earnings at the end of July, Apple reported Services as generating $30.74 billion in the quarter, representing a 12% increase in revenue year-over-year.
Apple Services revenue growth year-on-year, as of Q3 2026
While a considerable increase, and a reliable growth factor for the company for many quarters, it wasn't enough for Wall Street. Analysts expected $31.22 billion.
At the time, Apple citied limiting factors including foreign exchange headwinds as being challenging for the arm. Apple CFO Kevan Parekh also said that changes to the App Store had made an impact, though didn't say how much by.
Major regulatory pressures
The report goes on to say that legal battles and regulatory oversight is forcing Apple to relinquish control over its devices and how developers can use them. The all-important 30% App Store transaction fee is under threat, undermined by these pressures.
This includes the ongoing push by Epic Games in its long-running lawsuit to get concessions from Apple. It partially succeeded in forcing Apple to allow for app purchases outside the App Store, though the commission rate is still being fought over.
The EU also managed to get Apple to support third-party app storefronts on the continent, despite Apple dragging its heels all the way. This has also inevitably led to regulatory interest elsewhere, including Brazil, Japan, and the UK.
Apple certainly is going to have to adapt and deal with these threats to its App Store revenue as they roll in. It's well aware of the problem on its hands.
But at the same time, the report is trying too hard to point this out as a major weakness to the company. Sure, it's weak, but it's only one part. As always there are many other areas that Apple pulls revenue in from to counter it.
