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Apple Says Forcing It To Tweak App Store Policies Will 'Materially' Impact Its 'Financial Condition'

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Apple Says Forcing It To Tweak App Store Policies Will 'Materially' Impact Its 'Financial Condition'

Apple Inc (NASDAQ: AAPL) has drawn criticism for its App Store policies being anti-competitive and the high commissions charged from app developers, leading to antitrust probes

The tech giant has warned that a forced amendment to its App Store policies or reduced revenue cut from third-party in-app purchases in the ecosystem would impact operating results.

What Happened: When Fortnite-maker Epic Games found a way to ditch Apple's in-app payment system for its own to avoid paying a cut in the game's subscription services, Apple banned Fortnite from its platform. Epic Games sued Apple for being anti-competitive, a trial for which is due in May 2021.

Separately, a house antitrust investigation concluded that major tech companies, including Apple, are stifling smaller rivals with their dominance.

Apple has acknowledged the risks of a forced change in-app store policy or commission in the latest 10K filed Friday.

"If developers reduce their use of the Company's platforms, including in-app purchases, then the volume of sales, and the commission that the Company earns on those sales, would decrease," the company said in the filing.

"If the rate of the commission that the Company retains on such sales is reduced, or if it is otherwise narrowed in scope or eliminated, the Company's financial condition and operating results could be materially adversely affected."

Benzinga's Take: A lot depends on the outcome of the Apple-Epic Games trial next year and the antitrust investigation. Apple losing the lawsuit would force the company to allow app developers to bypass its payment system, losing its control and bearing a significant revenue loss.

On the other hand, new regulations due to the antitrust investigation could compel Apple to relax the app store norms and lose revenue.

Apple has denied the antitrust allegations, claiming that its commissions were firmly in the "mainstream of those charged by other app stores and gaming marketplaces."

 

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