Apple’s recent antitrust trial revealed that the company raked in more profits from gaming than Xbox’s Microsoft Corporation, Nintendo Co., Activision Blizzard Inc., and PlayStation maker Sony Corp. combined in 2019.
This has been made possible thanks to the 30% cut of the sales made through games on the App Store. The implication of this is that the Cupertino-based company has turned out to be a major player in the gaming world, despite not having a single gaming title of its own.
Analysis from the Wall Street Journal put Apple’s operating profits from gaming alone at $8.5 billion during that fiscal year, which is greater than the other four companies’ combined gaming operating incomes in the same period.
However, Apple had rubbished the report during the trial saying that the figures were not right and were higher than reality. The company explained this by saying that the operating margins discussed in the trial were produced without taking into account the numerous joint costs associated with the App Store. In effect, the analysis included all of the game-related revenue but only a tiny fraction of the possible cost.
An earlier report via Sensor Tower, an analytics firm, set Apple’s total revenue from the App Store at $15.9 billion, effectively making its $8.5 billion figure a massive 69% of the total. Using Apple’s operating margin calculation described in court records, the company’s App Store approximately generated an operating profit of $12.3 billion that year.
During trial, the judge ruled that Apple wasn’t a monopoly partly due to the fact that the mobile gaming market is growing far too quickly. Further, the likes of Microsoft and Nvidia are pushing gaming subscription services that can be accessed through websites, thus bypassing the App Store.
It was thus concluded that Apple does enjoy a “considerable market share of over 55% and extraordinarily high profit margins,” but that Epic Games failed to prove Apple as an “illegal monopolist” in the gaming market. Epic has filed to appeal against the ruling.
RELATED:
