Apple Signals Possible Revenue Boost From Third-Party AI Apps

Apple signaled during its Monday earnings call that it may seek to boost services revenue through third-party apps, including possible AI-related opportunities, though the company did not explain exactly what that would involve. The comments come as Apple's App Store faces regulatory pressure and mobile gaming headwinds, even while its services business remains at record levels.

Unclear plans for AI apps

When discussing how AI could potentially "contribute to revenue growth over time," Apple chief financial officer Kevan Parekh said the company sees AI as a compelling reason for customers to upgrade and switch to get the latest capabilities. He added that there are also "opportunities across third-party apps and partnerships as well as first-party opportunities." Parekh did not elaborate on what sorts of opportunities might be available via third-party apps. Reuters reported Monday that investors are wondering whether Apple could profit by distributing third-party AI agents through the App Store and taking a cut of the revenue they generate.

App Store pressures

Regulatory and legal changes have cut into App Store commission revenue in some markets, even as Apple's services business as a whole continues to grow. Third-party estimates in August suggested the company had seen an 18% drop in U.S. commission revenue, with declines also in Brazil and Japan after those countries introduced new regulations. Apple has traditionally controlled payments within its app marketplace tightly, taking a cut of all App Store transactions, but a lawsuit by Epic Games ultimately forced the company to allow apps to redirect users to outside payment systems. Other legal challenges throughout the world have further hampered the business. Parekh said that during the September quarter, App Store performance was similar to the prior year, with a record number of paid subscriptions and double-digit growth for third-party apps on the App Store, while mobile gaming headwinds seen before are expected to continue into the summer quarter.

Services outlook

Parekh said that as Apple moves ahead, it expects services growth to be between 8 to 9% in the December quarter. That outlook contemplates the company's best estimates on sequential headwinds, primarily from third-party licensing and an additional half percentage point of foreign exchange. TechCrunch has reached out to Apple for more information and will update its story if it responds.

Sources: TechCrunch