Epic witness says Apple's App Store profit is 78 percent

The latest in the Epic Games lawsuit against Apple is to accuse the iPhone maker of being greedy. The Verge is reporting that expert witness Eric Barns testified that Apple apparently had an App Store operating margin of 77.8 percent in 2019, which is a hike from 74.9 percent back in 2018. He also rejected Apple witness’ claims that you couldn’t practically calculate profit, pointing to info from the company’s Corporate Financial Planning and Analysis group as evidence.

It is no surprise that Apple disagreed with this. Apple says that the margin calculations are just wrong and that it planned to fight these allegations at the trial. The company’ss own witness, Richard Schmalensee, said that Barnes was looking at one iOS ecosystem element that distorted the apparent operating margin. The real figure was “unremarkable,” and he added that you couldn’t study App Store profit without looking at the broader context of the devices and services.

He said that Apple doesn’t calculate profits and losses based on products and services.

Will the court accept Barnes’ take? They may. We will have to wait and see. Apple’s overall gross profit margin has typically been high relative to most of the industry, but never that high. It was reportedly 42.5 percent during the company’s latest winter quarter. Apple also has a history of portraying the App Store as a way to drive hardware sales rather than a money-maker on its own.

The testimony shows how Epic will pursue its case against Apple as the court battle starts on May 3rd. The Fortnite creator wants to show Apple as anti-competitive and abusing its lock on iOS app distribution for huge profits.

Source Engadget

Filed Under: Apple

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