Apple’s services business remains near record levels but is under increasing pressure. The App Store, the centerpiece of that business, has faced regulatory scrutiny and a slowdown in mobile gaming that have weighed on services growth.
On the company’s recent quarterly earnings call, Apple suggested artificial intelligence could help expand services revenue through both first- and third-party channels. Chief Financial Officer Kevan Parekh said, “On the product side, you know, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities, and we also feel there’s opportunities across third-party apps and partnerships as well as first-party opportunities.” Parekh did not provide specifics about what types of third-party opportunities Apple might pursue.
A Reuters report noted investors are speculating whether Apple could monetize by distributing third-party AI agents via the App Store and taking a cut of the revenue those agents generate. This line of thinking comes amid wider pressure on App Store commission revenue in some markets: third-party estimates in August indicated about an 18% drop in U.S. commission revenue, with declines also reported in Brazil and Japan after those countries enacted new regulations.
Historically, Apple tightly controlled payment processing within its app marketplace and took a share of App Store transactions. The lawsuit brought by Epic Games ultimately forced Apple to allow apps to redirect users to outside payment systems, and other legal challenges worldwide have further complicated the business model.
On the earnings call Parekh also addressed App Store performance, saying the September quarter was similar to the prior year and that Apple saw a record number of paid subscriptions and double-digit growth for third-party apps on the App Store. He cautioned, however, that headwinds in mobile gaming persisted and were expected to continue into the summer quarter.
Apple forecasts services growth of between 8 and 9% for the December quarter. Parekh said this outlook incorporates Apple’s best estimates of sequential headwinds, primarily from third-party licensing pressures and an additional half-percentage-point foreign exchange impact.
TechCrunch has reached out to Apple for further comment and will update the story if the company responds.
Why this matters
Expanding services revenue is strategically important for Apple because services contribute a significant and growing portion of the company’s revenue and profits. Integrating AI features and enabling third-party AI apps could open new revenue paths, but regulatory and legal constraints remain major risks to the App Store’s traditional commission-driven model.
