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Home / Technology / Netflix, Spotify and others are taking action that can trigger an "Apple Tax" reform, says RBC (APPL, NFTX)

Netflix, Spotify and others are taking action that can trigger an "Apple Tax" reform, says RBC (APPL, NFTX)



  Tim Cook Apple App Store

  • A number of great apps like Netflix and Spotify are supposed to take action to stop paying Apple's App Store fees.
  • If the trend continues, Apple may consider issuing an "Apple Tax" reform, according to Amit Daryanani, an RBC analyst.
  • The App Store pays app developers 30% of their revenue from new registrations, and consumers have accused tech giant of monopolizing the iPhone apps market and making them pay more than they would otherwise.
  • See Apple act live.

Things can go from bad to worse for Apple.

On Wednesday, tech giant turned its first quarter sales outline and quoted an unexpected decline in iPhone sales. In a letter to investors, CEO Tim Cook at least partially informed the weakness of a decline in China's economy among trade liberties between the world's two largest economies .

But that's not all. Apple's service business can also be under pressure. Now, a number of great apps such as Netflix and Spotify have taken steps to stop paying Apple's App Store fees, which is likely to trigger an "Apple Tax" reform, RBC says.

TechCrunch reported Monday that Netflix, App Store's top grosserapp, has stopped new users from signing up and subscribing via its iOS app, thus avoiding the "Apple Tax." Currently, App Store pays 30% of revenue from new registrations and 1

5% for subscription renewal.

Netflix tested this on selected international markets in August 2018 and has now pulled the iOS registration capability across all global markets, TechCrunch said. Markets Insider was unable to sign up for a new account on the Netflix app that was downloaded from Apple stores in the United States.

"While the short-term direct effect would be negligible (we estimate $ 250 million annual revenue impact) given the move only affects new customers, there is a growing trend for large apps trying to avoid app huge fees on both Android and IOS, says RBC analyst Amit Daryanani.

According to RBC, Spotify allows users to sign up outside the App Store and Amazon doesn't allow users to buy media through their iOS app. Meanwhile, Epic Games, creator of Fortnite, launched , its own game store for PC and Mac, and plans to roll out its Android store later in 2019. Epic Games store takes a 12% cut from developers, which is less than 30% paid by Apple and Google.

If the trend continues, Apple may consider issuing an "Apple Tax" reform, according to Daryanani, but there are many factors at stake in adjusting App Store fees, he added. [19659010] App Store direction Lines prohibit apps from using alternative payment mechanisms, so Apple can carry apps that undermine this rule. But this punishment could only work for smaller apps, as larger players usually have greater negotiating power and seem to get away with bending the rules, Daryanani said.

Also in the long term, Apple is considered by the highest court. Justices considers a lower court decision in favor of consumer claims that the technology giant has monopolized the market for iPhone apps and has caused consumers to pay more than they would if they did not take 30% of the sales price for apps

"An ongoing trial at The Supreme Court will decide whether consumers can sue AAPL to charge high prices through the App Store, further increasing the risk of the App Store model, "Daryanani said.

] So, one possible "Apple Tax" reform might be that Apple lowers App Store fees, or establishes a mechanism where it negotiates lower fees with major developers while charging smaller apps higher fees, he concluded.

RBC has an overweight class and $ 220 prizes for Apple – 54% over where stocks traded on Thursday.

Shares refueled as much as 9.5% to $ 142.95 a piece on Thursday, and were down 16% in the past year.

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