In the just adjourned antitrust proceedings with Epic Games, Apple argued It does not rate its profits and losses on the App Store as a standalone company. But today the company released new numbers that suggest it has at least a good understanding of the money flowing through its app marketplace. The company has now released an updated version of a study conducted by Analysis Group economists that claims the App Store ecosystem generated $ 643 billion in billing and sales in 2020, 24% more than in Previously $ 519 billion. The new report focuses, among other things, on the impact of the pandemic on apps and the small business developers who the App Store serves.
It also found that roughly 90% of the billing and sales made possible by the App Store actually took place outside of its walls, meaning Apple didn’t receive any commission on those purchases. That’s an 85% increase reported last year, and is a number Apple used in antitrust litigation to paint a picture of an app store that does a lot of trading that doesn’t cost a commission.
The study then broken down how the different categories of billing and sales were distributed in the App Store.
Apple receives commission on sales of digital goods and services, which in 2020 were $ 86 billion, or 13% of total sales. But another $ 511 billion came from selling physical goods and services through apps – think online shopping, food delivery, driving services, etc. – or 80% of the total. These are not commissioned. And $ 46 billion came from in-app advertising, or 7% of the total.
The key point about some of these numbers is that while the amount of dollars that goes through commissioned apps is large, it is much smaller than most of the business done on the App Store.
The report also noted how much of that business came from China, which accounted for 47% of total global billing and sales ($ 300 billion), versus 27% in the US ($ 175 billion).
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The study also looked at how some app store categories were badly affected by the pandemic – particularly apps that helped businesses and schools move online, apps that provided options for shopping on their phone, or helped consumers be entertained and healthy stay, among other things.
This led to an increase in billing and revenue from apps that offer digital goods and services by over 40%, while revenue from travel and ridesharing decreased by 30%. While the latter could gradually return to pre-pandemic levels, some of the pandemic-induced acceleration could persist in other categories – like online shopping and grocery deliveries.
To break it down further, general retailing grew to $ 383 billion in 2020, up from $ 268 billion the previous year. Grocery delivery and collection increased from $ 31 billion in 2019 to $ 36 billion in 2021. Grocery shopping rose from $ 14 billion to $ 22 billion. But travel fell from $ 57 billion in 2019 to $ 38 billion in 2020, and car service dropped from $ 40 billion to $ 26 billion. (None of these categories are commissioned.)
The study then continued with a deep dive into how the App Store is helping small businesses.
Highlighting how smaller businesses are benefiting from a tech giant’s ecosystem is a tactic others have also used to buttress support for their own businesses, also accused of being monopolies in recent months.
Amazon, for example, raves about the small businesses profiting from its marketplace and Prime Day sales event, despite accusations of using non-public data to compete with the same small business sellers. Facebook meanwhile drove the impact angle for small businesses when Apple’s new data protection in iOS 14 enabled customers to opt out of tracking – and thus out of the realm of personalized ads from Facebook.
In the case of Apple, this suggests that the number of small developers worldwide has increased by 40% since 2015. This group now makes up more than 90% of App Store developers. The study defines this group of “small” developers as those with less than 1 million downloads and less than $ 1 million in revenue for all of their apps. It also excludes any developers who never saw more than 1,000 downloads in a year between 2015 and 2020 to make sure the data is focused on businesses, not hobbyists. (This is a slightly different definition from what Apple uses for its small business program, we should note.)
In this group, more than one in five had an increase in downloads of at least 25% per year since the first full year on the App Store. And one in four people who sold digital goods and services saw profits grow at least 25% annually.
The study also linked a company’s presence in the App Store to increasing its revenue, finding that only 23% of large developers (those with more than $ 1 million in profit in 2020) were more than 1% as early as 2015 Million dollars. 42% were active on the App Store in 2015 but hadn’t passed the $ 1 million mark, and another 35% weren’t even on the App Store – an indication that their success is much younger.
The study also identified over 75 companies in the US and Europe where iOS was essential to their business that went public or was acquired since 2011. Their value was nearly $ 500 billion.
Finally, the study looked at how apps are handled outside of their home market, as around 40% of all downloads of apps by small developers came from outside their home country and almost 80% were in multiple stores.
Credit: Apple WWDC 2021 images
While antitrust scrutiny last year may have led Apple to commission this type of App Store research, it’s interesting to see that the company now updates the data annually to give the industry a deeper look at the App Store compared to the general developer income to be given, which it used to compete at various events and occasions.
Like last year’s study, the updated study was published in the days leading up to Apple’s worldwide developer conference. It’s a time of year when Apple is looking to renew its connection with the developer community by introducing new software development kits (SDKs), application programming interfaces (APIs), software, and other tools – enhancements designed to enable developers, in part because of the App Store fees.
Today Apple finds that more than 250,000 APIs are contained in 40 SDKs. At the WWDC 2021, it will host hundreds of virtual ones Meetings, 1 versus 1 Development laboratories, and Mark App Store favorites.
“Developers in the App Store prove every day that there is no more innovative, more resilient or more dynamic marketplace in the world than the app economy,” said Apple CEO Tim Cook in a statement on the study. “The apps we relied on during the pandemic changed our lives in many ways – from groceries delivered to our homes, to educational aids for parents and educators, to an imaginative and ever-expanding universe of games and entertainment. The result is not just incredible apps for users: it’s jobs, opportunities and immeasurable innovation that will drive global economies for years to come, ”he added.