Banking

Across four continents, Apple’s control of payments is under attack

Apple has long wielded its global market power as a blunt instrument, enabling it to dictate the terms of contracts with banks, app developers and anyone else that wants entry into its ecosystem. It may finally be meeting its match.

A federal judge recently ruled Apple must allow developers to use third-party payment options for App Store purchases. Apple and Epic Games were engaged in

The App Store is a lucrative business for Apple, with App Store revenue totalling about $64 billion in 2020 with a profit margin above 75%. Apple receives a fee of up to 30% for any digital services sold through its App Store or within apps, but not physical goods ordered from apps.

Developers bristled at the terms, but few fought back. One exception is Epic, maker of the popular game Fortnite, which defied Apple by putting third-party payment options in its game. Apple removed the game immediately, prompting a long court battle that ended with Epic owing Apple $6 million for payments over the past year, according to 9to5Mac.

“App Store revenue is not a small number, and it will take a lot to fill the hole if a chunk of that goes away,” said Thad Peterson, strategic advisor for retail banking and payments for Aite-Novarica Group.

The Epic Games dispute is just one of several fights Apple has faced while attempting to expand its mobile wallet, payment app and App Store in multiple markets.

Apple, which has battled with Amazon to be the world’s most valuable company, often runs afoul of regulators, politicians and rivals that contend the company’s frequent use of walled garden policies for its technology and huge market share unfairly hinders competition. Here are some examples of these battles, and a look at how Apple is able to attract banks and merchants to its payment products despite the controversy.



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