Just 38 developers sign for alt App Store payments – Analyst

Morgan Stanley Research Analyst, Erik Woodring says just 38 developers have so far requested approval to link to payment processing systems outside the App Store, which perhaps proves that for all the fuss, only a small number wanted these changes in plaxe.

A small concern

He notes the information has emerged during ongoing hearings in which Apple is accused of not being faithful to court orders around steering. “We have learned from these hearings that only 38 developers – on a base of millions of developers – have applied to include a link to an outside payment processor,” writes Woodring.

The analyst speculates that the lack of interest reflects two things:

• Developer pricing concerns.
• That consumers and developers still “overwhelmingly prefer the centralization, security, and simplicity that the App Store provides”.

The analyst has previously speculated that the App Store’s most significant challenges will be other large tech firms getting into the store business, and shared his expectation that most Apple users will prefer to stay with Apple’s App Store model, as they value the privacy and security it provides.

The numbers may also reflect one more thing: Apple has frequently said that the vast majority of developers – around 99% — do not pay the so-called 30% ‘Apple Tax’ its competitors and critics like to complain about. This suggests that the number of developers who do so is far lower than thought, and adoption could reflect that. It is also true to say that some developers are still not happy with the changes Apple has applied, particularly as it still intends collecting a Core Technology Fee to compensate for its own development efforts.

The Google connection

Woodring estimates Apple’s search deal with Google brings in around $23 billion each year. “The current deal was signed in 2016 and runs through at least September 2026 (with Apple having the right to “unilaterally” extend it for another two years after that, but not to unilaterally withdraw),” he said. Google is paying Apole around 40% of its net ads revenue, he believes.

On Apple’s Gen AI

Another interesting point, the analyst continues to believe (as do I) that Apple will adopt a hybrid approach to GenAI, which means it will want at least some features running natively on the device, boosted by cloud-based features potentially from partners like Google or OpenAI.

He also thinks Apple is working to bring the M2 Ultra chip, currently used in the Mac Studio, inside its own cloud data centers to better optimized for training and running AI workloads following the launch of iOS18 later this year.

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