Although Apple has won its ever-growing service segment as a growth future, an analyst has concerns. As reported by CNBC Bernstein analyst Toni Sacconaghi has addressed concerns that the growing rebellion against Apple's 70/30 App Great Revenue will damage its long-term growth.
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In a note to investors, sacconaghi writes that investors are concerned about developers who are in violation of this "apple tax" that can damage the growth of Apple's services segment:
"while The service segment grew 18 percent in the December quarter, we have now begun to ask investors questions about whether the App Store will be the next shoe to drop, "Sacconaghi wrote. "Certainly, the headlines in the last few months have not been encouraging. Netflix, Spotify and Fortnite have all stopped / threatened to stop paying the so-called" Apple Tax "of 15-30 percent on App Store revenue."  On the other hand, Sacconaghi recognizes that the 30 percent cut Apple through the App Store is what has pushed the App Store to account for 40 percent of all services growth.
This concern from investors comes after Netflix's decision last month to remove in-app billing functionality from its iOS app for new customers. Other developers, such as Epic Games has also expressed concerns about the revenue sharing model.
Ultimately, Sacconaghi recognizes these concerns, but believes that the iPhone is still the biggest thing that Apple investors are concerned about. Sacconaghi says he is not at all concerned about "disintermediation" in the App Store, although he does not address the possibility of other big name companies following in Netflix footsteps.
"We are not at all concerned about the potentially uneven use of the App Store," he wrote. Instead, the analyst is concerned about the iPhone and believes that estimates for the sale of smartphone may need to come down more.
What do you think? Is it time for Apple to rethink its 70-30 split on the App Store? Let us know in the comments.
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