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Epic witness claims Apple’s App Store profits reach 78 percent

Epic Games is using its lawsuit against Apple to accuse the iPhone maker of being particularly greedy. As The edge reports expert expert witness Eric Barns testified that Apple reportedly had an App Store operating margin of 77.8 percent in 2019, even an increase from 74.9 percent in 2018. He also rejected Apple witnesses’ claims that you could not practically calculate profit and pointed to info from the company’s Corporate Financial Planning and Analysis group as evidence.

Apple did not surprisingly disagree. The technical company told The edge the margin calculations are “simply” incorrect and that it planned to combat the allegations during the trial. The company̵

7;s own witness, Richard Schmalensee, claimed that Barnes was looking at an iOS ecosystem element that distorted the apparent operating margin. The real figure was “not remarkable,” he said, adding that you could not study profit in the App Store without looking at the broader context of devices and services.

The company does not calculate profits and losses based on products and services, Schmalensee said.

There is no guarantee that the court will accept Barnes’ admission. Apple’s total gross profit has typically been high relative to much of the industry, but never so high – it was 42.5 percent in the company’s most recent winter quarter. Apple has also tended to portray the App Store as a way to drive hardware sales rather than a money maker itself.

The testimony nevertheless does more to explain how Epic will pursue its case against Apple when the court battle begins on May 3rd. That Fortnite the creator not only wants to portray Apple as anti-competitive, but abuses its lock on iOS app distribution to reap massive profits.

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