By Senad Karaahmetovic
Apple (NASDAQ:AAPL) is set to allow other app stores on its iPhones and iPads, according to yesterday’s report in Bloomberg News. The change in stance is partially fueled by stricter EU laws that are coming in 2024.
The plans involve letting users download third-party software to iPhones and iPads without having to use Apple’s App Store, which charges up to 30% commission on all payments.
Apple is reportedly aiming to introduce new changes as a part of next year's iOS 17 update.
Despite the tech giant preparing to open up its “walled garden”, Apple analysts see minimal impact from such a move. Deutsche Bank analysts say all indications “point to potential lower App Store fees.”
“Similar to Apple's ATT/IDFA implementation, the company could use leverage its control over iOS system prompts to encourage users to opt for its own App Store, thus limiting the potential for users to adopt the "sideload" approach (which is the key to lowering app developers' overall app store fee), and as a result, the incremental margin expansion opportunity,” they said in a client note.
The analysts see three companies best-positioned to take advantage of the App Store policy change: Match (NASDAQ:MTCH), Bumble (NASDAQ:BMBL), and Roblox (NYSE:RBLX).
Morgan Stanley analysts said the news about Apple allowing 3rd part app stores on iOS is “more bark than bite.” They estimate a 1% revenue and 2.5% EPS hit, at worst.
“We see limited risk to App Store revenue from greater App Store competition on iOS, and believe that Apple potentially appeasing EU regulators could actually remove a long-standing overhang on Apple's stock,” the analysts wrote in a client note.
Similarly, Evercore ISI analysts also see a minimal impact from the potential policy change. They believe the Cupertino-based giant was always likely to comply with new requirements.
“The impact from side loading will likely be minimal and we expect the App Store to remain the main avenue for app discovery as it’s unlikely consumers will be interested in this more complex method of downloading an app,” they wrote in a note.