- Apple and Google could see a material drop in their operating income if antitrust regulators mandate changes to the commission rates they charge app developers, according to a new report from Macquarie Research.
- The Department of Justice launched a new antitrust investigation on Monday into “market-leading” internet platforms, which would include Apple and Google when it comes to mobile operating systems.
- Macquarie projected how much Google and Apple would lose in operating income for every 5% drop in commission rates.
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Google, Apple, Amazon, and Facebook all traded lower after the investigation was announced even though the DOJ didn’t name specific platforms, but rather referred to “market-leading” companies.
Apple and Google, which operate the two dominate mobile operating systems, could see a significant hit to their mobile app businesses if the DOJ enforces any changes to commission rates, a report from Macquarie research concluded.
Both Google and Apple charge a 30% fee on any purchases of subscriptions or apps through the company’s platforms. According to the firm’s report, for every 5% drop in commission rates from the current 30%, Apple would lose 4.5% of its operating income and Google would take a 3.6% hit.
“If commission rates come down, the revenue comes straight out of AAPL and GOOG and into the developer’s hands,” A team of analysts led by Benjamin Schacter said in a note to clients on Wednesday.
The Google Play store currently accounts for $US8.7 billion of Google’s $US182 billion in revenue, and Apple’s app store generates $US17 billion of the iPhone maker’s $US270 billion in revenue, according to Macquarie’s report.
Social game developers like Zynga are particularly vulnerable to the the commissions rates charged by Google and Apple. Macquarie’s analyst found that for every 5% drop in commission charges, Zynga could see up to a 18.2% increase in EBITDA, the largest percentage benefit out of any company in the report.
Apple and Google have come under increased criticism recently over their dominate market positions in the mobile operating system space, which gives third-party developers limited options for reaching smartphone users.
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