Apple CEO Tim Cook speaks at Apple’s Worldwide Developer Conference (WWDC) at the San Jose Convention Center in San Jose, California on Monday, June 4, 2018.
Josh Edelson | AFP | Getty Images
Apple’s App Store grossed more than $64 billion in 2020, according to an analysis by CNBC.
That’s up from an estimated $50 billion in 2019 and $48.5 billion in 2018, according to the same analysis, suggesting that App Store sales growth accelerated strongly during the Covid-19 pandemic, as people sheltered at home and spent more time and money on apps and games.
App Store revenue grew 28% in 2020, up from 3.1% growth in 2019, according to CNBC’s analysis.
Apple’s App Store is a core growth area for the company. It’s reported as part of Apple’s Services division, which reported $53.7 billion in sales in Apple’s fiscal 2020, which ended in September.
The money that Apple makes from its App Store has become a flash point for critics of Apple which argue it has too much power. Apple charges 30% for digital sales through its platform, with a few exceptions. Apple recently altered its fee structure, and now it only takes a 15% cut from companies that generate less than $1 million in the App Store.
A congressional subcommittee found in 2020 that Apple has monopoly power over iPhone app distribution, which it said gives Apple outsized profits. Apple is being sued on antitrust grounds by Epic Games, which wants to avoid paying Apple 30% of sales from its games for iPhones, which it calls unfair. Apple has denied that the App Store is a monopoly, and is currently fighting Epic Games’ allegations in court.
Apple doesn’t disclose how much revenue its App Store makes per year. Instead, since 2013, it has released data points in January that include the total that Apple has paid to developers since the beginning of the App Store in 2008.
Using those numbers, it’s possible to back out roughly how much revenue the App Store generated based on how much Apple paid to developers in any given year. According to a press release on Wednesday, Apple has paid developers $200 billion since 2008, up $45 billion from the figure that was announced in January 2020. If that’s equal to 70% of App Store sales, then the App Store grossed around $64 billion last year.
There are some exceptions to Apple’s 30% cut of digital sales, and Apple’s figures are rough, which means that Apple’s App Store total sales is likely even higher. Sensor Tower, an app analytics firm, estimates that the App Store did $72.3 billion in sales 2020.
In 2016, Apple said that apps on the second year of a subscription only have to pay 15%, and Apple executive Eddy Cue emailed Amazon CEO Jeff Bezos in 2016 suggesting Apple would take a 15% fee on subscriptions that signed up through the Amazon Prime app to get a deal done, according to an email released by the House Antitrust Subcommittee last year.
But as an assumption, 30% for Apple’s take is closer than 15%. Analysis by RevenueCat, a company making software to help Apple developers to bill subscriptions, found that only 16% of apps that it works with manage a “take home” rate above 75%. The apps that make the most money on the App Store are usually games, which aren’t subscription-based, but monetize through in-app purchases, which are billed by Apple at 30%.
Starting this year, Apple is charging smaller developers who make less than $1 million per year on Apple’s platforms 15%, instead of 30%. But apps are a winner-take-most business, according to analysts. The top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store, according to a 2019 estimate from Sensor Tower, an app analytics firm.