Apple Signals a New Direction for Services Revenue
Apple's services business is still posting record numbers, but it is under mounting pressure. The App Store, the core of that segment, faces both regulatory scrutiny and a slowdown in mobile gaming—headwinds that have already dented services growth in 2026.
On Monday's earnings call, Apple hinted that it may look to third-party apps to help offset those challenges. What that means in practice, however, remains unclear.
AI as a Revenue Driver—But How?
When asked how AI could "contribute to revenue growth over time," Apple CFO Kevan Parekh offered a broad answer:
"On the product side, we feel AI offers a compelling reason for customers to upgrade and switch in order to get the latest capabilities, and we also feel there's opportunities across third-party apps and partnerships as well as first-party opportunities."
Parekh did not specify what those third-party opportunities might look like. Reuters reported Monday that investors are speculating whether Apple could profit by distributing third-party AI agents through the App Store and taking a cut of the revenue those agents generate.
Regulatory Pressure Is Eroding App Store Commissions
Regulatory and legal changes have already cut into App Store commission revenue in several markets, even as Apple's broader services business continues to grow. Third-party estimates from August suggested Apple saw an 18% decline in U.S. commission revenue, with similar drops in Brazil and Japan following new regulations in those countries.
Apple has historically exercised tight control over payments within its marketplace, taking a cut of every App Store transaction. But the long-running Epic Games lawsuit ultimately forced the company to allow apps to redirect users to external payment systems. Additional legal challenges worldwide have further weakened the business model.
App Store Performance and the Road Ahead
Parekh acknowledged the App Store's difficulties while pointing to areas of strength:
"We've also seen some factors that impacted the performance of the App Store, and during the September quarter, the performance on the App Store was similar to the prior year, and we had a record number of paid subscriptions with double-digit growth for third-party apps on the App Store. At the same time, we did see some headwinds in mobile gaming that we've talked about before, and expect to see those continue into the summer quarter."
Looking forward, Parekh projected services growth of 8% to 9% for the December quarter, noting that the outlook accounts for expected sequential headwinds—primarily from third-party licensing and an additional half-percentage-point impact from foreign exchange.
TechCrunch has reached out to Apple for further details and will update this story if the company responds.
via TechCrunch AI