iPhone sales are falling, and Apple's app fees might be next

iPhone sales are falling, and Apple’s app fees might be next

By Michael Liedtke | Associated Press

As its iPhone sales slip, Apple has been touting its growing digital-services business as the engine that will keep profits up. But there may be a catch. Apple currently pockets a generous commission on all subscriptions and other purchases made on iPhone apps. But a brewing backlash against the company’s cut, which ranges from 15 to 30 percent, could undercut the app store’s profitability just as Apple is counting on it most. (AP Photo/Patrick Semansky, File)

As iPhone sales slip, Apple has been positioning its booming digital-services business as its new profit engine. But there could be a snag in that plan.

A brewing backlash against the rich commissions Apple earns from all purchases and subscriptions made via iPhone apps could undercut the app store, which generates about a third of the company’s services revenue.

Late last year, Netflix rebelled against Apple’s fees, which can range from 15 percent to 30 percent. Analysts fear other companies may follow.

Attorneys representing consumers in a pending Supreme Court case also charge that Apple is an unfair monopolist in the market for iPhone apps. An adverse decision could open a legal door that might eventually force Apple to cut its generous commissions.

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