What you need to know
- Morgan Stanley is highlighting the risk to Apple's services revenue in its new investor note.
- Analyst Kay Huberty says potential regulation could impact performance.
- The note also highlights Google's payments to Apple to be the default search engine as a long-term risk.
In a note to investors, Morgan Stanley analyst Katy Huberty says that preliminary data from Sensor Tower shows that App Store net revenue grew 30% year-over-year in October.
Huberty notes that while overall app downloads are slowing down, spending on apps and in-app purchases continues to grow.
However, the analyst also points out in a separate research note that the risks to Apple's services revenue continues to grow as well. Apple even warned investors, in a filing with the United States Securities and Exchange Commission, of a material impact to its bottom line if its commissions were lowered or eliminated.
Concerning any threat to Apple's revenue from Google's payment to make its search engine default on the iPhone, Morgan Stanley believes that, since investigations like the one Google is going through right now usually take years, there is no short-term or mid-term risk there.
On a separate front, a report from late October speculates that Apple may even be working to eventually build out its own search engine and cut ties from Google Search.
Apple continues to focus on expanding its services outside of the App Store. In addition to already offering Apple Music, Apple Arcade, Apple News+, Apple TV+, and iCloud, the company is also launching Fitness+ by the end of the year. It also just launched Apple One, its subscription bundling service.
Master your iPhone in minutes
iMore offers spot-on advice and guidance from our team of experts, with decades of Apple device experience to lean on. Learn more with iMore!
Joe Wituschek is a Contributor at iMore. With over ten years in the technology industry, one of them being at Apple, Joe now covers the company for the website. In addition to covering breaking news, Joe also writes editorials and reviews for a range of products. He fell in love with Apple products when he got an iPod nano for Christmas almost twenty years ago. Despite being considered a "heavy" user, he has always preferred the consumer-focused products like the MacBook Air, iPad mini, and iPhone 13 mini. He will fight to the death to keep a mini iPhone in the lineup. In his free time, Joe enjoys video games, movies, photography, running, and basically everything outdoors.