Global Regulatory Changes Slow Apple’s Services Growth

The growth of Apple’s Services has been impacted by several countries’ regulatory changes affecting the company’s App Store, 9TO5Mac reported Thursday (July 30).

Apple’s third quarter financial results, released Thursday, showed that its Services revenue had its first sequential decline since 2022 and that its Services growth rate was the weakest third-quarter growth rate since 2023, according to the report.

During a Thursday earnings call, Apple Chief Financial Officer Kevan Parekh attributed the slowdown in part to factors impacting the App Store, per the report.

Apple has had to change its business model in Japan, Brazil and the European Union over the past year to comply with new rules covering alternative app distribution, payment methods and out-of-app purchase offers, according to the report.

In addition, in the United States, a ruling in an ongoing legal battle between Apple and Epic Games has temporarily barred Apple from charging a commission on purchases made through external links in the U.S., per the report.

Parekh also attributed the slowdown in Apple’s Services business to headwinds in mobile gaming as well as a difficult comparison to the year-ago quarter, when the company’s successful F1 The Movie was in theatrical release, according to the report.

PYMNTS reported Thursday that while Apple’s Services business reached another record at $30.7 billion, despite foreign-exchange headwinds, analysts pressed management during the earnings call about Services growth.

Parekh noted during the call that Services revenue increased 12% to $30.7 billion.

PYMNTS reported in June that British regulators said they want both Apple and Google to let developers steer users to payment methods beyond the companies’ app stores.

The Competition and Markets Authority (CMA) issued a proposal that would lift the restrictions imposed by the companies that prevent app developers from directing users to alternative methods of payment.

It was also reported in June that the U.S. Supreme Court agreed to hear Apple’s appeal of a lower court ruling that found the company in contempt in its legal battle with Epic Games.

The lower court ruled that Apple was in contempt because it violated a judicial order requiring it to make extensive changes to its app store after Epic Games brought an antitrust action against the company.