Apple escaped a big lawsuit after a U.S. judge reversed an earlier ruling. The previous decision had allowed millions of iPhone users to sue the company together over its App Store practices.
Meanwhile, the tech firm has reached a new milestone, with its services division expected to generate more than $100 billion in annual revenue for the first time.
Analysts estimate the company will report around $108.6 billion in services revenue for the fiscal year ending last month, a 13% increase from the previous year. This segment, which includes iCloud, Apple Pay, and AppleCare, now accounts for roughly 25% of Apple’s total revenue and contributes up to 50% of its profits, benefiting from high margins and recurring income streams.
Judge ends lawsuit over Apple Store’s harsh monopoly
In 2024, Judge Yvonne Gonzalez Rogers of the Northern District of California allowed millions of Apple customers to sue the company as one large group. The lawsuit began in 2011 when users claimed they could not purchase apps from any other source because all apps and in-app purchases were required to go through the App Store.
Developers were also upset because the iPhone maker takes a 30% cut from every sale on the App Store, so they had no choice but to raise their prices to offset the loss. In the end, it was the customers who suffered the most, as they had to pay more just because Apple refused to allow other app stores or direct sales from developers.
Judge Rogers overruled her previous decision because she stated that the people suing Apple did not have sufficient evidence that everyone involved was harmed in the same way. Experts attempted to estimate the additional costs incurred by people due to Apple’s strict rules, but the company claimed its data contained too many errors.
The judge went through the evidence and agreed with the company that the data contained too many errors. She noted that the report listed “Robert Pepper” and “Rob Pepper” as two separate individuals, despite having the same address and credit card.
Judge Rogers also realized that the expert had grouped over 40,000 users with the same first name, “Kim,” even though these individuals had no apparent connection to one another. She said these mistakes made the filing very unreliable, and she decided to cancel the group case.
Apple’s legal team used these mistakes to build its argument against the plaintiffs, arguing that the model lacked clear evidence of real harm. As a result, anyone who still wants to sue the company must do so individually. However, they are less likely to succeed due to the high legal fees and lengthy court process involved in suing such a large company.
Lawyers for the plaintiffs said they were disappointed with the ruling but will continue to defend consumers who believe Apple’s control over the App Store has really harmed them.
Apple grows its services business as legal pressure continues
The services division at Apple has doubled in size and generated over $100 billion in revenue in one year, despite facing this legal pressure. The company recognized that the most effective way to grow is to ensure that people continue to spend on iCloud, Apple Pay, AppleCare, Apple Music, and App Store services.
Apple generates revenue every time someone pays extra for iCloud storage, subscribes to Apple Music, purchases insurance through AppleCare, or makes an in-app purchase through the App Store. And since the company has more than a billion iPhone users worldwide, small payments add up to make very substantial profits.
However, developers and regulators say the tech firm is creating unfair rules that make it difficult for other companies to compete. They claim these rules raise prices for consumers, so governments in the U.S., the European Union, and other countries are investigating.
However, despite all this pressure, Apple still defends itself, stating that it spends a significant amount of money annually to ensure its apps are safe, verified, and free from harmful content. “We invest significantly to make the App Store a safe and trusted place for users to discover apps and a great business opportunity for developers,” Apple said in its statement.
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