Apple EU-mandated App Store changes likely to have minimal financial impact: Evercore

The changed that Apple (NASDAQ:AAPL) made to its App Store policy to comply with orders from the European Union are likely to have a minimal financial impact, investment firm Evercore ISI said.

“EU countries account for [roughly] 8% of total App Store revenue, and we estimate they generated [roughly] $5.7B in total App Store sales in 2023,” Evercore analyst Amit Daryanani wrote in a note to clients. “Assuming a 20% take rate, this would imply Apple earned about $1.2B in revenue from the EU App Store. Even if we assume every developer chooses to side load and use third party payments and that $1.2B in revenue goes to $0, we still estimate that would only have a $0.06 impact to EPS (~1% impact). Assuming the fee goes down to 10%, this would imply an impact of ~$570M and [less than] 1% of EPS.”

Daryanani has an Outperform rating and $250 price target on Apple.

Apple announced changes on Thursday to its App Store for users in the EU to comply with the continent’s Digital Markets Act and avoid escalating financial penalties. Developers with apps in the EU can promote offers for purchase of digital goods or services available at a destination of their choice.

The new rules give developers two payment tiers, including a basic one with a 5% fee and a second tier with increased functionality that has a 13% fee.

Apple also introduced a “Core Technology Commission,” a 5% fee charged on external transactions, which replaces the prior $0.50 fee per download.