App Store Commerce Reaches $643 Billion

Apple’s App Store Commerce Reaches $643 Billion in 2020

During its recently concluded antitrust trial with Epic Games, Apple maintained that it does not assess its App Store’s profitability as a separate entity. However, the company has now released updated data suggesting a comprehensive understanding of financial activity within its app marketplace.

A revised study conducted by economists at the Analysis Group indicates the App Store ecosystem facilitated $643 billion in billings and sales during 2020. This represents a 24% increase compared to the $519 billion recorded in the previous year.

Focus of the Updated Report

The new report specifically examines the impact of the pandemic on apps and the small business developers who utilize the App Store platform, among other key areas.

Approximately 90% of the billings and sales processed through the App Store occurred outside of Apple’s commission structure. This figure has risen from 85% reported last year, and is a key point Apple emphasizes in ongoing antitrust proceedings.

Breakdown of App Store Billings and Sales

The study details the distribution of different categories of App Store billings and sales.

Digital goods and services accounted for $86 billion, representing 13% of the total.
Physical goods and services sold through apps – including online shopping, food delivery, and ride-hailing – generated $511 billion, or 80% of the total.
In-app advertising contributed $46 billion, constituting 7% of the total.

A significant takeaway is that while commissioned app transactions are substantial, they constitute a smaller portion of the overall business conducted on the App Store.

Geographical Distribution of Sales

China accounted for 47% of total global billings and sales, totaling $300 billion. The United States represented 27% of the total, with $175+ billion in sales.

apple’s app store facilitated $643 billion in commerce, up 24% from last year

Pandemic’s Impact on App Categories

The study also analyzed how the pandemic influenced various App Store categories. Apps supporting businesses and online learning, as well as those offering shopping, entertainment, and health solutions, experienced significant growth.

Billings and sales from apps offering digital goods and services increased by over 40%, while the travel and ride-hailing sectors saw a 30% decrease. Some pandemic-driven trends, such as online shopping and grocery delivery, are expected to persist.

Specifically, general retail grew to $383 billion in 2020, up from $268 billion the prior year. Food delivery and pickup increased from $31 billion in 2019 to $36 billion in 2021, and grocery shopping rose from $14 billion to $22 billion. Conversely, travel fell from $57 billion to $38 billion, and ride-hailing dropped from $40 billion to $26 billion.

Support for Small Businesses

The report further examined the App Store’s role in supporting small businesses.

Highlighting the benefits smaller businesses derive from a large tech ecosystem is a strategy employed by other companies facing similar scrutiny regarding potential monopolistic practices.

Amazon emphasizes the small businesses thriving on its marketplace, while Facebook highlighted the impact of Apple’s privacy changes on small businesses reliant on personalized advertising.

Apple notes a 40% growth in the number of small developers since 2015, now comprising over 90% of all App Store developers. These “small” developers are defined as those with fewer than 1 million downloads and less than $1 million in earnings.

More than 20% of these developers experienced at least a 25% annual increase in downloads, and 25% of those selling digital goods and services saw a similar increase in earnings.

The study also found that only 23% of large developers had already surpassed $1 million in earnings in 2015, while 42% were active on the App Store but hadn’t reached that threshold, and 35% weren’t even on the platform at that time.

Over 75 businesses in the U.S. and Europe that relied on iOS have gone public or been acquired since 2011, with a combined valuation of nearly $500 billion.

Annual Updates and Developer Relations

Apple’s decision to update this App Store research annually provides the industry with a more detailed view of the platform’s performance, beyond the general revenue figures previously shared.

The release of this updated research coincides with the lead-up to Apple’s Worldwide Developer Conference (WWDC). This is a key event for Apple to strengthen its relationship with the developer community by introducing new software development kits (SDKs), application programming interfaces (APIs), and other tools.

Apple currently offers over 250,000 APIs across 40 SDKs. WWDC 2021 will feature hundreds of virtual sessions, one-on-one developer labs, and showcases of popular App Store applications.

“Developers on the App Store prove every day that there is no more innovative, resilient or dynamic marketplace on earth than the app economy,” stated Apple CEO Tim Cook. “The apps we’ve relied on through the pandemic have been life-changing – from groceries delivered to our homes, to teaching tools for parents and educators, to an imaginative and ever-expanding universe of games and entertainment. The result isn’t just incredible apps for users: it’s jobs, it’s opportunity, and it’s untold innovation that will power global economies for many years to come.”