Apple's services business is under pressure from regulatory headwinds and mobile gaming weakness, but the company may look to AI partnerships with third-party apps to boost revenue growth.
During its earnings call Monday, Apple CFO Kevan Parekh said the company sees "opportunities across third-party apps and partnerships as well as first-party opportunities" for AI to contribute to revenue growth over time. Parekh did not specify what those opportunities might entail.
Reuters reported that investors are speculating Apple could profit by distributing third-party AI agents through the App Store and taking a cut of revenue those agents generate.
The App Store has faced mounting challenges. Third-party estimates in August showed Apple experienced an 18% drop in U.S. commission revenue, with declines also in Brazil and Japan following new regulations in those countries. Epic Games' lawsuit forced Apple to allow apps to redirect users to outside payment systems, further reducing App Store commission revenue.
On the same earnings call, Parekh noted that App Store performance in the September quarter matched the prior year, with paid subscriptions on third-party apps growing double digits. However, he flagged continued headwinds in mobile gaming heading into the summer quarter.
Apple expects services growth of 8 to 9% in the December quarter, accounting for headwinds from third-party licensing and foreign exchange impacts, Parekh said.