Apple CFO Denies Claims Of 75% Profit Margins On App Store: 'I Wouldn't Say They're Accurate'

On Thursday, Apple Inc. AAPL CFO Kevan Parekh refuted claims that the tech giant enjoys a 75% profit margin on its App Store.

What Happened: Parekh, who succeeded Luca Maestri as CFO, was the first high-ranking executive from a major tech company to testify in the U.K. class action antitrust trial.

Michael Armitage, the attorney for the claimants, referred to evidence from a separate U.S. litigation that suggested App Store operating margins of over 75%, reported the Financial Times.

However, Parekh disputed these figures, stating, “I wouldn’t say they’re accurate.”

He further contended that it was not feasible to accurately calculate the standalone profitability of the App Store due to the inability to allocate all indirect costs to specific products or services.

He said that any attempt to do so would involve imprecise and subjective judgments.

See Also: Apple Stock Has Moved Up 4.2% Since iPhone 16 Launched, Analyst Says It Has Another 8% Upside As Manufacturing Cost Decline Bolsters Cupertino’s Margins

Why It Matters: The claimants, led by Rachael Kent, a lecturer at King’s College London, are seeking £1.5 billion (approximately $1.83 billion) from Apple.

They argue that the tech giant has created a monopoly by forcing developers to distribute their apps using the company’s own App Store, leading to excessive and unfair commissions passed on to consumers.

Apple’s lawyers responded that the claimants’ case fails to consider the significant benefits conferred through Apple’s innovation by the iOS ecosystem as a whole.

Apple has been battling with multiple legal challenges currently. Last year, Apple faced a lawsuit over alleged snooping on employees’ iPhones and other devices, and a $1.2 billion lawsuit over discontinuing its child sexual abuse material detection feature.

Earlier this month, Apple also agreed to pay $95 million to settle a lawsuit alleging its Siri voice assistant recorded users' private conversations without consent.

Cupertino will report its first-quarter earnings for 2025 on Jan. 30. In October 2024, the company reported a fiscal fourth-quarter revenue of $94.9 billion, exceeding analysts’ forecast of $94.56 billion.

Price Action: Apple’s stock dropped 4.04% on Thursday, ending the day at $228.26. However, in after-hours trading, the shares rose by 0.061%, reaching $228.40, according to Benzinga Pro data.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.