What you need to know
- Epic Games CEO Tim Sweeney has decried Apple's record-breaking earnings, claiming that "much" of the money Apple makes "isn't rightly theirs".
- He was referring to Apple's "monopoly" on App Distribution and payments, despite the fact nearly 85% of Apple's revenue comes from hardware sales and only 15% comes from services.
- He also said that people speaking out in defense of Apple were "bozos" who "deserve to live in the world they advocate for."
Epic Games CEO Tim Sweeney has decried Apple's record-breaking Q1 earnings in his latest Twitter tirade, claiming that "much of the money" Apple is making "isn't rightly theirs."
Responding to Apple's record-breaking Q1 earnings call, Sweeney took to Twitter stating:
Of course Apple makes more money than any other company ever. Much of the money they're making isn't rightly theirs! They're taking it from consumers and smaller companies by imposing a monopoly and a tax on app distribution and payments.
As was immediately noted by commenters including 9to5Mac's Chance Miller, Sweeney's comments seem to be a stretch given that nearly 85% of the revenue Apple recorded in Q1 of 2022 ($104 billion of the $123.9 billion to precise) came from hardware sales of Apple's best iPhones like the iPhone 13, the iPad, Mac, wearables like Apple Watch and home devices. Only 15% comes from Apple's services range, which includes Apple's App Store and revenue from iOS App Distribution, but also includes several other notable lucrative revenue streams including iCloud storage and subscriptions, Apple Music, and likely includes a large amount of money paid by Google to Apple for the privilege of being the default search engine on iOS, a figure estimated to be between $8-$12 billion.
Sweeney's original tweet generated enough unpopular responses that he followed up by stating:
So many tweets today are making the case for an all-powerful tyrant to protect each of us from ourselves and tax us all to pay for it. These bozos deserve to live in the world for they advocate for. The rest of us don't.
In response to Miller, Sweeney also claimed that the money attributable to "Apple's app tax" was more profit "than all but a handful of companies in history have ever made." He did not provide any further information regarding the claim.
In a 2020 interview with iMore, Apple analyst Neil Cybart noted that while the App Store is profitable "it ends up representing a small share of Apple's overall gross profit" and that based on his own estimates "the App Store's net profit margin is not as high as consensus assumes." Responding more recently to Sweeney's comments Cybart stated that Sweeney was "gaslighting" and that the App Store accounted for around 5% of Apple's revenue, and retierated that App Store gross margins "are not as high as most people assume."
Apple and Epic Games are gearing up for the second round of their legal battle as both sides look to appeal the ruling handed down by a court last year, which stated that Apple did not have a monopoly on iOS app distribution, but should no longer be allowed to stop developers from sending their customers to alternative payment methods outside of iOS.
The company continues to face further pressure around the world to open up its App Store to alternative payments, notably in the Netherlands and South Korea.
