Apple Rejects 78 Percent App Store Operating Margin Figure From Epic Expert Witness

Apple has hit back at a figure put forward by an expert witness for Epic Games in the build-up to the two firms’ court case. Financial and economics researcher Ned Barnes said that he had evidence the App Store had operating margins of nearly 78 percent in the fiscal year 2019. However, in a statement seen by Bloomberg News, Apple described the figures as “simply wrong.”

Epic and Apple Expert Witnesses Offer Differing Views on App Store Operating Margin

Mr. Barnes explained that the 78 percent figure came from documents he obtained. There were “prepared by Apple’s Corporate Financial Planning and Analysis group and produced from the files of Apple CEO Tim Cook,” he said. In response, Apple said that the “calculations of the operating margins for the App Store are simply wrong and we look forward to refuting them in court.”

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Furthermore, Apple’s own expert witness, Massachusetts Institute of Technology economics expert Richard Schmalensee, said the “estimate of the App Store’s operating margin is unreliable because it looks in isolation at one segment of the iOS ecosystem in a way that artificially boosts the apparent operating margin of that segment.” This reinforces point made by Mr. Cook in his own pre-trial testimony. He said that “Apple’s business is not structured that way that allows a person to push a button and obtain an App Store” profit and loss.