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Apple (AAPL) Allows Reader Apps to Include In-App Link

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Apple (AAPL - Free Report) recently announced an update to its App Store that will allow developers of reader apps to include links to their own websites for account creation and other management purposes.

Reader apps can be classified as apps that provide digital content in the form of magazines, newspapers, books, audio, music or video.

Per the Apple App Store review guidelines, developers will have to request access to the External Link Account Entitlement to avail of this feature. This allows reader apps to link their website to the App store so that users can use and manage their products outside of the app.

Apple decided to make the changes in accordance with the settlement with the Japan Fair Trade Commission. Although the agreement was with the Japanese authorities, Apple decided to apply the updates globally.

Apple Inc. Price and Consensus

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

Apple App Store Update to Aid Fend Off Competition

Changes to Apple’s App Store policies come following its peers Alphabet’s (GOOGL - Free Report) Google and Spotify Technology’s (SPOT - Free Report) announcements.

Spotify has always scoffed at tech giants Google and Apple’s demand to pay as much as 30% as transaction fees for the proceeds of the payment through their platforms.

However, Google and Spotify have reached a middle ground through their multi-year agreement. The new agreement will give users who have downloaded Spotify through Google Play Store to pay either by using Google Play billing or Spotify’s in-house payment systems.

Per the recent agreement, Spotify will still have to pay Google, but less than the 15% transaction charges that Google collects through its Google Play subscription charges.

Following suit, Apple has made changes to its App store’s stringent policies.

Prior to this move, Apple complied with a ruling from the Netherlands’ Authority for Consumers and Markets (ACM) by allowing app developers to utilize third-party payment services within its App Store for the first time in its history.

This rule is specifically for dating apps like Tinder, owned by Match Group (MTCH - Free Report) .

Match Group’s Tinder is the number 1 dating app globally. The app will benefit from the new updates that allow it to accept payments via the third-party payment system in the Apple App Store.

However, the recent updates will not reduce Apple’s revenues from transaction charges. Apple will still charge dating app developers a 27% commission regardless of which payment mechanism is used.

Apple has been benefiting from the continued momentum in the App Store ecosystem. The recent upgrades are expected to attract even more developers to their App store, aiding Apple’s revenue from their Services business.

In the first quarter of fiscal 2022, Apple’s Services revenues grew 23.8% from the year-ago quarter to $19.52 billion and accounted for 15.7% of sales.

Apple, which carries a Zacks Rank #2 (Buy), has risen 0.1% in the year-to-date period compared with the Zacks Computer-Mini Computers industry’s return of 0.8%. Meanwhile, the Zacks Computer and Technology sector has declined 7.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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