Apple Services Revenue to Top $100 Billion Amid App Store Legal Battles [Report]

Apple's services division is on track to surpass $100 billion in annual revenue for the first time this year, a major milestone for the business unit even as it faces mounting legal and regulatory pressure over its App Store.

According to a new report from the Financial Times, analyst estimates peg the unit's annual revenue at $108.6 billion for the fiscal year that ended last month, a 13 percent increase from the prior year. If Apple hits that number when it reports earnings this week, its services division alone would be larger than the entire annual sales of companies like Walt Disney or Tesla.

The high-margin services business, which includes iCloud, Apple Pay, AppleCare, and the App Store, has doubled in size over the last five years. It has become a vital source of growth at a time when iPhone sales have become less dependable, and is on track to account for a quarter of Apple's total revenue but as much as half of its profit.


The division has also been bolstered by a multibillion-dollar deal with Google to make it the default search engine on Apple devices. That arrangement was largely preserved in a U.S. court order last month following the Department of Justice's antitrust victory against Google, a decision that was a major relief for investors.

Still, Apple's services unit is facing its own legal headwinds. The DOJ has filed a separate anti-competition case against Apple, and the company is still fighting a U.S. legal battle brought by Epic Games over its App Store rules.

A UK tribunal recently ruled that Apple had abused its dominant market position with its App Store fees, a judgment that could cost the company as much as £1.5 billion in damages. In Europe, Apple has called the EU's Digital Markets Act a 'hugely onerous' burden.

Despite the legal challenges, the services division continues to expand. The unit is moving into live sports, recently finalizing a deal to stream Formula 1 races in the U.S., and is preparing a major revamp of its virtual assistant, Siri. Analysts forecast that services could make up more than 30 percent of Apple's total revenue by the end of the decade.


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