Every company around the world charges fees for services and for every company at some point in time executives will examine the fee structure to see if they can fees. Many companies have fees but over the years, the fees are considered low and could be raised, but there can be a backlash among others who think the fees are a competitive advantage. Raise fees can bring more money in.
For Apple, the App’s store has become a large generator of fees and Apple has reported it collects over $53 billion in service fees. Similar to people around the world, someone believes they are paying too much in fees relative to other companies.
In an article by Stephen Nellis of Reuters, Epic Games sued Apple to lower fees and a US District Judge Yvonne Gonzalez Rogers rule partially in favor of Epic. This sent Apple shares down because the amount of fees expected to be charged by Apple will decline something. Evercore ISI analyst Amit Daryanni wrote to investors that we suspect the eventual management from this ruling will be manageable.
The Judge did not require Apple to let app makers use their own in-app payment systems, one of Epic’s top requests and allowed Apple to continue to charge commissions of up to 30% for its own in-app payment system. The judge did say Apple can no longer bar app developers from providing buttons or links in their apps that direct customers to other ways to pay outside of Apple’s own in-app purchase system.
Epic Games is going to try to get legislatures to rule on monopolistic conditions in the digital world. Given the legislatures are not up to date in digital practices, one can expect there to be a timing delay.
Linking to dividend paying stocks, one of the reasons why an investor wants to buy the stock of Apple because it had a monopoly like position, although it said it did not, but fees were coming to ensure revenues rose and Apple stayed very popular even if iphone sales did not increase every year. Investors like to see diversified earnings that can weather any economic cycle. On the other side is consumers who do not like to pay too much in fees. All companies fact the balancing act and fees need to be examined every year. Years ago, one company the writer was working at gave an employee a bonus for increasing fees. We were charging $10 and other companies were charging $50 for the same service. Fees should be competitive, otherwise new management will and should raise fees. In your investments, are fees competitive or should be raised?
There are more questions than answers, till the next time – to raising questions.