App Store regulatory changes are beginning to affect Apples Services growth

During today’s earnings call, Apple CFO Kevan Parekh said the company is beginning to feel the impact of regulatory changes to the App Store business model in the US and abroad. Here are the details.

Last year’s F1 success also played a part in this quarter’s Services slowdown

Today, Apple released its Q3 2026 financial results, reporting $30.7 billion in Services revenue, a record for a third fiscal quarter.

Although that was up 12% year over year, it marked the segment’s first sequential decline since 2022, down from $30.98 billion in the previous quarter. It was also Apple’s slowest Services growth since Q2 2025 and its weakest Q3 growth rate since 2023.

Part of this slowdown, as Apple CFO Kevan Parekh explained, was due to “some factors that impacted the performance of the App Store,” which is traditionally one of Apple’s biggest revenue drivers in its Services category.

Although Apple does not break down Services revenue on a per-stream basis, estimates cited last year by The Wall Street Journal suggested that the App Store accounts for nearly one-third of this category’s revenue. Additionally, findings from the Epic v. Apple case showed that gaming apps alone accounted for approximately 70% of App Store revenue.

Back to today’s earnings call and the slowdown of Apple’s Services revenue, Parekh said:

We also had some factors that impacted the performance of the App Store. We did see some headwinds in mobile gaming. And keep in mind, we also made some changes to the App Store business model in certain countries. And in the US, we do continue to operate under a court ruling impacting the link-out transactions. But we’re pleased the Supreme Court will hear our appeal. Despite this, the App Store set a June-quarter revenue record. 

Over the past year, Apple has had to comply with new rules allowing alternative app distribution, payment methods, and out-of-app purchase offers in markets including Japan, Brazil, and the European Union.

Additionally, due to the Epic Games lawsuit, Apple has been temporarily barred from charging any commission on purchases made through external links in the US.

The Supreme Court is currently reviewing whether Apple can be held in civil contempt for charging off-App Store commissions, even though the lower-court injunction did not explicitly forbid it. At the same time, the lower court is considering what commission, if any, Apple can charge on such purchases.

Interestingly, weaker App Store gaming commissions were not the only factor behind the slowdown in Apple’s Services growth. According to Parekh, the year-over-year comparison was also affected by the success of F1 The Movie in the prior-year quarter:

We [had] the theatrical release of F1, which is one of the highest-grossing, you know, sports films in history. And this year, we didn’t have a theater release. So that had a favorable impact on both the June quarter, and also the September quarter in the year ago.

For the breakdown of Apple’s Q3 2026 results, follow this link.