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The Commission EngineNarrow moat

Apple (AAPL) — moat facet

A 15-to-30% cut of other people's businesses, at nearly pure margin — one of the best economic positions in all of commerce.

The commission Apple takes on sales made through the App Store — historically around thirty percent, reduced to fifteen for smaller developers1 and for the later years of a subscription — is the mechanism that converts gatekeeping into profit, and it is a wonderful engine indeed. On a great deal of what changes hands inside the store, Apple simply takes its cut, and because the cost of running the store is small relative to the sums flowing through it2, the commission is extraordinarily high-margin. It is a large part of why the Services business is so profitable and so richly valued, and why Services gross margin rose from 55.0% in fiscal 2017 to 76.2% in fiscal 20264.

Services gross margin (%)55.0%FY1763.7%FY1969.7%FY2170.8%FY2375.4%FY2576.2%FY26Apple results exhibits; Siri AI cloud costs will be charged to this line's cost of sales
Nine years of rising margin on the richest dollar Apple earns. The new pressure on it is not a court: it is the cloud bill for running the assistant.

What makes the commission so attractive as a business is that it is paid for almost entirely by other people's effort and other people's risk. The developers build the apps, take the chances, and bear the costs of creating something people want; Apple built the road and the storefront and collects a percentage of the traffic between them. It is closer to a royalty on the labor of others than to a conventional product business, and royalties, requiring little incremental effort to grow, are among the finest economics there are.

The engine also scales beautifully. As more of economic life moves onto phones — as games, media, services, and commerce increasingly happen inside apps — the base on which Apple levies its commission grows without Apple having to do much of anything at all. The store handles more transactions, and the cut compounds, at very little added cost. A business that grows its take simply because the world it sits astride is growing occupies an enviable position.

The vulnerability, of course, is that the commission is precisely what everyone is fighting over. Developers resent it, regulators question it, and courts are pressing to lower it or to let developers avoid it by steering customers to outside payment methods. The commission is the richest strand of the whole franchise and therefore the most exposed — the number a legislator's pen could most directly reduce. But for now it remains a remarkably lucrative engine, humming along on the effort of a million developers3. The quieter warning sits in Apple's own commentary rather than in any courtroom: through the September quarter the App Store merely performed similar to the prior year, against headwinds in mobile gaming that Apple expects to continue5. The margin is holding. The volume underneath it has stopped growing.

Moat trajectory: Narrowing

Narrowing. The commission — 30% headline, 15% for smaller developers and second-year subscriptions — is the mechanism that converts the install base into pure-margin Services revenue, and it is under direct attack. EU rules force alternative billing, and Apple has had to introduce reduced fee tiers to comply. Every carve-out, and every jurisdiction that follows, chips at the take rate. The engine still runs and still throws off enormous profit, but the rate it can charge is being ratcheted down, not up.

The number that tests this moat
Moat Explorer calc
Services gross margin, fiscal year
76.2% in FY2026, from 75.4% in FY2025

The commission is nearly pure margin, so Services gross margin rises as it grows. It rose again in FY2026, in the year the contempt ruling was upheld — which is the clearest evidence that regulation has not yet reached the economics. The new pressure is self-inflicted: the cloud cost of running Siri AI is charged to this line.

How it's calculated: Services net sales less Services cost of sales, over Services net sales: ($123,301M - $29,358M) / $123,301M for FY2026.
Source: Moat Explorer calculation from Apple's Q4 FY2026 results exhibit ↗
⚠ Threats to the moat
⚠ THREAT 01
The Rate Ratchet
Every ruling and new-fee compromise nudges the effective commission a little lower.
References
  1. ReportedHistorically ~30%, reduced to 15% for smaller developers and for subscriptions after the first year.
    Apple App Store — published commission schedule (15% small-business / subscriptions after year one; 30% standard) — Current schedule · publ. 2025–2026 · source ↗
  2. ReportedServices gross margin runs near ~75% — the store's costs are small relative to the sums flowing through it.
    Apple Inc., Form 10-Q (Products vs. Services gross margin disclosure) — Q2 FY2026 — quarter ended Mar 28, 2026 · publ. Filed May 2026 · source ↗
  3. ReportedServices revenue reached ~$109B in FY2025, of which the commission is one of the most profitable strands.
    Apple Inc., Form 10-K (FY2025) — Fiscal year ended Sep 27, 2025 · publ. Filed Oct 31, 2025 · source ↗
  4. Moat Explorer calcServices gross margin rose from 55.0% in FY2017 to 76.2% in FY2026.
    Moat Explorer calculation from Apple's Q4 FY2026 results exhibit (growth rates, category and segment shares, products and Services gross margins, gross-profit shares and compound growth rates are all derived from the reported dollar figures) — FY2026 · publ. 3 November 2026 · source ↗
    Method: Shares and margins are the reported dollar lines divided into one another.
  5. ReportedKevan Parekh: "performance on the App Store was similar to the prior year", with "headwinds in mobile gaming" expected to continue into the December quarter.
    Apple Q4 FY2026 earnings call — Ternus: memory pricing "unprecedented"; Khan: manufacturing purchase obligations up $33 billion from the June to the September quarter, December constraints on Mac and iPad "primarily driven by memory"; Parekh: December revenue growth 7-10% and "the best quarter for revenue in the history of the company", Services growth 8-9% with "headwinds, primarily driven by third-party licensing and foreign exchange", gross margin 45-46% on higher memory costs and the Siri AI ramp, Siri AI cloud costs recognised through Services cost of sales; installed base over 2.5 billion active devices; paid subscriptions over 1.5 billion; Services gross margin 76.0%; App Store "performance was similar to the prior year" with "headwinds in mobile gaming" — Quarter ended 26 September 2026 · publ. 2 November 2026 · source ↗
Sources
Generated November 3, 2026