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Apple (AAPL) Removes 46,000 Apps From China App Store

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Zacks Equity Research
·4 min read
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Apple AAPL has been benefiting from strong momentum in App Store sales, boosted by coronavirus-led social distancing norms. This is reflected in the stock’s rally of 77% over the past year, which has outperformed the S&P 500’s rise of 17.7%.

The App Store’s strong growth can be attributed to momentum in China. The iPhone-maker generates more revenues in China than it does in any other country, with the majority of it coming from gaming.

Resultantly, Apple is striving to comply with the requirements of China’s content regulators. Apple took down a record-breaking total of 46,000 applications including 39,000 games from its App Store in China on Dec 31, 2020 as part of the crackdown on unlicensed games on the platform, per a Reuters report.

The deadline for game publishers to submit a government-issued license number was originally set by Apple for Jun 30. However, the company later extended the deadline to Dec 31.

iOS games have long been required to obtain a Chinese gaming license in order to operate in the country. The government-issued licenses would enable users to make in-app purchases through the App Store in China, which is considered to be the largest market for mobile games.

Per a Qimai report, some of the apps that have been affected by the sweep include Take-Two Interactive’s TTWO NBA2K20 and Assassin’s Creed Identity by Ubisoft UBSFY. Reportedly, only 74 of the top 1,500 paid games remained following the removals.

Moreover, the company froze updates for almost 30,000 apps in August 2020, which did not comply with its licensing policies. These apps were subsequently removed.

One-Year Performance

Apple’s Rigorous Efforts to Aid Developers Globally

The App Store accounted for 68.4% of total sales, which came in at $276.6 million, up 35.2% year over year on Christmas Day 2020, compared with Alphabet GOOGL Google’s Play Store sales of $129 million, up 33% year over year and comprising 32% of the total, per a Sensor Tower report.

Not including Chinese third-party app stores, iOS and Android users in 2020 downloaded 130 billion apps and spent a record $112 billion, according to App Annie’s year-end forecast.

Apple’s App Store has been facing backlash from third-party developers over the past year for forcing them to pay a 30% commission and only use the company's own in-app purchasing system.

This Zacks Rank #3 (Hold) company has been striving hard to close off the loopholes that developers find in order to bypass some of the in-game purchases that have to be made through the App Store. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Apple has reduced its App Store commission fee from 30% to 15% on paid apps and in-app purchases for small developers who earn less than $1 million in annual sales from their apps and those who are new to the store effective Jan 1, 2021.

As part of Apple’s new App Store Small Business Program, the new commission structure is aimed at supporting small and individual developers as businesses adapt to a virtual world during the coronavirus pandemic.

The App Store continues to draw the attention of prominent developers from around the world, helping the company offer appealing new apps that drive App Store traffic. The new program is expected to attract more niche app makers, game developers, and other members of the iOS ecosystem.

As stated in a court filing, cited by a report from The Verge, Apple’s App Store currently has 27 million developers globally, catering to users of the more than 1.5 billion Apple devices around the world in 175 countries and over 40 languages, with more than 180 local payment methods and 45 accepted currencies. The store hosts more than 1.8 million apps.

Last week, Apple removed an iOS app called Vybe Together from the App Store that encouraged users to organize secret underground parties despite social distancing measures and pandemic restrictions.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

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