Apple reports first decline in App Store sales in a decade

Apple’s App Store, the digital toll booth that has minted money for the better part of two decades, is finally showing cracks. Morgan Stanley’s analysis of Sensor Tower data reveals that App Store net revenue dropped approximately 0.6% year-over-year through mid-August 2026, marking the first such decline in four years.

The numbers behind the slowdown

The damage is most visible in the United States. Consumer spending through the App Store fell 6% year-over-year in the second quarter of 2026. For context, that same metric showed a 9% increase the year before.

Global spending fared slightly better, rising 3%, but that figure looks anemic next to the 13% growth recorded in the prior year.

Apple’s commission revenue in the US has dropped 18% year-to-date in 2026, according to Appfigures data. Similar declines are showing up in Brazil and Japan, where comparable regulatory shifts have taken hold.

Apple’s Services segment still posted a record $30.7 billion in revenue for the June quarter, but it missed analyst expectations of roughly $31.4 billion.

Morgan Stanley now forecasts App Store growth of just 0.5% for the third quarter of 2026.

Regulation is doing what competition couldn’t

The primary culprit is regulatory change, specifically rules that now allow developers to direct users to external payment links. In the US, these provisions went into effect in April 2025. If developers can route customers to their own checkout pages, Apple’s 15-30% commission gets bypassed entirely.

This shift traces back to the Epic Games litigation, which challenged Apple’s commission structure and ultimately forced meaningful concessions.

The gaming category, historically one of the App Store’s biggest revenue generators, is being hit from both sides. Regulatory changes are siphoning off commissions, while broader demand for mobile gaming has softened. Add adverse foreign exchange impacts into the mix, and you have a triple headwind.

During its July 30, 2026 earnings call, Apple acknowledged that these factors weighed on Services growth during the second quarter.

What this means for Apple’s financial architecture

Apple’s Services segment is the highest-margin part of the business. The App Store commission model has been extraordinarily profitable precisely because it required almost no marginal cost. Apple built the platform once, and then collected a percentage of every digital transaction flowing through it.

An 18% decline in US commission revenue reflects a permanent change in the rules of the game, as developers who have spent years resenting the “Apple tax” now have a legally sanctioned escape route following the regulatory changes implemented in April 2025.

For Apple specifically, the question becomes whether it can offset declining commission revenue with growth in other Services categories like advertising, AppleCare, iCloud, and Apple TV+.

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