Microsoft poses 'biggest potential threat' to Apple's App Store: Morgan Stanley

Analysts astatine Morgan Stanley said Tuesday that a Microsoft app store connected the iPhone would correspond "the biggest imaginable threat" to Apple's App Store.

Microsoft could motorboat a caller app store for games arsenic aboriginal arsenic adjacent twelvemonth if regulators o.k. the company's $75 cardinal acquisition of Activision Blizzard, Phil Spencer, caput of Microsoft Gaming, told the Financial Times successful an interrogation Monday.

Under the European Union's Digital Markets Act, Apple and Google volition apt person to grow entree to app stores owned by different companies connected their mobile devices. The caller rules are expected to travel into effect adjacent March, which provides a model for competitors similar Microsoft to participate the fray.

"If we took a 'worst case' presumption of the satellite and said the imaginable Microsoft app store could instrumentality each EU gaming gross from the Apple App Store – fixed the absorption of the DMA is conscionable successful Europe, for present – that would equate to 8% of App Store revenue, 2% of Apple Services revenue, and a ~1% deed to Apple company-level gross and EPS," the analysts said. Apple generated $20.77 billion successful services gross during its fiscal archetypal 4th of 2023.

But adjacent if Microsoft is capable to successfully get Activision Blizzard and motorboat an app store, Morgan Stanley analysts are not convinced that it volition beryllium origin for interest astatine Apple.

In 2022, analysts recovered that Microsoft and Activision Blizzard had an "immaterial impact" connected Apple's company-level revenue, arsenic they accounted for little than 1% of full Apple Services gross combined.

"We estimation the interaction of a imaginable Microsoft App Store connected the iPhone would beryllium constricted to <3% of App Store gross and <0.5% of EPS, but it inactive represents the biggest imaginable menace to the App Store today," they wrote successful a Tuesday note.

The analysts added that galore unknowns inactive stay astir whether Microsoft tin successfully adjacent its deal. Regulators successful the U.S., the U.K. and Europe person raised concerns astir what the acquisition of Activision Blizzard could mean for competition.

Morgan Stanley analysts besides recovered that less than 30% of Apple users would beryllium consenting to bargain apps extracurricular of the company's App Store. Even so, they said Microsoft's app store could beryllium to beryllium a existent rival with time.

"MSFT's beardown marque and tech enactment inactive represents a imaginable semipermanent menace to support watching," the analysts wrote.

--CNBC's Michael Bloomberg contributed to this report