Will Apple Users Flock To Make Direct Payments To App Developers Like Netflix, Spotify Now Or Stay Within The iPhone Maker's 'Walled Garden?'

After Apple Inc. (NASDAQ: AAPL) said it will allow app developers such as Netflix Inc. (NASDAQ: NFLX) and Spotify Technology S.A. (NYSE: SPOT) to process payments outside its App Store, Loup Ventures analyst Gene Munster waded into the debate on whether Apple users will continue to transact in the tech giant’s “walled garden.”

What Happened: Munster said in a note that he believes Apple users are likely to stay in the “garden” even when they have the option to transact directly with the app developers.

“Our belief is the vast majority of users will stay within the Apple payment and app ecosystem because it’s more secure and easier,” Munster said.

The analyst also advised app developers to opt for transacting within the Apple ecosystem as the ease of payment enabled by the Cupertino-based company will result in a higher paid customer conversion.

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Further, Munster said Apple’s service segment growth rate will face a one-year headwind if Apple has to lower its 30% and 15% take rates before the next five years.

Why It Matters: Apple will be foregoing the App Store cut by allowing content subscription apps to process payments outside its App Store.

Spotify had complained to the European Union earlier this year about the 30% charge that Apple mounts on app developers to utilize its in-app purchase system.

Last year, Apple and Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG) were both taken to court by Epic Games after the company’s “Fortnite” game was removed from the two tech giants’ app stores for refusing to pay the 30% cut charged by them on in-app purchases.

Price Action: Apple shares closed almost 0.8% higher in Thursday’s trading at $153.65.

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