Apple Taxes AI Apps, Builds On-Device Future

Analysis firm AppMagic estimates Apple collected nearly $900 million in App Store fees from GenAI apps in 2025, with ChatGPT accounting for three-fourths of this revenue. While this sum is a small fraction of Apple's total sales, it represents a growing segment within its high-margin services business.

Apple's strategy diverges from competitors like OpenAI and Google, who are investing heavily in large language models and data centers. Instead, Apple focuses on an on-device AI approach, utilizing user data and custom chips for privacy-centric, localized AI.

This "toll road" model, where Apple profits from third-party AI services, provides the company with time and capital to refine its own AI strategy without the massive capital expenditure of rivals. However, Apple faces challenges with its outdated Siri technology, though a partnership with Google's Gemini is expected to improve it this year.

Competitors are also exploring hardware, but replicating Apple's ecosystem remains difficult. Investors are keen to see progress on Apple's unique AI path, which could prove highly profitable if on-device AI becomes dominant.