Apple Is Way Behind in AI—and Still Making a Fortune From It: WSJ

Distribution is hard, distribution is gold.

Apple is on pace to surpass $1 billion in artificial-intelligence revenue this year, a tidy sum that demonstrates the company’s AI advantage even as it struggles to deliver an AI strategy of its own.

That means they typically pay the App Store tax, roughly 30% of subscription fees in the first year and 15% a year thereafter, though rates vary by country. Generative AI apps paid Apple nearly $900 million in App Store fees in 2025, according to the analysis firm AppMagic.

Three-fourths of the revenue Apple rakes in from GenAI apps in its App Store comes from ChatGPT, according to AppMagic. Next, at about 5%, is xAI’s Grok. Apple’s revenue from GenAI apps rose from about $35 million in January 2025 to a high of $101 million in August. Sales have fallen from their peak, partly because ChatGPT downloads have declined, according to the data.

Source: Wall Street Journal

NB: I always thought Apple would take 20% of all AI spending…

…, but what the article fails to appreciate is that Apple is still way behind on Search and Social Media and Ride Hailing and a thousand other killer apps for the iPhone and yet it still profits from them. Apple is not "taxing" these services but offering distribution to their makers the same way a retailer is not "taxing" a brand by allowing their products in the store.

But the other buried lede here is that $1 billion for distributing AI to iPhone users is not a hugely impressive indicator of a great business. At best we're looking at $5 billion revenue run rate through iOS and maybe $10b across phones. It's not much for something with $1 trillion capex budget.