Apple's "sneaky" ad biz: how privacy changes could give it an edge over Google and FB

Wednesday, April 28, 2021 by Robinhood Snacks |

Quiet but deadly?... It's easy to overlook Apple's ad biz, when Google and Facebook take the spotlight. Apple doesn't have a search engine or social network to fill with protein powder ads — but it does sell ads in its App Store, and displays ads in the News and Stocks apps. App Store ads are expected to bring in $2B this year (a fraction of Apple's $275B annual sales). For reference: Google made $46B in ad revenue last quarter alone. Buuut...

  • Apple is making big privacy changes that could hurt competitors, while bolstering its own ads. Apple’s latest iOS update lets users decide whether to let apps track them for ads.
  • According to #PFWTM: Advertisers targeting iPhone users will get more detailed and timely data if they buy Apple’s ad space, than if they buy via third parties (like FB).
  • Apple's own ad biz won't be affected by the changes, since ads on its platforms can only target large groups, not individuals.

MiPhone, MiRule... These changes could hurt companies' precious ad-targeting, while giving Apple’s ad biz an edge. Apple has been getting heat for allegedly favoring itself on its platforms. Think: favoring its own apps on the App Store, and taking large cuts of purchases from non-Apple apps. Just last week, Apple and Google got grilled in a Senate hearing over their dominance of smartphone ecosystems. Still...

  • The ad changes could be hard to challenge: Apple says it's not favoring itself, but is motivated by user privacy concerns.

Ads could be Apple’s competition-slayer... Not because it has a massive ad biz, but because it can influence the fortunes of its competitors' main money-driver: ads make up ~80% of Google's sales, and 98% of Facebook's. Apple doesn’t have to become an ad giant to reduce ad giants’ power. The privacy changes are already poised to hurt its competitors. Meanwhile, Apple reportedly plans to expand its own ad offerings. JPMorgan estimates its ad revenue could grow to $11B/year by 2025.