Apple's Ad Positioning

Oct 26, 2022

Apple ads business is growing fast. Since 2016, Apple has quietly been encroaching on the ad market, now offering front-page ads in the App Store and advanced targeting capabilities.

Short-term thinking? Incentives are already mixed up within the company. Apple’s advantage partly comes from its counter-positioning against other tech giants who collect data to sell ads. Just take one of Apple’s latest marketing pushes, Privacy on iPhone.

The App Tracking Transparency (ATT) rules have severely damaged competitors like Meta and Snap. Apple forces its competitors to target with limited information while it offered more granular tracking for its own search products. Maybe this is an anticompetitive scheme by Apple execs, but Occam’s Razor — it points to directly competing incentives across business units at a large company.

Apple continues to squeeze its largest apps — advertisers on Facebook or Twitter that purchase “boosts” for posts will be taxed at the 30% rate. There’s probably a line where enough small businesses (the majority of whom buy through mobile) and consumers lash back. Already there’s been a sort of consortium of disgruntled companies between Meta, Shopify, Spotify, and other mobile-first apps that are affected.

It’s not just Apple — Amazon’s ads business hit $31 billion in revenue last year. But I wonder if Apple is risking decades of consumer trust by chasing an ads business for growth.

Like network effects, incentives unravel as quickly as they grow.