Apple builds a new ad empire after competitors

Apple is starting to build its own ad empire just as its iPhone privacy campaign has weakened major ad-supported competitors.

The Big Picture: in the middle of wider contraction In the online advertising market, Apple has moved to limit the way apps track user behavior with competitors like Meta, even Users embraced it.

why does it matter: Apple has long promoted the privacy and security feature of its products over alternatives like Google’s Android and Microsoft Windows. But the simultaneous publication of Apple’s advertising expansion and privacy changes has drawn criticism and could draw the attention of antitrust regulators.

News leadership: Apple plans to significantly expand its advertising activity by placing more ads directly on users’ devices, Bloomberg Reports.

• The expansion will include bringing ads to more of Apple’s own apps on iPhone and iPad, including Apple Maps.

Between the lines: The company reportedly started in reorganization Its services team — the in-house department responsible for making money from apps, media and other “soft” products — to support its business as growth in hardware sales slows.

In numbers: In the most recent quarter, Apple said it earned $19.6 billion from services like ads, the App Store, Apple Music, iCloud, Apple News, Apple TV+ and Apple Pay — accounting for nearly 25% of its quarterly revenue.

• In the same quarter five years ago, services accounted for just 13% of Apple’s total revenue.
• Apple doesn’t detail how much revenue from its services comes from advertising, but from Bloomberg Report It is suggested that the company currently generates around $4 billion annually in advertising revenue.
• Analysts Estimation Apple’s advertising business could reach $6 billion by 2025. For comparison, Snapchat, which brought in nearly all of its money from advertising, generated $4.1 billion in revenue last year. Twitter made $4.5 billion in ads last year.

Quick catch up: Apple’s advertising business started to boom after changes it made last year to its app tracking policies that made it easier for iPhone users to opt out of tracking via other apps on their phones.

• For companies that rely heavily on this user data, the changes have made it very difficult to target people efficiently with online advertising.
• The changes have also been devastating to companies like Meta and Snapchat that rely on that data to run their ad offerings.

Wan dead Huge pressure campaign Against Apple’s changes, arguing that they make it more difficult for small businesses to find customers.

• But the company has its own reasons for holding back. Meta executives have said they will lose $10 billion in ad revenue this year in response to Apple’s changes.

Between the lines: Apple started pushing privacy a long time ago, but it landed hard on the selling point in the wake of several Facebook data leaks and privacy disasters, including the Cambridge Analytica scandal.

• This “privacy listing”, Some are arguing nowHelp her advance her anti-tracking plan without being portrayed as an institutional predator.

be clever: Search advertising is Apple’s largest source of advertising revenue. The data shows that Apple’s privacy changes have significantly shifted ads promoting app downloads from companies like Meta and Snapchat to Apple.

• Analytics Branch found that in the first half of the year, Apple’s internal search ads were responsible for about 50% of iPhone app downloads resulting from clicks on ads in the first half of this year, up from about 20% in April 2021 before the company rolled out Privacy changes.

What’s Next: To date, regulators have yet to pay much attention to this issue.

• That’s probably because the biggest vocal rally against Apple’s changes right now is the Meta, which is facing a slew of competition issues.

deepen: Apple’s privacy changes eat up competitors’ business