Apple spokesman Shane Bauer declined to answer WIRED’s questions about how the company’s business is changing, advertising’s role in it, or whether ATT was related to its advertising plans. “A user’s data belongs to them, and they have to decide if they want to share their data and with whom,” Bauer says. ATT’s rules apply equally to all developers, including Apple, he says, and the company “never tracks users.”
That doesn’t mean Apple’s existing ad revenue won’t continue to grow. “It could definitely become an important part of their business,” said Peter Newman, forecasting director at Insider Intelligence, which specializes in tracking Apple. “They want to make themselves significantly less dependent on pure hardware sales.”
Newman points to monthly subscription services like Apple Music and Apple TV+ as places where ads can be placed easily. The company’s video streaming service is remarkable, he says, because after the launch of an ad-supported tier by Netflix, Apple is now one of the few major video streaming services without an ad-supported version. (In April, Apple signed a deal that would show ads on Major League Baseball coverage through the streaming service, even though those ads were sold by MLB, not Apple).
How big Apple’s advertising business could grow is far from certain. Newman sees a lot of room for growth, but does not see that the company can compete with the largest digital advertising giants. “I see Apple becoming something on the level of Microsoft, maybe a little bigger, but significantly behind Google and Meta,” he says. That would mean ad revenues in the tens instead of hundreds of billions. Microsoft says its ad revenue is about $10 billion a year; Google, the world’s top digital advertising platform, made nearly $210 billion last year, with Meta in second place with $115 billion.
Newman says that while Apple’s devices and services offer a lot of potential ad inventory, they don’t offer the scale or lucrative capabilities of Google’s search engine, Meta’s billions of social app users, or Amazon’s all-purpose store. However, if persistent rumors hold true that Apple is building its own alternative to Google Search, the project could open up lucrative new advertising opportunities.
And the company’s privacy commitments may limit how far ad targeting can go. Investment bank Evercore ISI estimates that Apple will have a $30 billion ad business by 2026. That’s about the size of iPad sales in 2021, or just under half of the company’s revenue.
Apple hires many people to pursue advertising wealth. An ad tech engineering manager job posting cites the company’s “complex and ever-expanding platform needs that help deliver highly optimized ad content to consumers.” In September, Apple employed about 250 employees on its advertising platforms, according to an analysis of LinkedIn data by the Financial timeswith job openings suggesting plans to nearly double that number.
Apple seems sensitive to the fact that too much meddling in digital advertising could tarnish its brand or create regulatory pressure. It paid for a study, published in April, by a Columbia Business School professor who threw cold water on the idea that ATT was helping it compete with the Internet’s advertising giants.
But Reinhold Kesler, a researcher at the University of Zurich in Switzerland, has found that ATT has helped Apple. The feature led some app developers to shift business models from free but ad-supported to paid models, sometimes including in-app payments. That was in favor of Apple, which is demanding a 30 percent cut in such payments, although it’s clear some companies have negotiated better rates.
Cusumano of MIT says Apple’s biggest challenge may be balancing its past reputation for privacy and the data theft that digital ad companies create. “Apple is a carefully maintained walled garden, not this ad-intensive ecosystem like Google,” he says. It can be difficult to maintain that distinction while growing ad revenue at the same time. “Apple users are very loyal and forgiving,” Kesler says. “But if they push this to match their predictions, I wonder if users might be overlooking this.”
