Unwanted Ads: How Apple is using Google Ad Slots to take money from developers.
https://www.forbes.com/sites/johnkoetsier/2021/11/12/apple-quietly-buying-ads-via-google-for-high-value-subscription-apps-to-capture-app-publisher-revenue/?sh=30c325341b52
Buying ad slots for other companies seems nonsensical, so why is Apple buying Google ad slots for apps like Tinder, HBO, and Amazon? Apple takes a percentage of all the revenue from apps in in its app store, 30% in an app’s first year and 15% from then on. Even though Apple is paying for each click on the ad, if those clicks lead to consumers buying high value services and subscriptions from their App Store, they will turn a profit. As the article notes, Apple is buying these ads for high-value subscription services, that can cost upwards of $100 per year. For example, say an ad cost $10 per click, and the the expected money spent by a user per click is $100. Even if Apple is only getting 15% of that $100, their value per click would then be $15, so they’d be making a profit of $5 per click.
Of course, that profit is coming from the developers pockets, and they are rightfully upset with Apple. Most of these services offer the ability for customers to sign up directly from their website, in which case the fee Apple takes from its App Store is gets bypassed. Going back to the previous example, we know that they are getting $100 minus the $15 they have to pay Apple, and since they aren’t the ones paying for the ad, that means they would be receiving $85 per click. That’s all well and good, but if they were to place their own ad for $10 that led to their website instead of Apple, they would be getting the $100 minus $10 per click, for a total of $90 per click. By advertising for these companies and routing them to the App Store, Apple is stealing that extra $5, or however much it would be. Google has refused to take the ads down, so and companies are saying that Apple has been doing this for over two years, so it will be interesting to see how companies combat this tactic in the future, or if Google will implement similar tactics for their own Google Play Store. Considering they wouldn’t have to pay anything for ads put on their own platform, they could potentially abuse this tactic to an even greater extent than Apple.