There really is something about great commercial success that makes tech companies obnoxiously arrogant once they achieve it, isn’t there? Sony achieved it with the PlayStation2 and then deemed it wise to encourage us to get two jobs so that we can afford a PlayStation3. Microsoft achieved it with Windows and then decided that it’s OK to harvest as much personal information about people using its operating system as possible. Apple achieved it with the iPhone and now… well, let’s just say that for what we’ve always considered “free”, there may be a price of sorts to pay going forward.
At least that’s what Bloomberg’s Mark Gurman notes in his latest newsletter, that is. Apple is planning to introduce more advertisements in its operating systems, beginning with its own Maps app on iOS: the company is already running internal tests in order to serve paid search-based recommendations to users on that app (although it will probably introduce the new feature after launching iOS 16 in September). Apple is already displaying regular banner ads inside its News and Stocks apps, as well as paid recommendations and Google-like search ads inside the App Store across all its devices. The company recently placed its own ads inside the Apple TV Plus app too.
It’s easy to dismiss Gurman’s report as one making a big deal out of stuff other companies have been doing for years — but in the context of Apple’s financial goals, it’s not that simple. Advertisements are not generating that much revenue for the company now — $4 billion a year is a very thin slice of a $365 billion pie — but Apple’s vice president of ad operations wants to increase that to more than $10 billion within the next two years. For the company to achieve this we’ll probably start seeing a lot more ads than we currently do, starting from similar places (such as Apple’s own Books and Podcasts apps) and potentially expanding to other areas of the iOS, iPadOS and macOS operating systems in the fullness of time.
This is disconcerting for Apple’s customers and rather embarrassing for Apple itself for a couple of reasons. For one, there is no way that the company will be able to insert many more effective ads in its operating systems or apps — iOS in particular — without them getting intrusive and annoying at some point. Then it’s the matter of user privacy and personal information: Apple prides itself in being the champion of consumer privacy with its devices and software, even going so far as to seriously hurt other companies’ businesses (hello Facebook!) in order to protect the rights of its customers. Widely employing a system that leverages user data in order to serve relevant ads is still questionable on Apple’s part, regardless of whether third parties are involved in this process or not. Consumers will presumably be able to opt out of that internal tracking, but they won’t be seeing fewer ads within Apple’s operating systems that way, just random or irrelevant ones.
Many believe that Apple is going after more ad revenue coming from within its operating systems in order to offset some of the cost associated with developing new versions of those and offering them to billions of people every year for free. That may or may not be the case — it’s not as if anyone outside of Apple knows exactly how the company’s executives think of this particular revenue stream — but if it is, it does not look good. The cost of updating and upgrading iOS, iPadOS, macOS, tvOS etc. was always thought to be included in the premium price that Apple’s devices usually command. This extensive, dependable software support is something that we tech reporters have always commended the company for. If Apple’s way of having consumers pay for some of that development cost is implementing way more ads into those operating systems, then it reflects badly on the company as a whole. How much of a problem that will prove to be, we’ll just have to wait and see.