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Apple used to hate the ad business. Now, it looks like it's taking it more seriously. So, how big could Apple's ad business get?
That's a question lots of people in the advertising world have been wondering. And that includes Google. And now, thanks to documents unearthed during Google's antitrust court case, we can see how Google has been thinking about Apple's potential as it edges into an industry Google has dominated for decades.
Titled "Operation Black Walnut," the 2022 report appears to have been assembled by Google strategists to try to imagine what kind of ad business Apple might eventually build out one day.
Apple's current ad business is mostly confined to selling ads on its App Store search results page. But the report's authors speculate that Apple could eventually start selling ads that run on other people's apps and eventually on the web via its Safari browser. It might eventually become a $30 billion business, they guesstimate.
You can see the full document here:
But while the document's authors were trying to imagine how big Apple's ad business could get, they also wondered if Apple would really want to fully embrace it. Right now, most of the money Apple says it gets from "ads" is really money it gets from Google, which pays Apple upward of $20 billion a year to make Google's search engine the default on Apple's phones.
"We believe Apple is unlikely to give up search TAC [the annual payments Apple gets from Google] for a $10-$20b Spotlight Search [Apple's own search engine] opportunity, unless regulation or Google disrupts the status quo," the report notes at one point.
Then again, one of the commenters on the document points out, those annual payments — which could account for 15% or more of Apple's annual profits are "at risk … by regulation or Google's choice."
Which may very well be the case. In August, Judge Amit P. Mehta ruled that Apple had an illegal monopoly in search and those Google/Apple payments are at the heart of the case. The US government has since asked Mehta to ban those payments, along with other proposed remedies like forcing Google to sell off its Chrome browser.
A Google rep declined to comment on the document. Apple hasn't replied to a request for comment. The file became part of the public record in August 2024. Jason Kint, the CEO of Digital Content Next, a trade group representing online publishers, brought the document to my attention after I wrote about the possibility that Apple could lose Google search payments.
The rest of "Operation Black Walnut" is useful for anyone trying to imagine what an Apple ad business could look like if Apple decides to build one. While there are a few insights that seem proprietary to Google — the authors note that Apple has been hiring people with ad backgrounds, including "outreach to Googlers" — most of the data points would be available to anyone outside Google, like the fact that Apple has been moving into sports programming.
Back when Google assembled the document, this looked more like a speculative road map. But now that $20 billion a year could disappear from Apple's revenue line, it looks more realistic.
