How AppLovin "scared" Google

Google's Core Advertising Business Sounds Alarm - Google's mobile app advertising business growth suddenly stalls, with internal attribution pointing to AppLovin.

According to The Information on June 3, 2023, Google advertising executives noticed a concerning phenomenon: the once-booming mobile app advertising revenue growth has slowed. As this multi-billion dollar business faced setbacks, internal employees reached a consensus that the small ad tech company AppLovin is eating into Google's market share.

AppLovin specializes in placing ads within gaming apps, and its market share growth secret lies in ignoring the privacy constraints that Google adheres to. The company continues to use IP address tracking to monitor consumer online behavior, a practice that Google voluntarily abandoned in 2019. This means AppLovin can provide advertisers with targeting capabilities that Google cannot match.

According to former Google employees, the key to AppLovin's soaring market share is breaking through the "privacy taboo." While Google strictly adheres to industry guidelines prohibiting the use of IP addresses for cross-site user tracking, AppLovin has leveraged this to precisely target user devices. This "cheating weapon" allows advertisers to achieve targeting precision that Google cannot provide, directly leading to inverted ad conversion rates. Consultant Felix Braberg observed, "Game developers see an 8% increase in daily revenue after switching from Google to AppLovin."

The Astonishing Rise of a Small Company

Data speaks volumes. Reports indicate that between 2022 and 2024, AppLovin's advertising revenue doubled to $3.2 billion. Although this is still insignificant compared to Google's $264.6 billion revenue, AppLovin's surge has shocked the market—its stock price skyrocketed 712% last year and has risen another 24% so far this year. The company's market capitalization has now reached $136 billion, more than twice the combined market value of Pinterest, Reddit, and Snap.

AppLovin was founded by Adam Foroughi in 2012 and remained relatively low-profile for several years. The real turning point came with the acquisition of Max, a company specializing in in-app bidding technology, in 2018, and the $1.05 billion acquisition of MoPub from Twitter in 2022. According to consultant Felix Braberg, AppLovin subsequently shut down MoPub and transitioned clients to its own platform, offering cash incentives to sweeten the conversion.

Google's Forced Counterattack

In the face of AppLovin's challenge, Google has begun to take countermeasures. In December of last year, Google reversed its 2019 policy prohibiting advertisers from using IP addresses to track users. At the same time, Google has started offering cash and cloud service credits to game publishers to entice them to use Google's in-app advertising sales toolsGoogle stated that the change in IP address policy is due to the availability of new privacy-enhancing technologies, creating new ways to responsibly use IP and other data.

New Battleground in E-commerce

AppLovin has not stopped at the game advertising sector. Over the past year, the company has begun to venture into the e-commerce advertising market, directly competing with Google and Meta. According to reports, some advertising executives participating in AppLovin's invite-only testing program indicated that the effectiveness of ads purchased through AppLovin on gaming apps is comparable to that on the Meta platform.

However, not everyone is optimistic about AppLovin's expansion prospects. Aditi Joshi, CEO of advertising agency Bamboo, questioned:

I don't know how many AppLovin users do not use Google or do not have an Instagram account