Apple looks to China to bolster its growing ad business

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Apple search ads China
Feature launched in China this week.
Photo: Apple

Apple this week launched its App Store search advertising business in mainland China, five years after it arrived in the United States. Called Apple Search Ads, the targeted ads feature works similar to Google ads by letting developers bid to get advertising space for certain keywords.

Debuting Apple Search Ads in one of Apple’s biggest markets comes at the same time that Apple is cracking down on targeted advertising from other companies. Features like iOS 14’s App Transparency Tracker lets users opt out of personalized tracking from other companies. But while they’re struggling, Apple’s seemingly making the move to expand its own ad empire.

Strict rules on non-Chinese companies

“It’s likely that the long delay in launching Search Ads in China was due to Chinese government restrictions on the operation of advertising business in China,” Rich Bishop, founder and CEO of AppInChina, told TechCrunch. “It seems that Apple has found a way around this, but at the cost of having to accept payments in foreign currencies and not being able to provide Search Tab ads.”

In a blog post, AppInChina, a company which helps apps launch in the Chinese market, notes that:

“The most interesting section of [Apple’s guidance on Apple Search Ads in China] is the ‘Ad Content Qualifications’ which provides examples of the qualifications that may be required according to the category of app that will be promoted. Almost all of these licenses can only be held by a 100% Chinese-owned company (or in some cases a joint venture with Chinese shareholders holding over 50%) and are therefore impossible for an overseas entity or wholly foreign-owned entity (WFOE) to obtain.”

If a foreign company wants to advertise in China they must therefore partner with local companies. Apps must also, for obvious reasons, comply with local laws. Since China can be pretty strict about the apps they allow, this could prove more of a challenge than it immediately sounds.

Growing its search business

The China expansion isn’t the only example of Apple bolstering its search business recently. Apple also recently launched a new “Suggested” apps section in the App Store. This lets developers more widely promote their apps. That’s instead of having them show up only in response to certain search terms.

While Apple has grown its ads business, it has also spoken out about restoring faith in digital advertising. In January, CEO Tim Cook gave a pro-privacy speech in Brussels on the topic. Cook’s talk covered “enforcing rights in a changing world,” including boosting user confidence in online advertising.

Cook has often criticized other companies’ monetization of users’ personal data for things like advertising. What Apple would argue makes its approach different is that it doesn’t track users across apps (although it does use information from multiple Apple apps). Apple also doesn’t sell individual users’ data. Instead, it targets users according to broad, anonymized categories. That’s still not enough to quiet all critics thought.