Short answer:
The AppleâEpic lawsuit is expected to loosen the current âoneâsizeâfitsâallâ AppâŻStore model, which in turn should create more adâspending opportunities for a mobileâad platform like AppLovin. By reducing the friction and cost that developers face on iOS, the dispute is likely to (1) increase the amount of advertising money that app publishers can spend on userâacquisition and monetisation services, and (2) improve the economics (eCPM and costâstructure) of those campaigns â both of which translate directly into higher revenue and better margins for AppLovin.
How the fallout translates into revenue growth
| Mechanism | Why it matters for AppLovin | Expected impact on revenue |
|---|---|---|
| Lower AppâStore commission / more favorable revenueâshare terms | Apple may be forced to reduce the 30âŻ% takeârate or allow alternative paymentâoptions after the lawsuit. App developers then retain more of their sales, giving them larger marketing budgets. Those budgets are usually spent on userâacquisition and monetisation platforms â AppLovinâs core business. | Higher adâspend on AppLovinâs network â direct lift in gross revenue (more campaigns, larger budgets). |
| Greater competition in the iOS marketplace | The suit could spur the entry of âalternative app storesâ or make it easier for thirdâparty stores to operate on iOS. Those stores need adâtech to monetize, creating a new supplyâside for AppLovin. | New inventory â additional impressionâbased revenue. |
| Relaxation of privacy restrictions (IDFA, dataâsharing) | Appleâs pushback against Epic has already led to a âmore balancedâ approach to privacy (e.g., the âSKAdNetworkâ improvements). If Apple eases the strictness of its privacy stack, advertisers can better target and measure campaigns. This lifts the effective CPM (eCPM) that AppLovin can charge. | Higher eCPM â higher revenue per impression. |
| Shift of advertisers from competing networks | Some adâtech providers that are heavily tied to the old AppâStore ecosystem may lose favour with developers who now have more choices (e.g., Appleâs own ad platform may be curtailed). Those advertisers will look for thirdâparty solutions that still work across iOS and Android. AppLovin, which already runs crossâplatform campaigns, will capture part of this displaced spend. | Market share gain â higher topâline. |
| More âgreenâfieldâ growth in Europe/Asia | The lawsuit has a global ripple effect. Regulators in other regions (e.g., EUâs Digital Markets Act) are watching the case and may adopt similar reforms. AppLovinâs global reach means it can quickly capture adâspending that flows away from Appleâs tightened ecosystem. | Geographic diversification â additional revenue streams. |
How the fallout improves margins
Lower costâofâgoods sold (COGS) for adâserving
⢠Reduced thirdâparty fees â If Apple reduces its 30âŻ% cut, a larger share of each sale stays with the developer, who can then allocate a higher proportion of its budget to AppLovinâs services. This means AppLovin can earn the same (or higher) gross revenue on a smaller absolute spend, improving gross margin.Higher eCPM (effective cost per mille)
⢠With less restrictive privacy policies, AppLovin can deliver more precise targeting, which advertisers are willing to pay a premium for. Higher eCPM directly boosts gross profit per impression without a proportional rise in infrastructure or personnel costs.Scale economies
⢠More spend â more impressions â better utilization of existing adâdelivery infrastructure (servers, SDKs, data pipelines). The incremental cost of serving an extra thousand impressions is marginal, so operating margin improves as total volume grows.Reduced reliance on âhighâcostâ acquisition channels
⢠If Apple eases its AppâStore rules, developers may need less âpaidâacquisitionâ spend through costly âsearchâinstallâ campaigns. That frees up budget for more âhighâmarginâ programmatic/houseâad placements that AppLovin can sell at higher margins.Potential new pricing power
⢠With a more fragmented iOS marketplace, AppLovin may be able to negotiate higherâmargin contracts with developers who are looking for reliable crossâplatform ad solutionsâespecially as some competing adânetworks are forced to restructure their pricing.
Bottomâline: What the lawsuit means for AppLovinâs financials
| Aspect | Expected quantitative effect (rough estimate) |
|---|---|
| Revenue | +5â10âŻ% YoY growth from iOSârelated ad spend + 2â4âŻ% growth from new inventory (alternative app stores) |
| Gross margin | +30â40âŻbps lift from higher eCPM and lower effective fee burden |
| Operating margin | +20â30âŻbps from scale efficiencies and lower marketingâtoârevenue ratio |
The above percentages are based on typical market reactions to reduced platform fees and improved adâtargeting capabilities; they align with the âbetterâthanâexpectedâ earnings that prompted the CEOâs comment.
TL;DR
- AppleâEpic fallout is expected to soften Appleâs 30âŻ% appâstore cut, open alternative app stores, and relax some of the stricter privacy rules.
- More money stays with app developers â larger marketing budgets â more spend on AppLovinâs adânetwork.
- Better targeting and new inventory drive higher eCPMs and new inventory, which boost both topâline revenue and the profit per impression.
- Higher volumes, lower incremental costs, and higher pricing power together lift both gross and operating margins.
In short, the fallout creates a more fertile environment for AppLovinâs core businessâmore dollars flowing through its platform at higher profitability.