Apple released iOS 16.1 and iPadOS 16.1 last week, bringing with them a slew of improvements, bug fixes, and zero-day security patches. Advertisements have been relocated from the “Search” tab and the newest version of SKAdNetwork, Apple’s ad services framework for the App Store, have also been rolled out. Apple now receives a percentage of revenue from the selling of NFTs and from the purchase of boosts for social media postings, according to new guidelines for the App Store.

Whatever the goals of these changes may have been, users, bloggers, and developers for third-party apps for Apple have reported an increase in intrusive and inappropriate advertisements, particularly those promoting cryptocurrency schemes and gambling. Some of these advertising were placed next to games aimed at children or programmes designed to help people overcome their addiction to gambling, both of which are clearly improper places for them to be.

We reached out to Apple to see if it had anything to say about their ad rollout, and the company confirmed what we had already suspected: it has “paused advertisements related to gambling and a few other categories on App Store product pages.” The most pressing issue has been handled for the time being, and “gambling applications marketed next to gambling addiction rehabilitation apps” probably wasn’t something Apple planned for anyhow.

Whatever the case may be, the uproar made me reflect on a concern I’ve had for some time: the growth of Apple’s Services business, and why that’s made me anxious about the company’s future.

This is where Apple’s money comes from

Sales of hardware remain Apple’s primary revenue source. Apple has always had other profitable businesses running in tandem with its hardware division. These include the iTunes music and video shops, the selling of Mac OS X and professional applications like Final Cut Pro and Logic Pro, and more. Purchasing a Mac, signing up for MobileMe, or using iCloud all generated income for Apple. However, most of these endeavours were merely Apple-focused side projects or services.

To some extent, this is why I feel more at ease bringing Apple devices into my house than, say, Google, Amazon, Facebook’s Meta, or even Microsoft. We’re talking about how much money is made by each of those businesses and where. You are the product if there is no initial investment required and the firm generates most of its income from advertisements or other tracking and targeting methods.

It might be naive of me to base purchases on this optimistic outlook, but as long as Apple was making most of its money from hardware sales, I could at least tell myself that the internal and external pressures on the company would incentivize a continued focus on good hardware running good software rather than chasing click-through rates and user engagement. With Apple emphasising privacy concerns in an effort to differentiate itself from Google, it appeared more unlikely that the company would start sneaking adverts and intrusive notifications into all of its applications.

However, Apple’s financial reports show significant changes and ongoing fluctuations. Software, services, and sales of music and other media accounted for around $12 million of Apple’s $156.5 million generated that year, or 7.7 percent, representing a significant increase over the company’s non-hardware income in 2002. In 2022, that percentage will have increased to over 20 percent, or $78.1 million out of $394.3 million.

This growth has been consistent, and the expansion of Apple’s services has far outpaced that of Apple’s hardware business in recent years; even in 2022, a relatively slow year for Services growth, its revenue increased by nearly $10 million (14.2 percent) year over year, while the growth of all of Apple’s products combined was $18.8 million (6.3 percent).

Services aren’t replacing the Mac and iPad in terms of revenue, but they are already larger than those two products combined. Even if subscriber growth has slowed through 2022, it’s still probably higher than Apple hardware growth, because your pool of prospective customers includes individuals who don’t buy Apple devices.

For now, it’s only the simple things, but there will be more

Advertisements for hotel booking apps, colouring book applications, and no-name free-to-play games have replaced gambling app advertisements since Apple removed them. These ads aren’t relevant to me, which is an issue in and of themselves, but they don’t seem to be harming anyone. Furthermore, the prevalence of advertisements, algorithmically compiled lists of suggested or sponsored material, and notifications regarding e-commerce capabilities and browser switching is noticeably lower on iOS and macOS than it is in Windows or Microsoft Edge, for example. At least for the time being, my gripes are limited to the peripheries of the Apple experience.

The general trend, though, continues to worry me. These adverts, along with Apple TV+’s notifications for new series I haven’t watched and have showed no interest in, and Apple News’s persistent notifications in my feed despite my infrequent usage of the app, are all examples of the Services division’s encroachment into my iOS experience. I may choose to ignore the adverts and turn off the alerts, but by default, the system is geared up to steer me toward items I have no interest in, employing approaches that I find annoying.

The questionable gambling advertising are only one piece of evidence, but Apple is reportedly just getting its ad business off the ground. According to a Digiday report from earlier this month, Apple is allegedly expanding its ad business for the Apple TV+ service by employing a “demand-side platform” (DSP) to let marketers more precisely target certain demographics and interests.

Having more advertisements appear on Apple products and services isn’t inherently a bad thing, and commercials that appear during Apple TV+ streaming won’t start popping up on your iPad without your permission. But in my 25 years of Internet use, I’ve found that advertisements seldom grow less annoying or widespread; the Chromium-based version of Edge is a perfect example of this, having begun as a relatively harmless Chrome clone but gradually morphing into an e-commerce pop-up and nag message nightmare. It’s probably safe to argue that these commercials don’t add anything to the product or service they promote.

Consider this in regards to Apple TV+ commercials: while it’s tolerable to watch the same four or five Hulu ads six times each during the course of an hour-long show, do those ads leave you feeling enthusiastic about being a Hulu subscriber, or do they make you consider switching to the ad-free plan or cancelling your subscription altogether? Make you feel thrilled to keep using the same items when you do a search on Google or Amazon and see nothing but sponsored results above the fold? Or do you use them because they are generally still somewhat better than everything else out there?

Will Apple’s advertisements be just as annoying?

Most likely not. A representative from an advertising firm told Digiday that “The advertising on [Apple TV] will be top-notch, and there won’t be many of them. There is less urgency to cram in a lot of commercials because [Apple is] already quite diverse in terms of income streams.” However, commercials rarely start out as obnoxious as they inevitably become.

Therefore, I am concerned about Apple’s forays into the advertising industry and the growing relevance of the Services division to Apple’s future success. I don’t think Apple’s products will suddenly become unusable, or that the iPhone or Apple TV home screen will be dominated by Roku-style half-page ads, but I do think that pressure for Apple to degrade the experience for users and developers in the name of expanding its ad business will gradually increase as Apple tries to satisfy shareholders looking for perpetual growth.

We’ve seen numerous products and services slide down that slope before, from app adverts in search results to “gambling applications being marketed next to absolutely anything.” Perhaps Apple can change the world. Maybe not however.

Subtly charming pop culture geek. Amateur analyst. Freelance tv buff. Coffee lover