Skip to Content

Data Sheet—The Unexplored Gold in Apple’s Advertising Opportunities

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.

Great businesses beget great businesses. That’s one way of looking at Apple’s nascent advertising opportunity.

Toni Sacconaghi, the Bernstein analyst who has followed Apple for years, reckons Apple is sitting on a multi-billion-dollar ad business, a kind of sleeping giant many might view as an afterthought—but not Apple.

Sacconaghi identifies four components of the Apple ad business. Two exist already: ads in its App Store whereby developers hawk their wares and Apple News, the quietly growing anti-Google and anti-Facebook that promises to make money for Apple and the publishers whose articles Apple re-purposes. The other two areas are its hoped-for video streaming business, which the analyst thinks could be a bigger revenue driver than Roku, and Apple Maps, the also-ran to Google which nevertheless could become a meaningful business one day.

Two stats jumped out at me in Sacconaghi’s recent report to investors. He says Flipboard, the news-aggregation app built for the iPad, brings in less than $50 million in revenue. (That’s a long time to get to a point that fails to impress in Silicon Valley.) And Sacconaghi estimates Amazon’s formerly stealthy ad business, just two years old, brings in annual revenue of between $4 billion and $5 billion. He calls Amazon’s ad business the third most important driver of the stock, behind retailing and Amazon Web Services. This is relevant because Apple could have a similar business.

If Apple capitalizes on this it also shows how patient Apple is. The company is methodically mining its giant business for unexplored gold.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

NEWSWORTHY

Deserted in the desert. Following cancellations by many other business leaders, SoftBank CEO Masayoshi Son will not speak at Saudi Arabia’s Future Investment Initiative investor conference this week, though he may still attend. SoftBank’s massive Vision Fund includes $45 billion of Saudi money, and Son was said to be talking about starting a second fund with an equally hefty Saudi contribution.

Capital cruising. The streets of Washington, D.C., will soon be the latest testbed for self-driving cars. Ford says its autonomous fleet is coming to the city next, though every car will have a backup driver and an engineer on board at all times in case of problems. Ford is already running similar tests in Detroit, Pittsburgh, and Miami. Meanwhile, Chinese electric car startup Faraday Future is struggling to raise more capital and will cut employee salaries by 20% and layoff some workers, The Verge reports.

You can’t say that. Cameron Poetzscher, Uber Technologies head of corporate development, resigned from the company a month after the Wall Street Journal disclosed prior allegations of his sexual misconduct. Last year, Poetzscher was given a formal warning, required to take sensitivity training, and had his bonus reduced, the paper reported. In other corporate shuffling, Brendan Iribe, co-founder and CEO of Facebook’s Oculus virtual reality unit, is also resigning. Iribe didn’t offer a reason why he was stepping down, though Facebook brought in former Xiaomi and Google exec Hugo Barra to oversee all VR efforts last year.

Cheaper by the dozen. Reviews of the new iPhone XR are out today and many reviewers say the device, which starts at $250 less than the iPhone XS, is the best deal for most consumers. At The Verge, Nilay Patel says the cheaper phone “offers virtually the same experience” but “you’ll be looking at a slightly worse display.” The Wall Street Journal‘s Joanna Stern says the XR is the better choice for everyone except “animal portraiture artists and screen obsessives” (as the XR’s camera can only do portrait mode on humans, not animals).

Bad connection. In other phone news, Huawei says it cannot sell its well-reviewed new flagship phones, the Mate 20 and Mate 20 Pro, in the United States due to reported security objections made to U.S. carriers. And some users of Google’s new Pixel 3 line of phones are reporting weird glitches like photos not being saved and apps crashing for no apparent reason. Google is expected to issue a software fix shortly.

Biohacking. Several thousand people in Sweden have voluntarily had digital identification chips inserted under their skin, NPR reports. The near field communications chips can be used to open doors, send contact information, and even pay for train tickets.

FOOD FOR THOUGHT

It’s plausible but unlikely at this point that Bloomberg’s blockbuster story on Chinese spyware chips planted in servers will be vindicated. Adding to the fray, this week both Apple CEO Tim Cook and Amazon cloud chief Andy Jassy took the rare step of calling for the story to be retracted. Washington Post media critic Erik Wemple also reported on Monday that other major news outlets have tried and failed to replicate Bloomberg’s reporting. Now comes enterprise computing consultant and journalist Patrick Kennedy with an epic takedown of the Bloomberg thesis. Among many problems cited, one is that the existence of a super-spying microchip should have left a trail of corroborating evidence, Kennedy notes:

Assuming Bloomberg correctly stated it has sources that found hardware there is one somewhat obvious detail missing. Who made the chips? If they were found, then it is reasonable to assume that one would try to figure out which foundry made it. In the silicon industry, there are firms that will open the package and work microscopic magic on them to determine process steps and techniques used to create a chip. These firms are able to identify key features being used, and thus who made the chips.

If you were doing an investigation, this is the hard evidence trail to follow. Figure out where the chips were made and that leads to a trail. You could then request information from the company who made them. That would allow you to get details on who paid for the chips, who sent the designs, where the chips went after they left the fab. You may even be able to get documentation for your team analyzing the hardware if you pressed hard enough. Bloomberg said its sources had knowledge of an investigation into Supermicro’s supply chain, but the other obvious vector is the chip’s supply chain in the hope that they would meet somewhere.

IN CASE YOU MISSED IT

Elon Musk Tweets That He Was Locked Out of His Twitter Account By Hallie Detrick

Oracle Executive Chairman Larry Ellison Slams Amazon Over Cloud Security By Jonathan Vanian

What the Trump Administration’s Proposed Gender Rules Changes Could Mean for Trans People By Natasha Bach

The Four Waves of A.I. By Kai-Fu Lee

White House to Encourage Tech Workers to Do Civic Tours of Duty By Natasha Bach

Amazon’s Alexa Is Coming to an Earbud Near You By Hallie Detrick

This Is the Most Frustrating Flaw Among Managers, According to Their Employees By Rachel King

BEFORE YOU GO

In the Black Sea off the Bulgarian coast, archeologists have found the oldest ever intact shipwreck, a 2,400-year-old Greek sailing vessel much like the one Homer described in the Odyssey. “This will change our understanding of shipbuilding and seafaring in the ancient world,” principal investigator Jon Adams tells The Guardian. Stay tuned for a documentary film on the amazing find.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.