AppLovin chief executive Adam Foroughi published a detailed explanation of the company's Axon advertising platform on February 2, 2026, addressing persistent confusion about how the business operates and its scale within the digital marketing ecosystem. The post arrives as industry professionals raise questions about transparency and verification capabilities on the platform.

According to Foroughi, advertisers currently spend "well over $11 billion dollars annually" on AppLovin's platform, a figure that has grown since the company disclosed it during the first quarter of 2025. The Palo Alto-based company reached over one billion daily active users through its MAX mediation platform, primarily adults playing casual mobile games including Candy Crush, Solitaire, Mahjong, and Crossword titles.

The business model explanation comes amid broader questions from marketing professionals about platform practices. Jonathan D'Souza-Rauto, a martech and adtech consultant, stated on LinkedIn that Axon "may be starting to win the hearts of especially the DTC crowd as an alternative to Meta, but when an ad platform doesn't have basic means to debug where exactly you served and validate it, it will always remain a red flag."

Scale and competitive positioning

Foroughi emphasized that advertiser spending on AppLovin exceeds combined spending on Pinterest, Snapchat, and Reddit. The distinction centers on performance-based spending models where advertisers acquire customers and generate revenue exceeding advertising costs. If they fail to achieve positive returns, spending stops immediately.

The company positions this as differentiation from legacy ad-tech models that relied on opaque arbitrage and misaligned incentives. Foroughi stated that Axon operates with structural alignment where declining advertiser performance immediately contracts spend, with no delay or budget smoothing. The system self-corrects in real time.

Most Axon advertisements deliver through AppLovin's own mediation platform rather than third-party inventory sources. MAX reaches the platform's one billion daily active users. The ad impressions AppLovin wins are exclusive to the platform and benefit solely advertisers buying through Axon. Advertisers not buying through Axon miss access to what the company characterizes as a significant portion of premium mobile supply.

This creates fundamental differences from demand-side platforms, according to Foroughi. He noted that when advertisers mention they already access AppLovin inventory via third-party DSPs, the company's scale likely exceeds most DSPs combined. Access to inventory on MAX reflects competitive auction outcomes. When advanced models predict high purchaser intent, other bidders rarely bid as competitively as AppLovin for that user.

The closed loop between supply, demand, and optimization represents one primary reason the advertising opportunity for partners has grown substantially in recent years, Foroughi stated. AppLovin reported 68% revenue growth in the third quarter of 2025, with net income from continuing operations climbing 93% year-over-year to $836 million.

Technical foundation and predictive capabilities

The Axon 2 platform, which launched in April 2023, significantly expanded model capacity beyond gaming-focused predictions. While Axon 1 performed well for gaming applications, Axon 2 enabled expansion into e-commerce, subscription services, and other verticals through enhanced prediction accuracy.

The models predict expected value distributions many days into the future with sufficient precision to support real-time capital allocation across categories. This requires accurately valuing consumers playing games for offers that aren't games, predicting an complex chain of behaviors including ad engagement, click-through rates, app or site engagement, conversion likelihood, payment probability, purchase size, and repeat behavior over time.

Even small inaccuracies in prediction break the economics, according to Foroughi. Advertisers require return on investment where $1,000 in spending generates meaningfully more than $1,000 in lifetime value. The precision threshold for these predictions exceeds what was technically feasible before substantial model capacity increases.

AppLovin's second quarter 2025 results demonstrated continued momentum, with net revenue per installation increasing 70% while installation volume grew 8% compared to the prior year period. These improvements reflected ongoing enhancements to the AI-powered advertising recommendation engine.

Attention environment and format advantages

Performance depends not only on prediction but on attention quality. Axon primarily delivers full-screen video ads that users cannot scroll past. Roughly half of impressions occur between game levels. The other half consists of rewarded video placements where users choose to watch advertisements in exchange for in-game rewards.

These advertisements are viewed with full attention, according to the company. Average watch time exceeds 35 seconds, and viewability is guaranteed. The format differs substantially from search and social ads that are often brief, easily skipped, and consumed passively as users scroll through feeds. Many brand messages reduce to a few seconds of attention before disappearing.

The attention-rich environment, when paired with Axon 2's predictive models and massive audience scale, creates what Foroughi characterized as a large incremental growth opportunity for advertisers that complements search and social rather than competing with them. The platform operates in an environment where advertisements are intentionally viewed, watched for extended periods, and give advertisers the ability to deliver complete brand messages with certainty they will be seen.

However, the attention claims exist alongside industry concerns about verification capabilities. D'Souza-Rauto noted that AppLovin branching into connected television space with an Adjust-based measurement model means advertisers should ask for transparency. He stated that plenty of credible research already exists on flaws and bad acting, with expectations that an AI-powered future state will generate even more concerns.

Transparency and verification questions

The transparency concerns D'Souza-Rauto raised center on platform capabilities for advertisers to verify where advertisements served and validate delivery. Basic debugging and validation tools represent standard capabilities across established advertising platforms, enabling advertisers to audit campaign delivery and confirm advertisements appeared in appropriate contexts.

The absence of such verification mechanisms on emerging platforms creates challenges for advertisers allocating budgets and assessing campaign performance. Without ability to validate delivery independently, advertisers must rely entirely on platform-reported metrics without external confirmation methods.

Industry standards for transparency have evolved substantially following programmatic advertising controversies. The Association of National Advertisers' Programmatic Media Supply Chain Transparency Study revealed that only 36% of post-transaction programmatic budgets reach valid, viewable, measurable, and non-fraudulent impressions. TAG CEO Mike Zaneis emphasized that marketers face "garbage in, garbage out" transparency without log-level data access across downstream partners.

AppLovin's business model differs structurally from traditional DSP operations. The company maintains that if the platform did not deliver measurable returns, advertisers would stop spending quickly. The persistence and growth of spend validates the business model. Many AppLovin advertisers are profitable, self-funded businesses where cash flow is critical.

Microsoft's decision to sunset Xandr DSP by February 28, 2026, removes one of the industry's most transparent platforms from the market. Brian O'Kelley, co-founder and former CEO of AppNexus, had positioned the company as a transparency champion, revealing in 2017 that AppNexus charged an average of just 8.5% to sellers on its platform, significantly lower than many competitors.

Economic growth and market expansion

Foroughi emphasized that AppLovin has created tens of billions in economic expansion over the company's lifetime. Inside mobile gaming, the company leads in user acquisition and monetization. Without efficient advertising and monetization, many free-to-play games would not exist at their current scale.

As Axon expands into new categories, similar effects emerge. Businesses grow faster, customer acquisition becomes more efficient, and entire segments of the digital economy become more economically viable. Advertising, when executed correctly, expands consumer behavior across categories.

The company transitioned from mobile gaming focus to broader market applications starting in 2024. AppLovin rolled out an initial version of its solution to e-commerce and direct-to-consumer brands, and results exceeded expectations, proving the platform could drive growth beyond gaming. That momentum fueled the launch of Axon Ads Manager, the self-serve, AI-powered advertising platform.

The strategic shift included divesting the gaming studios business. AppLovin announced plans in February 2025 to sell its entire mobile gaming division for $900 million, focusing entirely on advertising technology. The gaming division had generated $1.5 billion in revenue for 2024 but represented a strategic departure from the company's core advertising platform business.

Market scrutiny and controversy

The business model explanation arrives amid significant market scrutiny. Short-seller investigations in early 2025uncovered potentially problematic data collection practices. Muddy Waters Research published a report on March 27, 2025, alleging that AppLovin systematically collects third-party platform user identifiers without proper authorization.

The report claimed AppLovin gathers and structures unique identifiers from platforms including Meta, Google, Snap, TikTok, Reddit, and others, along with Shopify event data, to create what the firm termed "Persistent Identity Graphs." These practices appear to occur outside controlled environments where companies like Apple, Google, and Meta enforce detection policies, potentially bypassing their ability to monitor cross-platform tracking.

As a Meta Audience Network Partner, AppLovin is subject to restrictions that expressly prohibit "the collecting or storage of any data obtained from any Ad or use of the Audience Network Service." Apple's developer guidelines state that developers may not derive data from a device for the purpose of uniquely identifying it. Apps found engaging in this practice may be rejected from the App Store.

The Muddy Waters report challenged AppLovin's claims about advertising effectiveness, particularly regarding incrementality of sales generated through the platform. While Foroughi claimed advertisers were "experiencing nearly 100% incrementality" from traffic, Muddy Waters estimated only about 25-35% of purchases attributed to AppLovin are truly incremental.

According to web traffic analysis for 37 million unique users across five advertisers in the first quarter of 2025, approximately 52% of e-commerce sales tracked through AppLovin are actually retargeting of existing potential customers rather than new customer acquisition, the report suggested. AppLovin's share price fell 20% following the March report, representing its steepest single-day decline on record.

Additional allegations in February 2025 from Culper Research claimed AppLovin deployed systems enabling automatic app installations without proper user consent. The research firm alleged the company incorporated permissions into thousands of apps that trigger silent app downloads directly onto users' devices.

Industry context and competitive dynamics

The transparency debate occurs within broader industry transformation toward AI-powered automation and reduced human oversight. Meta's aggressive push toward fully automated advertising has ignited fierce industry debate about balancing automation efficiency with brand control and transparency.

The "black box" problem removes advertiser agency and makes diagnosis impossible when performance drops. Creative quality suffers when optimization algorithms prioritize clicks over brand building. Yet technical innovation in machine learning capabilities represents genuine advancement, with documented performance improvements when automation works correctly.

Yahoo DSP became the first platform to implement IAB Tech Lab's Data Transparency Labels in January 2025, providing advertisers with standardized information about audience segments. The implementation builds upon supply intelligence partnerships designed to help advertisers make informed decisions about data retention and processing requirements.

AppLovin's position in the market continues strengthening despite controversies. The company came in second in AppsFlyer's power ranking for iOS gaming in the most recent index, closing the gap with market leader Google. While still trailing significantly in quality metrics, AppLovin demonstrated 10% improvement in its quality retention score alongside rising client numbers.

The platform dominated Western tier-one markets, claiming first place in both power and volume rankings across North America and Europe. These regional strengths demonstrate AppLovin's ability to capture market share in the world's most valuable advertising markets.

Industry response and professional perspectives

Nitin Rabadia, senior commercial director specializing in AI marketing and ad tech, responded to D'Souza-Rauto's LinkedIn post with support for transparency demands. He stated that he has only worked in companies offering 100% transparency for brands and advertisers, emphasizing that this standard will never change for him.

The exchange reflects growing professional concern about verification capabilities as advertising platforms adopt increasingly automated optimization systems. Transparency requirements extend beyond simple reporting to include verification of where advertisements served, validation of audience composition, and confirmation of measurement accuracy.

The programmatic advertising industry faces mounting pressure over transaction identifier standards as demand-side platforms and supply-side platforms dispute fundamental architecture of bid request transparency, according to recent analysis of programmatic infrastructure. Privacy considerations motivated implementation modifications, with publishers expressing concerns that unified transaction IDs could enable buyers to combine bid requests across different sellers.

Amazon introduced AI targeting for DSP campaigns in November 2025, distinguishing its approach by maintaining transparency through rationale explanations for each recommendation. The system surfaces reasoning behind audience suggestions rather than operating as a "black box" where advertisers cannot understand targeting logic.

The interface maintains transparency by providing supporting rationale for each recommendation, enabling advertisers to make informed decisions about audience targeting strategies. This transparency addresses advertiser concerns about fully automated systems making strategic decisions without visibility into underlying logic.

Platform evolution and strategic positioning

AppLovin started in 2012 with an app enabling friends to share games they were playing. Like many startups, the company needed promotion methods to grow users, but marketing tools at the time failed to meet needs. The company pivoted from building another app to constructing a platform solving broader marketing challenges.

For more than a decade, AppLovin focused on helping mobile game developers market apps effectively. Having come from gaming backgrounds, the team built a network reaching over a billion daily active users through targeted ads in mobile games. It proved rewarding to see how the platform helped studios worldwide scale businesses, leading to fresh investments, hit game launches, and significant job creation in the industry.

The progress naturally evolved into Axon platform development. In 2024, the company expanded its vision, believing marketing tools could benefit businesses beyond gaming. Initial rollout to e-commerce and direct-to-consumer brands exceeded expectations, proving the platform could drive growth for any business.

The goal centers on making profitable growth accessible to every business, allowing companies to focus on core competencies. The company started as a small business, according to the Axon team, creating understanding of growth challenges, financing stress, and reinvestment thrills. The team embodies the mindset that got the company to current scale: humble spirit, relentless work ethic, curiosity driving innovation, and commitment to challenging status quo while delivering measurable value.

The business model positions Axon as structurally different from legacy ad-tech companies that relied on opaque arbitrage and misaligned incentives where revenue derived from spreads on impressions rather than advertiser outcomes. If advertiser performance declines, spend immediately contracts without delay or budget smoothing. The system self-corrects in real time.

Many advertisers are profitable, self-funded businesses where cash flow is critical, Foroughi emphasized. If Axon did not deliver measurable returns, these advertisers would stop spending quickly. The persistence and growth of spend represents the strongest validation of the business model. Axon scales because it allows advertisers to become arbitrageurs themselves, deploying capital while the system prices opportunity and profits are shared.

Timeline

Summary

Who: AppLovin Corporation CEO Adam Foroughi published the business model explanation, while industry professionals including Jonathan D'Souza-Rauto (martech/adtech consultant) and Nitin Rabadia (senior commercial director) raised transparency concerns through LinkedIn commentary.

What: Foroughi detailed how AppLovin's Axon platform operates, emphasizing that advertisers spend over $11 billion annually on the platform, exceeding combined spending on Pinterest, Snapchat, and Reddit. The explanation addressed persistent confusion about business scale and how the closed-loop system between supply, demand, and optimization creates competitive advantages through exclusive inventory access and advanced predictive models.

When: The blog post was published on February 2, 2026, following months of market scrutiny including short-seller reports in early 2025 that alleged data collection issues and questioned advertising incrementality claims.

Where: The explanation appeared on AppLovin's Axon platform blog, with industry discussion occurring on LinkedIn among marketing and advertising technology professionals. AppLovin's platform reaches over one billion daily active users primarily through casual mobile games, with expansion into e-commerce and direct-to-consumer categories.

Why: The detailed business model explanation responds to industry confusion about AppLovin's scale and operations as the company transitions from gaming-focused advertising to broader market applications. However, it arrives amid professional concerns about transparency and verification capabilities, with consultants noting that platforms without basic debugging and validation tools raise red flags for advertisers allocating budgets and assessing campaign performance.

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