How Do Free Apps Make Money? The Business Behind Free

Revenue figures need a denominator

Scale helps explain the headline numbers. Meta reported $196.175 billion in company-wide advertising revenue for 2025, or approximately $196.2 billion. That is a revenue figure across the company, not the profit of one free app. It also does not imply that a small app can expect the same business. Meta’s results

For example, Spotify reported €15.350 billion of Premium revenue and €17.186 billion of total revenue for 2025. Dividing those amounts gives about 89.3% of revenue from Premium. This is a share of revenue, not a claim that 89.3% of people using Spotify were subscribers. Spotify’s annual breakdown

Purchase categories and the free tier

These distinctions follow Apple’s purchase categories. A subscription can itself be purchased inside an app. The place where you pay and the duration of what you buy answer different questions.

Duolingo describes free users as contributing through advertising, recommendations, and product-improvement data in its account of its business model. Treat that as a company’s explanation, rather than evidence that each individual free account generates a profit. Duolingo’s annual report

There is another side to the calculation: serving free users still requires resources. An extra user may bring value, cost, or both. Removing the free tier can change who joins, who stays and who recommends the product. Results depend on the service.

Data use is not the same as a data sale

Google’s privacy policy describes its own information practices. A statement about one provider should not be used to explain every app. In a separate historical example, the FTC alleged improper browsing-data sales involving Avast and Jumpshot, and finalized restrictions in June 2024. The FTC’s case summary concerns that case, rather than all free software.

A contextual ad does not, by itself, establish that a named customer list changed hands. It also does not establish that there is no other tracking. Sharing information requires evidence of a recipient; describing that sharing as a sale requires additional evidence. A paid price does not establish privacy either.

Revenue is not profit

Software maintenance, infrastructure, support, content rights, distribution and payment processing can all matter. A customer’s payment is not necessarily the amount a developer keeps, and there is no single percentage to assume for all apps. Compare the same business, period and cost definition before comparing real figures.

Example assumptions & distinctions

An impression is an ad display; a click is a selection. Billing may depend on impressions, clicks or other terms, with an ad network between advertiser and developer. There is no universal payment for each view.

A subscription may itself be an in-app purchase. Consumable credits, lasting unlocks and renewable access are illustrative categories, not a claim that every app offers all three. For a specific service, examine its collection, purposes, recipients and controls; revenue figures cannot settle privacy questions.