The Rise of AppLovin: The Most Valuable and Most Controversial Company in AdTech

AppLovin is an AdTech anomaly: a company that started in Silicon Valley as a mobile-app monetization shop, grew up in relative obscurity in the shady underworld of mobile gaming, and then — almost overnight — become the most valuable pure-play AdTech company on the planet. The company’s fifteen-year climb from obscure growth-tool provider to industry titan reads like a parable of reinvention.

Like any company whose stock ticker resembles a hockey stick, AppLovin has attracted its share of enemies. Maybe it’s this unorthodox background, combined with success in an often-overlooked part of the digital marketing world, that has made AppLovin simultaneously the most valuable and most controversial company in AdTech?

For those not following closely, the company has been dogged by a vocal cast of short sellers who have accused the company of everything from AI exaggeration and a murky business model, to circular revenue and poor data hygiene. Whether you buy these arguments or not — and many do not — they are certainly part of the story.

Before we dive in. let me make a few things clear about this piece. First, I have no dog in this fight. I decided to write this piece because, frankly, I work in AdTech and don’t know too much about AppLovin, by most measures the largest, most successful company in the space. In this regard I know I am not alone — whether people are willing to admit it or not.

My goal here isn’t to pick a side, even though I recognize AppLovin is a polarizing topic that provokes strong opinions. I was at a dinner party during this year’s AdWeek and simply bringing up the topic caused a stir.

Last, I’m neither long nor short, and I don’t own a single share of their stock (mostly because I don’t fully understand their business). I researched and wrote this piece to unpack how a company founded in a Palo Alto office park became the new gravitational center of mobile performance advertising — and why so many people either swear by it or swear at it.

Origins & Early Game-Studio Days

AppLovin’s origin story stands out precisely because it didn’t come from the New York AdTech corridor. Founded in 2012 by Adam Foroughi, John Krystynak, and Andrew Karam, the company emerged from Silicon Valley with a decidedly un–Madison Avenue proposition: build tools that help app and game developers acquire users, analyze performance, and monetize more efficiently. Despite the common narrative, AppLovin wasn’t born a gaming studio — it was a growth engine that happened to use games as the proving ground. Its timing was impeccable, arriving just as the iPhone era turned mobile gaming from a curiosity into a cultural juggernaut.

Whether by foresight or fortunate timing, AppLovin expanded its capabilities right as mobile gaming exploded. In 2018, it launched Lion Studios, a publishing arm designed to help developers market and monetize their games while giving AppLovin deeper control over inventory, user acquisition, and monetization. The result was a self-reinforcing flywheel: more games meant more first-party data, which fueled better optimization, which in turn strengthened both the AdTech stack and the company’s foothold in the gaming ecosystem.

While AppLovin’s studio ownership amplified both its data advantage and value creation potential, it also exposed the company to later questions relating to fairness, transparency, and the true nature of its meteoric advertising growth. At the core of these criticisms is running the ad platform while also owning the inventory, which creates the appearance of a conflicts of interest, not to mention questions about the validity of the performance results themselves.

As critics call out, this opaque structure allowed AppLovin to use its own games to boost advertising performance, obscure attribution, and steer advertisers towards lower-quality traffic that benefits the platform. Boosters, on the other hand, like to point out that despite outward appearances, mobile gaming was more like a means to an end. As mobile gaming grew, AppLovin smartly pivoted to where the real action was, namely providing AdTech to drive mediation, attribution, optimization, and performance for brands and publishers.

Evolution & Major Milestones

AppLovin’s ascent is defined by a handful of smart, strategic moves that, in hindsight, look inevitable. What began as a simple monetization toolkit for mobile game developers evolved into a global performance platform with sophisticated capabilities across acquisition, measurement, optimization, and supply. By the early 2020s, AppLovin wasn’t just participating in the mobile-gaming economy — it was arguably one of its core infrastructure players.

Their rapid growth was punctuated by a series of smart moves, For example, when IDFA blew up mobile advertising, the industry panicked. IDFA (Identifier for Advertisers) was Apple’s device-level identifier that allowed apps and ad networks to track users across apps for targeting and measurement. Apple effectively “killed” IDFA in 2021 by requiring explicit opt-in consent through App Tracking Transparency. The change hit Meta, Snap, and much of the mobile ecosystem hard, but armed with first-party game data, a mediation layer, and closed-loop optimization, AppLovin was able to rebuild faster and ultimately gain marketshare. In many ways, the post-IDFA disruption created the opening that enabled AppLovin’s AXON-driven rise.

It was the shift from mobile game publisher to AdTech platform that unlocked the kind of margins and growth story that Wall Street likes to fawn over. The company’s stock began to surge, and one could argue the stock’s eventual entry into the S&P 500 was simply the market catching up to a winning strategy as the organization morphed from a clever growth tool into a global advertising powerhouse.

Key milestones:

• 2012: Founded in Palo Alto as a mobile-app advertising/monetization platform

• 2018: Launches Lion Studios; KKR invests; acquires MAX mediation

• 2021: IPO on Nasdaq; begins consolidating its AdTech stack

• 2021–2022: Buys MoPub from Twitter, cementing control in mediation/monetization

• 2022–2025: Pivots hard into software; launches AXON; divests studios; joins the S&P 500

Building the Platform: The AXON Pivot

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The real inflection point came with the AXON pivot. This is where AppLovin stopped presenting itself as “a gaming company with some AdTech,” and started leaning fully into “an AdTech company powered by AI-driven performance optimization.” In this narrative, AXON is the centerpiece — a machine-learning engine trained on billions of behavioral signals flowing through the company’s mediation stack, partner apps, and years of first-party gaming data.

AXON is AppLovin’s machine-learning engine that analyzes billions of in-app signals to predict which users are most likely to engage, convert, or monetize. It powers the company’s bidding and optimization decisions across its mobile-games inventory, acting as the brain of the ad platform.

AXON’s job is simple in theory but complex in execution: predict which users are most likely to engage, convert, or monetize, and then bid accordingly. It acts as the brain of AppLovin’s platform, deciding who to target, how much to bid, and where to place every dollar to maximize ROAS. Supporters view it as AppLovin’s strongest moat, while skeptics point to a black box whose performance can’t be validated from the outside.

Financially, the AXON pivot landed exactly the way AppLovin hoped. Revenue climbed, EBITDA skyrocketed, and later acquisitions like MAX, Adjust, and MoPub further tightened the company’s narrative on its full performance stack. The message to investors became unmistakable: you’re not buying a gaming company anymore — you’re buying a vertically integrated, AI-enabled performance platform.

The Bulls — Why Fans Believe

Bulls like Eric Seufert and Olivia Kory argue that AppLovin isn’t just another AdTech company — it’s something fundamentally different. They point to a business model operating in a massive, fast-growing category with surprisingly few true competitors. Their core argument is that AppLovin has what almost no one else does: full-stack control, a vast data footprint across owned and operated inventory, and an optimization engine (AXON) trained at a scale that’s incredibly hard to match.

A big part of the bull thesis is that the market still underestimates the sheer size of mobile gaming. As Matt Barash put it on Twitter, “Watch the people on your next flight, bus ride, subway ride. They’re all gaming. It’s universal and real. Everyone is a gamer. But mainstream adtech people will never recognize the market.” He’s not wrong. Segwise estimates roughly 3.2 billion active mobile gamers today, growing to 3.5 billion by the end of 2025. When you account for ad spend, user acquisition budgets, and platform services, the TAM for casual gaming alone sits comfortably in the tens of billions — and likely pushes into the low hundreds of billions globally.

From this standpoint, the upside becomes clearer. If AppLovin can continue demonstrating that it drives incremental spend beyond gaming — something its early ecommerce results hint at — it opens up a much larger market that many investors still underestimate. The ecommerce push is essentially a wager that DTC and retail brands will tap into AppLovin’s mobile-game inventory and AXON-powered optimization to acquire customers more efficiently than on the major social platforms.

In the bull view, this is the real unlock. Proving sustainable performance for non-gaming advertisers expands AppLovin’s addressable market well beyond the core gaming ecosystem. If the company can keep delivering genuine incremental ROAS for ecommerce brands, the runway is far larger than what the street has currently priced in.

When you add it all up, this is why The Economist labeled the story “remarkable,” and why Digiday said its results are “the kind that usually end an argument.” In the bull view, AppLovin is that rare AdTech company that doesn’t just tell a great story, it repeatedly backs it up with execution.

The Bears — The Detractors’ Concerns

The bear case is just as loud. Notorious short sellers like Lauren Balik, Fuzzy Panda, Culper, and Muddy Waters argue a meaningful portion of AppLovin’s growth comes from practices that look structurally conflicted and intentionally engineered to inflate performance. Their central claim is that AppLovin has long benefited from related-party dealings inside its mobile-gaming ecosystem, with studios in sketchy places like Cyprus or Belarus allegedly buying traffic from AppLovin, spending heavily on UA through AXON, and then monetizing through AppLovin’s mediation stack.

Critics describe this as a circular loop: money flowing between entities the public can’t fully scrutinize, creating the illusion of third-party demand when some of it may simply be internal recycling. They also highlight the quality of traffic inside the system, pointing to patterns that resemble click-farm-adjacent behavior — bursts of installs from low-value regions, strange retention curves, and activity that seems optimized more for algorithmic signaling than real user engagement. AppLovin’s proximity to multiple game studios only amplifies these concerns. If you control both supply and demand, as Google has long proven, manufacturing “performance” is much easier than proving it.

A newer line of attack focuses on AppLovin’s ecommerce expansion. Several early customer examples feature advertisers that look like Multi-level Marketing (MLM) companies, supplement resellers, diet-pill brands, and other “too-good-to-be-true” products that run aggressive campaigns in mobile games. Detractors argue these companies show up on AppLovin not because the ROAS is exceptional, but because Meta and Google won’t approve their ads. In other words, AppLovin’s ecommerce pipeline raises questions about inventory quality, brand safety, and whether the platform’s strongest results are coming from sustainable brands — or simply high-churn, scammy MLM operators built to scale fast and disappear even faster.

The Tension & What to Watch

These criticisms ultimately distill into a set of legit questions about the foundations of AppLovin’s business. The first is whether AXON’s performance can be validated by anyone outside AppLovin’s own walls. Because so much of the optimization happens inside a closed-loop system — MAX, O&O inventory, partner studios, and now ecommerce — critics argue it’s hard to know how much of the reported lift is truly incremental versus simply the product of AppLovin optimizing traffic it already controls. This naturally leads to concerns about how much of the company’s revenue is genuine third-party demand versus internally generated volume, or spending tied to related-party studios that may not represent real market conditions.

Layered on top of this is a growing unease about inventory quality, much of which sits in the sketchy world of casual gaming. AppLovin’s mobile-games supply has always been massive — think about all those people on buses playing games — but detractors say it’s also where brand-safety risks, retention red flags, and questionable ecommerce advertisers tend to cluster. The fear is that as AppLovin pushes deeper into ecommerce, where early adopters include MLM-ish brands and high-churn supplement companies, the quality of demand will become harder to defend. Looming over all of this is the valuation question about how any AI-first tech company can be priced for an eventual “AI bubble” burst — though AppLovin is certainly not unique in this regard.

In My View

What makes AppLovin fascinating and polarizing is it embodies the arc of modern AdTech — the shift from content to infrastructure, from deterministic IDs to machine-learning and AI, from scattered tools to a vertically integrated platform. It began in the shadows of mobile gaming, but its ambitions have made it bigger, and more successful than being a gaming studio.

For investors, there’s enormous opportunity here, and enormous risk. If AppLovin’s performance engine is as powerful as advertised, it may reshape mobile marketing — a fast-growing sector the company already dominates. On the other hand, the sky-high valuation, opaque business model, and looming regulatory issues could certainly collide in unpleasant ways. AdTech Theranos, anyone? But that’s the tradeoff with transformative companies: they’re either visionaries that succeed and make loads of people rich, or cautionary tales that burn institutional and retail investors alike. You just rarely know which narrative is the right one until the story is told.

Conclusion

AppLovin sits at a genuine crossroads. It has reinvented itself multiple times, executed with insane speed, and built one of the strongest performance marketing engines in the business. It also faces a wall of skepticism, regulatory pressure, and questions about the long-term prospects of its model. What happens next depends on how the company performs under the pressure of its own success — and whether AXON turns out to be the engine its boosters believe it is. Time will tell.