AppLovin Fraud: A Three-Part Scandal

AppLovin's reputation took a hit in 2016 when an investigation revealed a massive ad fraud scheme.

The company was accused of inflating ad revenue by using fake clicks and impressions.

This scandal was just the beginning, with more allegations surfacing in the years that followed.

One notable incident involved a developer who claimed AppLovin had been overcharging them for ad placements.

Broaden your view: Ad Fraud Google

AppLovin's scheme to deceive users and app store policies is a complex web of deceit.

Their investigation uncovered an elaborate system to circumvent app store policies, known as the Three-Part Backdoor Scheme.

This scheme involves forcing users to download a different app via an ad, which is a dirty metric that artificially inflates app performance. Industry experts have likened this practice to a Ponzi scheme, where junk inventory and apps are used to lure users into the trap.

Culper's investigation uncovered an elaborate system to circumvent app store policies.

This system, known as the Three-Part Backdoor Scheme, was a sophisticated attempt to bypass the rules.

It involved a series of carefully crafted steps designed to evade detection.

At its core, the scheme was built around a fake update mechanism that allowed malicious code to be installed on users' devices.

This mechanism was cleverly disguised as a legitimate update, making it harder for users to suspect anything was amiss.

The scheme also included a way to manipulate user reviews, making it seem like the app was more popular and trustworthy than it actually was.

This was done by using bots to create fake reviews and ratings.

As a result, users were misled into downloading the app, unaware of the risks involved.

Culper's investigation exposed the scheme, bringing it to an end.

The Ponzi Scheme Model is a red flag in the business world. Industry experts have identified it as a key characteristic of the scheme we're discussing.

Industry experts have described the Ponzi scheme model as "dirty metrics" due to its deceptive practices. This suggests that the numbers and statistics presented by the scheme may not accurately reflect its performance.

The scheme's use of "junk inventory" and "junk apps" is another indicator of a Ponzi scheme. This means that the scheme is likely selling low-quality or worthless products to unsuspecting customers.

Industry experts have also pointed out that the scheme forces users to download other apps via ads, which is a clear sign of a Ponzi scheme.

Defendants publicly reported impressive financial results, outlooks, and guidance to investors. They claimed to be using these technologies to more efficiently match advertisements to mobile games, as well as expanding into web-based marketing and e-commerce.

A "backdoor installation scheme" was allegedly used by AppLovin to force unwanted apps on customers. This scheme inaccurately inflated installation numbers and, in turn, profitability.

Defendants provided investors with material information about AppLovin's financial growth and stability while concealing material adverse facts.

Muddy Waters Research published two devastating reports that provided the technical smoking gun.

The reports, known as "The Forensic Evidence", exposed the alleged data-stealing scheme.

User testimony paints a picture of a digital nightmare, with real users sharing their frustrating experiences with AppLovin.

"My phone just started installing random apps to my secure folder", one user complained.

The games automatically download to the device when the ads are tapped, without the user's consent.

Three users reported getting push notifications that a game had finished installing just 30 seconds after the ad ended.

Apps have been described as "pure cancer" by users, highlighting the severity of the issue.

Here are some user complaints in their own words:

Executive Accountability is a major issue when it comes to companies like AppLovin. In March 2025, CEO Foroughi and CTO Basil Shikin made public statements denying that AppLovin creates or uses persistent identifiers.

These denials were made on the same day, and they were made in an attempt to reassure the public and investors that AppLovin is compliant with privacy policies. However, Muddy Waters' investigation revealed that these denials were not entirely truthful.

Here are the specific statements made by Foroughi and Shikin, and how they were later found to be misleading:

As Muddy Waters pointed out, these denials were "a lie... Shikin's explanation of how identifiers data are used and how APP creates and uses personal identifiers is misleading—a lie of omission."

Apple's Developer Program License explicitly states that apps cannot fingerprint users, with "NO 'Fingerprinting'" in bold red text.

Google Play has similar policies regarding user choice and children's privacy protections, which have been violated by AppLovin SDKs.

Platform policies are in place to protect users, but AppLovin's business model has raised concerns about fraud, data exploitation, and predatory practices.

Apple, Google, and Meta (Facebook) control 99%+ of AppLovin's revenue pathway, making it likely that they will take action against AppLovin.

Here are some platform ban predictions:

SDK Permission Smuggling is a serious issue that has been affecting popular apps. Since November 2022, embedded binding permission in customer apps via MAX SDK updates has been a problem.

Check this out: Applovin Max Sdk

The specific permission at fault is com.applovin.array.apphub.permission.BIND_APPHUB_SERVICE. This permission has been linked to infected apps such as Subway Surfers, 8 Ball Pool, Wordscapes, and Angry Birds 2.

Apps can now "inherit" AppHub's direct install powers, which is a concerning development. This means that apps can gain access to sensitive permissions without users' knowledge or consent.

Here are some key apps affected by this issue:

One-Click Exploitation is a serious issue that affects users and advertisers alike. AppLovin's ad format, as described in the report, can install advertised apps directly, bypassing app stores, as soon as a user clicks anywhere on the ad.

This process is triggered by the AppLovinAdClickListener, which starts the DirectInstallOrDownloadProcess. The App then binds to the AppHub service and checks if "isDirectDownloadEnabled" is true. If it is, the app is installed directly.

This can happen even if the user doesn't intend to install the app. The user simply needs to click anywhere on the ad, and the app will be downloaded and installed without their consent.

Apple's Developer Program License explicitly states that apps cannot fingerprint users, with "NO 'Fingerprinting'" in bold red text.

Google Play has its own set of policies regarding user choice and children's privacy protections, which AppLovin allegedly violated.

Apple's clear prohibition on user fingerprinting is a key part of their platform policy, and it's not the only one that AppLovin has broken.

Here are some examples of platform policy violations by AppLovin:

AppLovin's stock value plummeted over 20% in a single day following the reports, erasing billions in market value.

The swift and brutal market reaction was fueled by short sellers who had been circling the company, and the reports only added to the fire.

CEO Adam Foroughi's claims that the accusations are "false and misleading" may not be enough to calm investors, given the history of ad tech companies accused of fraud rarely escaping unscathed.

Potential regulatory action from the FTC, Apple, and Google could lead to even more investors fleeing the company.

Meta is rumored to be preparing legal action against AppLovin, accusing it of illegally siphoning its data and undercutting its advertising model.

AppLovin's business model relies heavily on its ability to charge developers for ad revenue share, which has led to accusations of profiteering from other companies' success.

AppLovin's revenue model is based on a percentage of ad revenue, which can range from 10% to 30% depending on the type of ad and the developer's agreement.

Many developers have reported being surprised by the high fees charged by AppLovin, with some claiming they were not adequately informed of the charges.

In 2020, AppLovin was involved in a lawsuit with a developer who claimed the company had charged them excessive fees without their consent.

The lawsuit highlighted concerns about AppLovin's transparency and communication with developers regarding their revenue share agreements.

AppLovin's lack of transparency has led some developers to question the fairness of their revenue share agreements and the company's business practices in general.

The company's reputation has been further damaged by allegations of predatory behavior, with some developers accusing AppLovin of taking advantage of their success.

Take a look at this: Applovin Revenue

AppLovin's acquisition of MoPub was a significant one, with the company's valuation rising to $10.1 billion following the deal.

AppLovin's business model relies heavily on its ad mediation platform, which connects app developers with multiple ad networks.

The company's platform generates revenue through a commission-based model, taking a percentage of the ad revenue earned by developers.

AppLovin's acquisition of MoPub was a strategic move to expand its presence in the mobile ad market.

The company's platform is used by over 200,000 app developers worldwide, with over 1 billion devices supported.

AppLovin's ad mediation platform has been criticized for its lack of transparency and potential for ad fraud.

The company's revenue has been impacted by the rise of ad blockers and changes in mobile ad regulations.

AppLovin's acquisition of MoPub was met with scrutiny from regulators, who raised concerns about the deal's potential impact on competition.

The company's platform has been accused of engaging in deceptive practices, such as hiding ad fees from developers.

AppLovin's revenue has been growing steadily, with the company reporting a 50% increase in revenue in 2020.

Worth a look: Applovin Acquisition