SAN FRANCISCO, March 24 (Reuters) - Apple on Tuesday said it plans to introduce paid ads to its maps service in the U.S. and Canada this summer, marking its entry into a business long dominated by Alphabet's Google.
Apple Maps, an app that comes bundled on hundreds of millions of iPhones and other devices each year, will display paid advertising on top of existing organic search results. Advertisers will be able to claim their physical location through a set of business tools, which Apple also said Tuesday it plans to revamp next month.
Apple did not say how much revenue it expects to generate from the new service, or how many users of its 2.5 billion active devices regularly use its maps service.
"The introduction of ads in Apple Maps could represent an incremental opportunity for Apple's services business," said Gil Luria, analyst at D.A. Davidson.
"Apple gets much of its growth and profits from the services business and this could add another layer of growth."
But the move launches Apple, which has long sought to set itself apart from rivals who generate most of their sales from advertising by playing up its data privacy controls, into more direct competition with both Google and Meta Platforms for local advertising dollars.
Apple said that its new map ads will maintain its privacy controls and that a user’s location and the ads they view and interact with will not be associated with the user's Apple account.
The company also said that what it calls "personal data" stays on a user’s device, is not collected or stored by Apple and is not shared with third parties.
The move comes at a time when some of Apple's biggest cash generators- its business of taking a commission on app developer subscriptions and the billions of dollars a year Google sends to Apple for sending search traffic to Google - are under regulatory pressure in Europe and threatened by new AI technology that is reducing traditional search traffic.
The move could also intensify scrutiny of Apple's efforts to block rivals such as Meta from gathering data on Apple users, which Meta and European publishers have opposed on antitrust grounds as Apple ramps up its own ad business.
In addition to map advertising, Apple said Tuesday it plans to revamp its tools for businesses, with improved tools to set up and distribute Apple devices to employees without needing special expertise. Among the other changes, Apple plans to make free a tool for managing devices that was previously a paid tool.
(Reporting by Stephen Nellis in San Francisco and Akash Sriram in Bengaluru; Editing by Nick Zieminski)
