How “Free” Apps Make Money From Your Data

The flashlight app, the weather app, the puzzle game your kids love: all free. Building and running apps costs real money, though, so most “free” apps are paid for some other way. Often that way is advertising, and advertising runs on data about you. That doesn’t make free apps bad, but knowing how the business works helps you decide which ones are worth it and which settings to change.

This article explains how free apps make money, what data they collect, and simple ways to limit it. It was checked against Federal Trade Commission (FTC), Apple and Google information on November 9, 2026.

The main ways free apps make money

1. Advertising

The most common model. Apps show ads and get paid each time one is seen or tapped. Ads that are targeted to your interests pay more, so apps and ad networks have a reason to learn as much about you as they can.

2. Sharing or selling data

Many apps include code from third parties, such as ad networks and analytics companies, called software development kits (SDKs). This code can collect information like your device’s advertising ID, approximate or precise location, and how you use the app. The FTC has noted that what an app can access, the ad code inside it can often access too. Some of this data flows to data brokers, who combine it with other sources and sell profiles.

3. In-app purchases

“Free to download” games often make money from coins, gems, lives and loot boxes. The FTC’s Net Cetera guide warns that apps can let kids spend real money even when the app itself is free.

4. Subscriptions and “freemium”

The basic version is free and better features cost money. This model often collects less data, because the app is paid for by subscribers.

What kinds of data are collected

• Device identifiers such as the advertising ID on your phone, which lets ad companies recognize you across apps.
• Location, which is valuable because it reveals where you live, work, shop and worship.
• Contacts, photos and microphone access, if you grant those permissions. The FTC advises checking what each app can access.
• Usage data: what you tap, how long you stay and what you buy.
• Account details like your email, age and gender if you sign up.

The FTC’s study of the data broker industry found that brokers collect and combine vast amounts of information about people, mostly behind the scenes. See How Scammers Get Your Information.

Why it matters

• Location data is sensitive. A pattern of locations can reveal health visits, religion or a home address, even without your name attached.
• Data travels. Once shared, you can’t easily see or control where it goes next.
• Breaches happen. The more companies hold your data, the more places it can leak from. See What Happens to Your Data After a Breach.
• Kids are targets. Children’s games may use ads and in-app purchase prompts designed to keep them playing and spending.

How to keep the useful apps and limit the tracking

1. Turn off app tracking. On iPhone, go to Settings, then Privacy & Security, then Tracking, and turn off “Allow Apps to Request to Track.” Apple says apps must ask permission before tracking you across other companies’ apps and websites.
2. Delete or reset your advertising ID on Android. Go to Settings, then Privacy (or Security and privacy), then Ads. Google says that when the ID is deleted, apps get a string of zeros instead.
3. Review permissions. The FTC suggests turning off permissions an app doesn’t need, or deleting apps that ask for too many. See our iPhone app permissions guide.
4. Set location to “While Using” or “Never”, and turn off precise location for apps that only need a rough area, like weather.
5. Check the privacy labels. The Apple App Store and Google Play show “App Privacy” and “Data safety” sections that summarize what an app says it collects.
6. Delete apps you don’t use. Unused apps can still collect data in the background.
7. Turn on purchase approval for kids. Use Ask to Buy on iPhone or purchase approvals in Google Family Link.
8. Consider paying for apps you use every day. A paid version often means fewer ads and less tracking, though check its privacy policy.

FAQ

Is every free app selling my data?

No. Many free apps are made by companies that earn money elsewhere, or by nonprofits and open-source projects. Check the privacy label and the permissions it asks for.

Do paid apps never track me?

Paying reduces the incentive, but doesn’t guarantee privacy. Check the privacy label either way. Our Privacy Policies Watch reviews popular services’ policies, such as our Samsung privacy policy review.

What’s the single most useful setting?

Limiting location access. It’s the most sensitive data most apps collect, and most apps don’t need it all the time.

Related reading

• Is My Phone Listening to Me?
• Built-in Phone Privacy Tools Reviewed
• Data Broker Removal Services Reviewed
• The Privacy Toolkit

Sources

• Federal Trade Commission, “How Websites and Apps Collect and Use Your Information,” consumer.ftc.gov, accessed November 9, 2026.
• Federal Trade Commission, “Data Brokers: A Call for Transparency and Accountability,” May 2014, ftc.gov.
• Federal Trade Commission, “Net Cetera: Chatting with Kids About Being Online,” consumer.ftc.gov, accessed November 9, 2026.
• Apple Support, “If an app asks to track your activity,” support.apple.com, accessed November 9, 2026.
• Google Play Console Help, “Advertising ID,” support.google.com, accessed November 9, 2026.

This is general information, not legal or technical advice. Menu names can vary by phone model and software version.