It's not a deal though. Reddit says the users are worth $20 million in lost advertising. So either Apollo pays the money, the users move to another app that pays, or the users return to the official site and app. Either way, Reddit gets their $20 million.

Apollo has no leverage here unless there is strong evidence most of the Apollo users will leave Reddit if the app shuts down. I don't believe they will. The other potential leverage is the upcoming subreddit blackouts, or hinting at taking the Apollo users to start a competitor. The developer said they are not going to build a competitor (that was a mistake, they shouldn't have revealed that card), so I think the blackouts are the only chance of lowering API costs.

There's no way the bit about $20million in lost advertising is true. Going by user counts and reddit's total ad revenue you get about $1 million.

Also, people use Apollo so they don’t have to deal with the ads and terrible ux. They’re not suddenly going to go to the terrible official website or app.

Or if they are, they'll use an adblocker and be of 0 revenue.

There are a lot of users who have decided to delete their account once 3rd party apps are gone. Some may come back but they won't be getting that 20 mil

The point here is, if Reddit thinks the user base is worth $20M per year, paying $10M to take over the app and implement ads on it, would be a steal. They’d return the money in 6 months. Usual payback periods are like 4-8 years. Clearly the $20M is BS because otherwise they’d done the deal on the spot.

They would only do the deal on the spot if that was their only option. But they have the option of spending $0 and having the majority of the users moving to the official app.

This is an example of the same thing being worth different amounts to different parties, and the equivocation leads to comments like this thread.

If Apollo's userbase was actually generating $20mm/yr, acquiring Apollo for $10mm is a no-brainer. But if that were the case, keeping Apollo running as it is would also work.

Obviously this is not the case. Apollo is confusing costing $20mm with generating $20mm.

If it were worth $20M in lost advertising, buying the app and adding adverts to it would be a no brainer. The author was trying to call their bluff on user value, but communicated it very poorly.