Blog Post

Apple Takes Mobile Ad Battle to Google, Blocks AdMob

UPDATED: When Google (s goog) beat Apple (s aapl) to the punch by acquiring mobile ad provider AdMob, and then the computer company responded by snapping up competitor Quattro Wireless, it seemed obvious that the two giants were headed for a showdown. Apple recently fired the first volley in what is likely to be an ongoing battle over the mobile ad market, by changing the terms of its iAds service to make things more difficult for third-party advertising providers, including Google. AdMob CEO Omar Hamoui responded today with a blog post in which he says Apple’s decision will hurt developers of apps and in the long run will be “bad for consumers.”

Apple’s new terms for use of the iPhone OS (now called iOS4) don’t specifically mention Google, and they don’t say that third-party platforms or providers can’t provide advertising on the device. What they do, however, isrestrict who can use the analytical data from those ads. The agreement states that data must be either used internally or provided “to an independent advertising service provider whose primary business is serving mobile ads.” Apple goes on to specify that an ad platform or service that is “owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple would not qualify as independent.”

Apple changed its terms in part as a result of data that was being collected by an analytics company called Flurry, whose software is integrated into a number of apps. Jobs referred to this behavior in his keynote interview at the D8 conference, saying, “[W]e went through the roof. It’s violating our privacy policies, and it’s p***ing us off! So we said we’re only going to allow analytics that don’t give our device info — only for the purpose of advertising.”

The upshot of those changes, however, is that AdMob is effectively shut out of providing ads on the iPhone, since the data provided by users as they browse and interact with ads is one of the crucial parts of having a mobile ad platform in the first place. AdMob CEO Hamoui said in his post that Apple’s terms “if enforced as written, would prohibit app developers from using AdMob and Google’s advertising solutions on the iPhone.” The CEO went on to say that:

The terms hurt both large and small developers by severely limiting their choice of how best to make money. And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well. Let’s be clear. This change is not in the best interests of users or developers. In the history of technology and innovation, it’s clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress.

What will be interesting to see is whether the federal government shows an interest in these complaints from AdMob. When Google said it wanted to acquire the company, the Federal Trade Commission reviewed the purchase because of concerns that the search giant already controlled a large proportion of the online advertising business. The regulator relented in part because Apple launched iAds, which would provide some competition. But if the company is seen as restraining its only significant competitor through licensing terms that seem to single Google out, that might not fly in Washington. Could Apple just have bought itself some anti-trust scrutiny?

Update: According to a report in the Financial Times, federal regulators in the U.S. are already looking at Apple’s behavior to see whether there is cause for concern about it being anti-competitive.

Related content from GigaOM Pro (sub req’d): Social Advertising Models Go Back to the Future

Post and thumbnails courtesy of Flickr user Tambako the Jaguar

29 Responses to “Apple Takes Mobile Ad Battle to Google, Blocks AdMob”

  1. Your headline and article completely misrepresent the situation. Apple blocked Google and other mobile device and OS competitors from collect user and device information from iPhones. They did not however block Google’s AdMob service from placing ads on iPhones, nor did they block apps from using AdMob.

    If you understood this, then a little more honesty in your writing is in order. If you didn’t understand this, then a little more research and getting straight of facts is in order before you irresponsibly post nonsense.

    • Thanks for the comment, Anon. Any headline is by definition an incomplete version of the facts, since it is so short and has to sum up a long post. The piece does explain that AdMob is not blocked specifically, but that blocking analytics from being sent to the company does effectively remove the appeal of being on the device.

  2. Question: would Google allow third-party advertisers to mine YouTube and run advertising on

    That’s essentially what AdMob’s CEO is arguing for.

    Just like developers create apps that can be downloaded by consumers on the App Store, people create videos that can be downloaded/viewed on YouTube.

    In both cases, a product is consumed and revenue can be earned by the creators by running ads on their products (apps and videos).

    So, question for GigaOM: Is it likely that Google isn’t really interested in openness and competition, but only using those buzzwords to string the gullible media along?

    I think Google’s answer about opening up YouTube to other ad networks for data mining gives you the answer you need.

    AdMob is an extension of Android now, and Apple needs to treat them as such.

    Google, on the other hand, needs to stop whining and compete by making Android profitable for its developers instead of using the App Store as a revenue hose to fund surreptitiously subsidize Android.

  3. ya i fully satisfied with this phone.because today every people depend on i phone and its part of life.more and more people attract in i Phone because its functionality is very height.

  4. Steve Jobs is right! He’s no Bozo! What’s so hard to understand here? You don’t want your direct competitor to make money under your nose on your own platform. What is Hamoui (AdMob CEO) really thinking, or better… smocking? After all, Google threw the first punch by acquiring AdMob and starting to compete with Apple on several other turfs. It’s business, they have the right to compete against whoever they chose and Apple, therefore, has all the right to defend its territory. Hamoui should suggest his parent company (Google) to allow Apple to place some type of iAds versions of AdSense or Adwords on Google search engine. Now since he’s not doing such a stupid thing, he shouldn’t complain at the new Apple iAds terms.

  5. Anti-trust cases in the EU more often fit the definitions you’re stuck into, e.g., harming a competitor.

    When push comes to shove – in U.S. anti-trust action by the government, precedent comes to whether or not consumers are hurt.

  6. Google didn’t think this chess match all the way through. Sorry, you lose. Hamoui should just get back to work an stop complaining.

  7. Paolo

    I don’t know, it seems to single out Google/AdMob from where I am sitting.
    Why Apple is allowed to strangle it’s developers in every way possible still confuses me, but people seem to put up with it. They limit the way they develop their apps and now they limit the way they monetize those apps to make a living.

    Seeing as it’s Apples platform, I can see and understand them trying to give themselves an advantage…which seems fair.

    This just seems like they took a list of the top 20 ad networks in mobile and tried to figure out how they would be able to single out any major competitor which as of today is only really Google/AdMob. I almost feel they were safer with the wording they had before that at the very least treated all competitors the same way.

    Should be interesting to see how this plays out.

    • Chris K

      Do you really want to let your competitor in the mobile phone space advertise on your platform especially when they fund their mobile phone platform strictly through advertising?

      Also not like Google has put Google Maps with the turn by turn directions on the iPhone yet. Not like they aren’t using that for Android first and foremost.

      So…it’s kind of like NBC allowing CBS to advertise its shows on NBC. I admit the analogy needs work, but its the closest thing I could think of off the top of my head.

  8. Anti-trust? Against a company with a minor market share? When there are 100s of choices from several viable platform alternatives?

    Aint gonna happen. More than that, Google better hope it doesn’t happen. As I wrote on my site, Google has long practiced something about competitive ad platforms that I consider much worse given Google’s enormous ad market share:

    Competitor ads
    In order to prevent user confusion, publishers may not display Google ads or search boxes on websites that also contain other ads or services formatted to use the same layout and colours as the Google ads or search boxes on that site. Although you may sell ads directly on your site, it is your responsibility to ensure that these ads cannot be confused with Google ads.

  9. Relwal

    It’ll be interesting to see if Apple uses this to cut out Greystripe who is now affiliated with Adobe (a development environment vendor) to allow real-time conversion of Flash ads to HTML over the Greystripe ad network.

    Also the AdMarvel ad aggregating network was recently bought up by Opera (a competing mobile platform). We’ll see whether Apple allows them to continue to exist.

  10. Don’t anti-trust cases require the abuse of a dominant market position? The iPhone is under 50% share of the smartphone market in the US I believe – with Android based devices growing share.

    • That’s a fair point, Gary — full anti-trust cases generally require the abuse of a market monopoly. But there is a lot of grey in the definition of monopoly, and of what constitutes anti-competitive behavior by a dominant player. Thanks for the comment.

      • Robert Drummer

        It depends on how you define the market. Apple controls 100% of the market for iPhone/iPad apps and those developers should have a choice of ad networks.

        Autodesk ran into an FTC problem in 1997, not because they controlled all CAD, but because they controlled a defined subset of the CAD market.

  11. Maneesh

    If an advertising company uses the analytics data from Apple devices to perfect its own competitive offering to Apple’s operating system and mobile phone, then Apple can be right in defending itself.