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Mobile Advertising Latest Battleground for Apple, Google (AAPL, GOOG, MSFT, RIMM, HPQ)


When Apple Inc. (NASDAQ: AAPL) announced its new 4G iPhone on Monday, it also noted that it had already booked some $60 million in mobile advertising on its iAd network. Apple also took the opportunity to lay down new rules for ad developers wanting to place advertising on that network.

Under the new rules, ads that are created as apps for the Apple’s iOS operating system “may not collect, use, or disclose to any third party, user or device data” unless the developer is “an independent advertising service provider whose primary business is serving mobile ads.” That language appears to cut out other mobile advertising networks such as the AdMob network recently acquired by Google Inc. (NASDAQ: GOOG) or to any mobile advertising company that may be acquired by Microsoft Corp. (NASDAQ: MSFT), Research in Motion Ltd. (NASDAQ: RIMM) or Hewlett-Packard Corp. (NYSE: HPQ).

Ironically, it was Apple’s purchase of Quattro Wireless that led to the FTC’s approval of Google’s acquisition of AdMob. Apparently it’s payback time.

The Financial Times reports that U.S. antitrust regulators are planning to determine if Apple if unfairly restricting competitors in the mobile advertising arena. Google/AdMob has already complained that it is being unfairly excluded from Apple devices like the iPhone, iPad and iPod. Privately held mobile ad networks are sure to take up the cause too, because their value will be severely limited if they can’t be acquired by a big player like Microsoft.

Apple’s move should come as no surprise as it is firmly in line with the company’s history. When Apple has a successful product, it controls the hardware, the software, and developer access to the platform. When the company tried in the 1990s to allow clone hardware, Apple nearly folded. Apple’s success depends on controlling its own ecosystem.

In order for the FTC or the U.S. Justice Department to restrain Apple from denying access to its ad network, someone must make a convincing argument that Apple’s actions harm customers. If Google can’t make a ton of money from mobile advertising, or if a small mobile ad company can’t survive, that’s not the regulators’ problem.

AdMob chief Omar Hamoui has pointed out the threat to users “because advertising funds a huge number of free and low cost apps.” That is the issue on which the battle may ultimately be decided.

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Article printed from InvestorPlace Media,

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