War between AdMob and Apple Hurts Users

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Apple and Google are engaged in a veritable chess match--or perhaps a knife fight--for the future of the smartphone platform and mobile advertising. As Google, with its recently approved acquisition of AdMob, and Apple, with the launch of its own proprietary mobile ad platform iAds, duke it out in a war to establish dominance, it's the small and medium businesses that rely on the mobile advertising that are becoming collateral damage.

Apple appears to be blocking its biggest competition for iAds by effectively banning AdMob from the iPhone platform.
The ad revenue for Google and AdMob will certainly take a hit if it is excluded from the iPhone platform, but Google has billions to spare. It will survive and then some.

However, the companies that advertise through AdMob and expect to be able to reach the iPhone market are another story. The developers who have created iPhone apps that rely on AdMob ads to generate revenue will also suffer. The consumers who benefit from free or low-cost iPhone apps supported by AdMob ads are yet another story.

When the FTC issued its statement approving Google's purchase of AdMob, it declared, "The Commission has reason to believe that Apple quickly will become a strong mobile advertising network competitor. Apple not only has extensive relationships with application developers and users, but also is able to offer targeted ads (heretofore a strength of AdMob) by leveraging proprietary user data gleaned from users of Apple mobile devices."

I don't think the FTC predicted that Apple would compete by changing the rules and banning AdMob from the iPhone altogether. Which one needs the regulatory scrutiny now?

Omar Hamoui, founder of AdMob, did not mince words in firing back at Apple for apparently rewriting the rules specifically to ban Google and AdMob from the iPhone platform, which includes the iPhone, iPad, and iPod Touch. Hamoui vented in a blog post, "This change threatens to decrease--or even eliminate--revenue that helps to support tens of thousands of developers. 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."

Hamoui added "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."

The cries of lament for the impact on developers and consumers seem altruistic enough. But, it's hard to take those concerns seriously from the company engaged in battle with Apple--especially when AdMob recently revealed metrics showing that the iPhone makes up the lion's share of its ad traffic and revenue.

As I pointed out earlier, though, there is a flipside to AdMob's massive revenue that echoes the concerns Hamoui discusses. Advertisers, developers, and consumers that rely on AdMob to reach the iPhone market are impacted as well, and they are not in the same position financially to just roll with the changes.

Chhavi Upadhyay, chief operating officer of iVdopia, said via e-mail, "Whenever there is a closed platform, these are the threats that people operating in the ecosystem have to live with. The consequences are not very apparent right now for smaller and medium-sized networks. Before iPhone and Android, the entire mobile advertising space was highly controlled by carriers; now, it is controlled by Apple and Google."

Upadhyay added, "Apple's banning AdMob maybe a good or a bad thing for publishers based on Apple's plans for iAds. It may be a way of controlling prices on ads on iPhone devices and may drive up prices for advertising on these devices."

That isn't necessarily bad news. Higher ad pricing could mean more money for the developers that rely on revenue sharing from mobile advertising to fund app development, and it could benefit users by maintaining the availability of free and low-cost, ad-subsidized apps.

Of course, the companies trying to market through mobile advertising won't see those same benefits. Those businesses are faced with possibly having to develop two different marketing campaigns in order to reach both the Android and iPhone markets, and the potential of paying more for the mobile ads at the same time.

You can follow Tony on his Facebook page , or contact him by email at tony_bradley@pcworld.com . He also tweets as @Tony_BradleyPCW .

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