Cranking Up the Mobile Ad War, Google Rips Apple's New iPhone Rules

Apple CEO Steve Jobs demonstrates iAd on an iPhone
Apple CEO Steve Jobs demonstrates iAd on an iPhone

Google (GOOG) says Apple's (AAPL) new iPhone advertising policies will prevent developers from using AdMob, the mobile ad company Google recently bought for $750 million.

And the Web search titan isn't happy about it.

"Apple proposed new developer terms on Monday that, if enforced as written, would prohibit app developers from using AdMob and Google's advertising solutions on the iPhone," AdMob chief Omar Hamoui wrote in a company blog post Wednesday. "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," Hamoui wrote. "Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress."

New Rules: You Can't Compete With Apple

Hamoui wrote that Google will "be speaking to Apple to express our concerns about the impact of these terms."

The new rules say that third-party advertisers are allowed to sell ads on the iPhone, provided they are "independent" and not also in the business of building mobile operating systems that compete with Apple.

"An advertising service provider 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 says in its terms of service.

In other words, Google doesn't qualify because it very much is the developer of a mobile operating system -- Android.

A Market That's Set to Explode

Apple's move is the latest flare-up in the escalating war between Apple and Google for supremacy in the fast-growing mobile ad market. "I think what we have here is two companies sparring for control of what is potentially a very big advertising market," eMarketer analyst Noah Elkin told the Associated Press.

The introduction of Apple's app store and Google's Android smartphone operating system market have literally created a whole new industry around mobile applications. As smartphones and tablet computers proliferate, the nascent mobile ad market is set to explode.

Over the past year, Google and Apple have engaged in a running battle as they position themselves for what many believe will be the next great Internet gold rush. Apple had been very interested in buying AdMob, the mobile ad leader, but Google came in and "snatched" it away with a higher bid, Apple CEO Steve Jobs said in April. Google had announced the deal in November 2009.

Apple then bought Quattro Wireless for $275 million in January and soon thereafter launched its iAd platform. Ironically, the Federal Trade Commission had been very concerned about AdMob placing too much mobile ad market power in Google's hands, but those concerns were ameliorated by Apple's iAd introduction.

Perhaps the FTC was looking at the wrong company.