Is Apple being unfair to
Google/AdMob by limiting the iPhone to iAd?
There are many sides to this question.
- What obligation does any company have to open its product to work
with the competition?
- Is Apple able to dominate the market so much that it can block a
competitor from access?
- Will iAd spread to other platforms and take over?
Standards vs. Secrets
Every company wants to enjoy the advantages of standards when it
enters a market. Later, when it is successful, it wants patents and
trade secret protection to ward off competition. Being "competitive" is
a race to the bottom in a commodity market that only certain types of
companies are good at doing. Google protects its search algorithms as
trade secrets, and Apple patents dozens of ideas every year.
Standards have their place when connecting to other systems, but
they are not a requirement. If Company X wants to build a car that runs
on coal, it can, but it risks losing customers who want the convenience
of filling up at a local gas station.
Some standards are regulated by law. For instance, the FCC won't let
you broadcast your radio station at any frequency or power level. There
are other rules, but the size of knobs, color of the enclosure, and
type of plugs on your radio or TV can be whatever you want. A custom
plug for the microphone is not covered by FCC regulations, but you may
lose business if customers expect something standard.
An Unregulated Market
Unless there are mobile phone regulations that control how companies
can advertise, Apple, Google, RIM, Motorola, etc., can advertise
however they want. The key is to not allow advertising that will upset
customers and make them switch to competing brands. As long as we have
no reports of any specific regulations that are being broken and there
are no major customer complaints, phone makers are free to choose.
If there are no standards to phone advertising or regulations to
break, then Apple, Google, RIM, Motorola, etc., can advertise however
they want. Google may think that Apple should play fair and let it
collect statistical data on software used on the iPhone, but that is
not a requirement - nor is it truly fair.
Apple vs. Google
Google lost its ability to cry foul when it got into the smartphone
business. Any data it can collect from advertising on the iPhone could
be used to make improvements on Android
phones, which compete with the iPhone. Apple will never willingly
let a competitor data mine its customers. It wants to control that
information for itself. Who Apple's customers are and their buying
habits is valuable information.
In the same way that Google was allowed to purchase AdMob after
Apple got into advertising - because Apple's iAd creates competition
that dilutes Google's "monopoly" in online advertising - Google's entry
into smartphones allows Apple to deny Google access to the iPhone. With
Android, Google created a strong competitor that diluted Apple's
growing market share.
Google/AdMob wants to have its cake and eat it too. It wants fair
and open competition, but Google gives away the Android OS for free,
while Apple uses iPhone sales to generate revenue. Google is the far
stronger, established competitor in the advertising market that Apple
has to fend off from its fledgling business.
Google will not be forced out of the Android phone market just
because Apple is using iAd for the iPhone. It remains to be seen if
Apple will extend the iAd service to Android phones. Maybe in a few
years iAd will grow so strong that it will threaten Google, but until
then, Google is in no danger of being forced out of the market.
There Is No Monopoly
The final issue is that Apple only has the iPhone, which is much
less than half of the smartphone market.* Apple's iAd is not the only
game in town, even if so many likes its products. Google/Android, RIM,
and Nokia are not switching to iAd. They can ignore what Apple is
doing. In fact, Apple hasn't and probably won't extend its iAd service
to any of these other platforms.
Apple is important, but it is not using iAd to control what anyone
else is doing. Apple either needs a lot more market share for the
iPhone or it needs to extend iAd onto other platforms before any claim
of monopoly control would be valid.
This all sucks for Google, but it picked this fight when it bought
AdMob after entering the smartphone market with Android. Android is
doing well and growing fast (nearly 20% of the mobile market).
Google should focus on what it has and stop crying that someone else
has a bigger piece of the pie. Google is being childish when it does
this. 
