Google Gphone + AmazonMP3 = Watch Out iTunes

(MoneyWatch)  Today Google delivered two fresh dings to Apple's armor with the unveiling of its first mobile device, the Gphone. The search engine giant isn't just taking on the iPhone -- it also poses a threat to Apple iTunes.

As Venture Beat's MG Siegler leaked yesterday, the Gphone's mobile platform comes preloaded with Amazon's MP3 store. The service doesn't simply match iTunes -- it's better, as Siegler has been arguing for a while. All six million songs are free of DRM copyright protection (most songs on iTunes are still restricted by DRM) -- and they're only 89 cents each (to iTunes' 99 cents).

The record labels have been holding out on Apple, refusing to allow iTunes to sell more DRM-free music because they don't want to give the company any more power. Indeed iTunes' 73 percent share of the digital music market may finally start to dwindle if even giants like Google can shed DRM restrictions while Apple can't.