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Apple Wants to Kill Its Mobile Advertising Competitors

Apple (AAPL) seemed to relent on letting other advertising networks have access to iPhones and iPads. But that's an illusion. The company's actions, in context, show that Steve Jobs wants to completely lock down advertising and control all forms of revenue when it comes to iOS. The result is now an escalating level of federal scrutiny that should make any CEO nervous.

When Apple introduced iOS 4 (formerly iPhone OS 4), a change in its developer agreement got many third party software providers upset. Although the focus initially was how closely Apple controlled them, attention on the upcoming iAd service also uncovered how the company would keep other ad networks from effectively operating on iOS devices by forbidding them access to behavioral information that advertisers demand.

It's been clear that one of the intentions of iAd was to undermine potential ad revenue for Google (GOOG). But the Department of Justice reportedly began to take interest in Apple's activities in online media sales. That continues to put Apple on the wrong end of the feds.

So Apple tried to relent in appearance and change the developer agreement to allow software developers to use other advertising networks. However, that was an illusion:

  • Apple still had language that so explicitly barred Google's AdMob from delivering ads that the new wording might as well have been called the Google Clause (although Microsoft (MSFT) would be locked out as well).
  • The new language still left Apple with control over what data other ad networks are allowed to collect, though the company apparently was free to use whatever data it wanted, giving it a clear market advantage.
  • Furthermore, Apple started to push new ad blocker features in its Safari browser. Although ad blockers are available for other browsers, Apple undermined the ability of software companies to create Web-based apps that were ad-supported, pushing them to work through Apple's completely controlled app store.
This shouldn't be surprising. Apple has clearly shown its interest in locking down all aspects of third-party commerce for iOS. Wanting ultimate control of ad revenue is a logical development.

Another logical development is the potential for the federal government to step in. As the Financial Times has reported, US regulators have plans to investigate whether Apple's activities are anti-competitive:

According to two people close to the situation, US regulators have already taken an interest in Apple's actions, though it is not yet clear whether it will be left to the Federal Trade Commission, which carried out the recent Google investigation, or the Department of Justice to take an investigation forward. Apple's latest rules for developers who create apps for its devices limit the situations in which they can send approved information about their apps' audiences to advertising services. The information cannot be sent to advertising networks that are affiliated with companies developing or distributing mobile devices or operating systems â€"- a definition that effectively excludes Apple rivals like Google and Microsoft.
Apple has shown that it has no genuine interest in modifying its approach to doing business. I would expect Google, Microsoft, and other large tech companies that have lagged behind Apple to use every means, including complaints to regulators, to stop the company. The stratagem could work, because Apple continues to leave itself open to such charges.


Image: user hisks, site standard license.
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