Apple's iAd Platform: A Big Bet Against the Open Web

Last Updated Apr 9, 2010 7:00 AM EDT

Apple (AAPL)'s new iAd platform, in which ads are displayed to users of apps inside the new OS 4 operating system appearing on iPhones and the iPad in coming months, appears to be CEO Steve Jobs' bet that the mobile phone ad market looks a lot more like Yahoo! (YHOO) in 1995 than it does Google (GOOG) in 2010.

Before Google bestrode the Earth like a Colossus -- in the mid 1990s -- everyone used Yahoo! Everyone. We used it because, not knowing what the hell was actually on the Internet, Yahoo! organized it for us in a directory. Literally, like a massively elaborate phone book, ordered by humans.

As you know, that worked well at first, but not forever. Google's free search model -- where every published page was instantly available whether a human being had indexed it inside a directory or not -- won out. It was cheaper, more efficient, and allowed users to find weirder, more unique stuff.

Today, Jobs said:

"People aren't searching on a mobile device like they are on a desktop device," said Mr. Jobs at an event at the company's headquarters. "They are using apps to get to the Internet."
That may be true -- now. But any Luddite can see that eventually mobile phones will become powerful enough to rival and exceed laptops in functionality. When that happens I'm not sure consumers will want their guide to the web to be limited to a set of apps.

Sure, free search is available on the iPhone. But the idea that ads are best served inside the sanitized, controlled environment of the app -- and not the free environment of the Web at large -- is an idea that goes against the history of the Internet. (The entire iPad experience seems to be based on this notion, interestingly.) The Web is successful because it's the Wild West -- anything goes, and the most successful businesses on the Web are often the wildest on offer.

Apple seems to be betting that the pendulum will somehow swing back, and money will flow back towards the simpler, cleaner experience offered by apps.

Of course, one bets against Steve Jobs at one's peril....

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