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Earlier this week, Steve Jobs estimated that Apple's iAd network would handle 48% of all mobile advertising in the second half of 2010. That number may seem high, but it looks like Jobs is pulling out all the stops to make sure that developers choose iAd.
Today the company unveiled new terms of service that would prohibit competitors like Google from delivering ads on its mobile products. This is an anti-competitive slippery slope that could get Apple into trouble pretty quickly.
Apple's new terms of service indicate that only "independent" mobile ad networks will be permitted to collect data on Apple users and use it target advertising on its products.Independent companies are classified by Google as those that sell mobile ads as their primary business. Now that Apple's biggest competitor is owned by Google, it is prohibited from selling ads on Apple's mobile devices. While the new rules take out AdMob immediately, they will also work as a disincentive for other mobile ad networks that might hope to one day get purchased by a larger corporate entity (say Microsoft).
AdMob, of course, is not pleased. The company's CEO, Omar Hamoui writes on the AdMob blog:
"This change threatens to decrease – or even eliminate – revenue that helps to support tens of thousands of developers. The terms hurt both large and small developers by severely limiting their choice of how best to make money. And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well."
I wrote earlier this week that AdMob's CEO had criticisms of Apple's mobile advertising boasts. Hamoui today is emphasizing the negative impact that a single ad purveyor could have on the mobile ad market. He writes:
"Let’s be clear. This change is not in the best interests of users or developers. In the history of tehnology and innovation, it’s clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress."
AdMob is going to speak to Apple about this latest change. Clearly, it's bad for AdMob's mobile ad business. But it's also ironic that Apple is working to limit its mobile competition with AdMob considering that Google is the company that got stuck in an anti-trust investigation for the first half of the year after purchasing AdMob.Of course Apple is allowed to dictate the terms of business for advertising on its mobile products. But Apple doesn't own the myriad apps that currently thrive in its ecosystem. And limiting the choices that developers are allowed to make when choosing advertising in their products is not something that regulators are likely to look upon kindly.