Google AdMob Creator Hits Out At Apple Over iAd

The creator of Google’s AdMob unit lashed out at Apple for preventing application programmers from using AdMob and Google’s mobile display ad technology on the iPhone and IPad.

Apple ignited the fire on 7 June by revising developer terms for its iPhone and iPad operating system to exclude developers from offering in-application ads on the iPhone using non-independent ad platforms.

The new terms were timed to accommodate the introduction of iPhone 4 and iAd in-application platform at Apple’s Worldwide Developer Conference in San Francisco. “These advertising related terms both target companies with competitive mobile technologies (such as Google), as well as any company whose primary business is not serving mobile ads,” AdMob Founder Omar Hamoui wrote in a blog post on 9 June.

“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.”

In-Application Ads Prohibited

As AllThingsDigital noted on 8 June, section 3.3.9 of Apple’s new developer terms prohibit in-application ads from an “advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple.”

That includes AdMob, which was acquired by Google last month and is the leading provider of in-application ads, the very type of ads Apple’s new iAd platform is poised to deliver on the iPhone.

Apple’s new terms also lock out giants Microsoft, Yahoo, AOL and Google, which makes the Google Android mobile operating system for smartphones that compete with the iPhone OS. If Hamoui is correct that Apple’s revised terms will lock AdMob out of the iPhone, this would be a huge blow for his group; AdMob rose to power on the strength of the iPhone, which has shipped more than 50 million units to date.

The new iPhone 4 goes on sale from AT&T on 24 June  and it appears AdMob and Google won’t be able to leverage that device and new iOS 4 platform with in-app ads, which keep users engaged within their applications instead of launching them to a new browser window.

Hamoui argued that since starting AdMob in 2006, he has watched competition in mobile ads, which includes JumpTap, GreyStripe, Millenial Media drive “incredible growth and innovation in the overall ecosystem.” He also said AdMob has helped tens of thousands of developers make money and build businesses across multiple operating systems. “We’ll be speaking to Apple to express our concerns about the impact of these terms,” Hamoui asserted.

Ironically, it was Hamoui who spurned Apple several months ago after Apple bid to buy AdMob for $600 million. Google swooped in with a $750 million offer and AdMob went for the money, forcing Apple to buy smaller player Quattro Wireless for $275 million.

Federal Trade Commission

iAd won’t launch on the iPhone 4 until 1 July, so it is unclear whether Apple made the correct choice in grabbing Quattro. However, it will be interesting to see if and how the Federal Trade Commission looks at Apple’s seemingly exclusionary developer terms.

The company is already being investigated for locking Adobe’s Flash technology out of its iPad and iPhone. Now it seems intent on locking AdMob and Google out of a competitive market. In another delicious irony, it was this market the FTC feared would be at the mercy of Google if the search engine acquired AdMob.

The FTC nearly sued to block Google from buying AdMob, but relented after becoming convinced by Google and other experts Apple’s iAd would keep the market competitive. But the iPhone OS platform upon which iAd will run, if the terms are to be understood correctly, seems bound to stymie competition.