Does Google have Apple running scared?

It was a mortal lock that Apple would introduce its newest iPhone during CEO Steve Jobs' Worldwide Developer Conference keynote appearance Monday, but few could have predicted the events that unfolded in the hours directly after the iPhone 4 was unveiled--especially not the computing giant's archrival Google. In conjunction with the release of the new iOS 4 operating system update, Apple quietly revised the terms of its iPhone Developer Program License Agreement to effectively block third-party analytics firms from collecting iPhone application user or device data: Section 3.3.9 of the agreement now reads "You and Your Applications may not collect, use, or disclose to any third party, user or device data without prior user consent," further stipulating that while developers may still share data for advertising purposes, information may only be provided "to an independent advertising service provider whose primary business is serving mobile ads."

"Independent" is the key word here--it would seem autonomous mobile ad networks like Millennial Media, Greystripe and Jumptap remain welcome on the iPhone platform, but Google-owned AdMob is not. "This change threatens to decrease--or even eliminate--revenue that helps to support tens of thousands of developers," wrote AdMob founder Omar Hamoui on the firm's blog Wednesday. "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." Hamoui added AdMob plans to speak to Apple "to express our concerns about the impact of these terms."

From a competitive standpoint, Apple's decision makes perfect sense--why share invaluable consumer information with its closest rival? Whether it's legal is an altogether different matter: Reports indicate federal regulators are already planning to investigate whether Apple's moves breach antitrust laws. That's on top of a rumored probe into Apple's decision to rewrite its developer rules to mandate that all iPhone and iPod touch applications must be created to run directly on the iPhone platform, effectively banning cross-compiler translation tools like Adobe Systems' Flash Professional CS5. Both revisions underscore Apple's relentless drive to maintain absolute control over the iPhone ecosystem, but the aggressive effort to block AdMob (the subject of Apple acquisition talks before Google offered $750 million for the startup) also exposes just how bitter and deep the divide between Apple and Google has grown. Most of all, it hints that the rapid growth of the Android platform is beginning to rattle nerves in Cupertino, with Apple seeking to stifle the competitive threat instead of simply outpacing it.

Here in the U.S., the battle for mobile supremacy is increasingly a two-horse race: The iPhone OS now commands 28 percent of the nation's smartphone market, a 2 percent quarter-over-quarter increase, according to data recently issued by Nielsen. But Android also jumped 2 percent in Q1, and now accounts for 9 percent of U.S. smartphones. (Their respective growth spurts came at the expense of Research In Motion's BlackBerry and Microsoft's Windows Mobile, both of which slipped 2 percent in the first quarter.) The numbers favor Android over time, of course: There's just one iPhone, but there are dozens of Android-powered devices now on the market, and many more to come (LG this week said it will release 20 Android smartphones by the end of 2010). Few anticipated the Google platform would evolve so quickly, or prove so popular with subscribers. And while the iPhone's stature as a benchmark device remains unassailable, there's no argument it's lost some sizzle over time--the new iPhone 4 appeared to diminished fanfare compared previous editions, and although that has much to do with the now-infamous lost iPhone prototype infamously purchased and publicized by technology website Gizmodo, it also reflects the relative scarcity of new device features as well as unrealized consumer expectations (e.g., no Verizon Wireless partnership).

Even with Android gaining, the question remains--why rewrite the iPhone developer rules in a manner so clearly intended to punish AdMob, and by extension Google? To hear Jobs tell it, AdMob doesn't pose a legitimate threat anyway--when Apple first announced its iAd mobile advertising effort in early April, Jobs openly derided existing approaches to mobile marketing, stating "What we want to do with iAds is to deliver interaction, but also deliver emotion... For a lack of an elegant way to say it, we think most of this mobile advertising really sucks, and we think we might be able to make some contributions." iAd would change that, Jobs argued, by offering rich media ads that keep the user within an application, instead of transporting them somewhere else: "We think people are going to be a lot more interested in clicking on these things," he crowed. So far, the numbers back up those assertions: With iAd slated to launch on July 1, sales are already at $60 million, and brands including Nissan, Citi, Unilever, AT&T, Sears, Target, JC Penney and Best Buy have so far signed on.

Based on Apple's promised 60/40 split with the iPhone developer community, programmers will see $36 million of that initial $60 million. "Why are we doing iAds?" Jobs said Monday at WWDC. "We are doing it for one simple reason. To help our developers earn money so they continue to create free and low-cost apps for our users." And no doubt most iPhone developers will stick with the App Store, despite Apple trampling over their creative rights one more time. But for those who wish to look elsewhere, there's always Android--and Apple's actions indicate just how viable the Android platform has become. For a company historically synonymous with innovation, not desperation, Apple suddenly looks like it's feeling the heat.

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Chris founded and started Androidheadlines.com website in 2009 and grew it into the international success it is today and is the CEO of the business today. Chris has been an entrepreneur most of his life running several businesses, startups and worked in the website technology Industry since 1998. His skills and assets are Business, Finance, Emerging Technology and the Mobile Industry including everything Android and Google related and more. Contact him at [email protected]
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