AdMob lashes out at new iPhone ad policies

Changes made by Apple to its iPhone agreement could cripple Google's AdMob business, possibly throwing $750 million of Google's money down the drain.

Updated 11:21 a.m. PDT with additional information.

After reviewing Apple's changes to its iPhone developer agreement, Google's AdMob reached the same conclusion that many others did: it could be screwed.

AdMob CEO Omar Hamoui
AdMob CEO Omar Hamoui AdMob

Apple this week changed the terms of the developer agreement that governs iPhone applications to prohibit developers from using advertising in their applications that shares analytic data with "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." The most prominent mobile advertising service provider owned by or affiliated with a developer or distributor of mobile devices and mobile operating systems--AdMob--isn't happy.

"Let's be clear. This change is not in the best interests of users or developers. In the history of technology 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," wrote Omar Hamoui, founder and CEO of AdMob, in a blog post Wednesday.

Apple's new policy would basically cut the legs out from under AdMob, since analytic data is the lifeblood of Internet advertising. Apple CEO Steve Jobs justified a similar policy banning the sharing of analytic data last week at the D: All Things Digital conference by noting that an analytics company called Flurry shared data about next-generation Apple products gathered from mobile apps without the user's permission.

However, this new policy singles out ad companies owned by mobile competitors: which effectively applies just to Google. Google beat Apple in a bidding war for AdMob last year but now faces the prospect of having spent $750 million to acquire a company that has just been locked out of its most promising market.

"Apple proposed new developer terms on Monday that, if enforced as written, would prohibit app developers from using AdMob and Google's advertising solutions on the iPhone," Hamoui wrote. "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."

Hamoui wrote "we'll be speaking to Apple to express our concerns about the impact of these terms." Those talks are not likely to be pleasant.

Updated 11:21 a.m.: A Google representative declined to comment beyond Hamoui's post, while representatives from Apple did not immediately return calls requesting comment on Hamoui's post and clarification on the terms of the agreement.

Around 30 percent of ad requests placed over AdMob's network come from Apple mobile devices running the former iPhone OS: the iPhone, iPod Touch, and iPad, according to data released by AdMob in May. Just looking at smartphones, ad requests from iPhone users account for 42 percent of ad requests over the network, compared to 25 percent for Android users and 22 percent for Symbian users, according to the report.

But while Google will certainly be adversely affected by the new clause, other companies could face their own problems. Mobile advertising companies that were considering a similar path taken by AdMob and Quattro Wireless (acquired by Apple) suddenly have reason to steer clear of mobile computing pursuers, and companies like Microsoft, HP, or Nokia looking to add mobile advertising technology to their mix will have to decide if it's worth the price despite not being able to work with one of the most popular mobile computing experiences on the planet.

Moreover, the clause at issue here also appears to ban the use of any third-party analytics software, even software used by developers for non-advertising related purposes to measure benign data such as how many times their app was downloaded, which parts of the app are used most frequently, or where people are using their application. Presumably, they'll now have to get those reports from Apple or build the analytics system themselves, which could be tough for smaller independent developers.

 

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