Google CEO Eric Schmidt told Reuters May 18 that Google will contest the U.S. government "very hard" if regulators block its $750 million bid for mobile ad firm AdMob.
Schmidt said AdMob had been left at a "significant disadvantage" in competing with Apple.
It's actually Google that has been left at the altar in a big way because without AdMob, it doesn't have an in-application ad platform for smartphones based on its Android operating system.
Google made its bid in November, outbidding Apple by $150 million or so. The FTC has been looking at it at least since December, talking to Google rivals and other mobile ad operators. The agency is reportedly intent on suing to block Google's play.
Despite being told time and time again how a Google-AdMob deal would be beneficial for a very young, fragmented mobile ad market, the FTC doesn't seem to want to hear this.
And Schmidt's absolutely right to vow to fight the government on this, even if it is a losing battle.
After being beat to AdMob, Apple went on to buy Quattro Wireless in January and has built iAd, a viable-looking in-application ad platform.
iAd hasn't launched yet, but Apple seems intent on locking up the mobile ad market with it. AllThingsDigital has zeroed in on this meme here.
If Apple is allowed to have its way with this market, woe to Google, Yahoo, Microsoft and anyone else that has designs on mobile ads. Schmidt told Reuters:
"It would be better if the AdMob acquisition can be approved to see if Google can get a more competitive market on the iPhone platform."
As I noted, Google doesn't really have a mobile platform for in-app ads to stand on without AdMob. This means it can't adequately make money from ads on Android phones. Apple will effectively corner the ad market on its iPhones, of which 50 million-plus units have been sold.
Ah, but there is the rub. Perhaps the FTC wants to block this deal to level the playing field a bit.
Google is the uncontested leader in desktop keyword search, and perhaps regulators recognize that the company may extend this dominance to mobile ads with AdMob. This they clearly don't want.
So in comes Apple with an opportunity to take the market by storm with iAd on the iPhone 4.0 this summer.
RIM's BlackBerry platform aside, Apple seems positioned to dominate the smartphone market in the United States, just as it dominated MP3s with the iPod before it.
But it could hardly be said to dominate advertising, which is what the FTC is looking at. They probably figure thwarting Google, or at least slowing it down, will give others such as Apple the opportunity to set up shop and take share.
The problem is, this is Apple, not some dark horse startup. Apple CEO Steve Jobs knows well how to swoop in and grab market share. By averting Google's potential for a mobile ad monopoly, the FTC may be abetting Apple's with iAd.
Of course, the market is young. Who is to say iAd won't bomb? (I don't believe it either. Hot smartphone with interactive ads at premium prices = win, win, win.)
Who is to say Google won't be able to buy another mobile ad player in the future. Plus, there is Yahoo and Microsoft to consider as viable rivals.
The FTC is wrong in its regulatory bent here, but it certainly makes the market interesting to watch. Will iAd blossom and leave in-app ads on Android and every other platform in the dust, or will the FTC see fit to let Google and Apple slug it out?
I'm hoping for the latter.