Google, Apple Mobile Ad War Makes for Engaging Drama

by Clint Boulton

Google bid to buy AdMob Nov. 9, 2009, for $750 million, a move that would give Google the leading provider of ads that run in iPhone applications.

What few people knew at the time was that Google actually outbid Apple for AdMob’s hand. The New York Times said Apple only offered $600 million and didn’t close the deal in time. Apple CEO Steve Jobs later confirmed this.

While poaching AdMob from Apple was a smooth move by Google, its bid was completely on the rocks thanks to an inquiry from the FTC, which believed an acquisition of AdMob would give Google too much power in the mobile ad market. Specifically, the agency feared it would duplicate its dominant desktop ad position on mobile phones. Mobile ad experts at Jumptap, Millennial Media and Greystripe spoke out in support of Google, perhaps hoping to get picked by the newly spurned Apple.

With Google’s deal with AdMob in limbo thanks to the FTC inquiry, Apple acquired mobile ad provider Quattro Wireless in January for $275 million. This clued the public into Apple’s plans for providing advertising on the iPhone.

The FTC pursued its investigation of Google’s AdMob bid by calling up rivals of Google and asking what the impact would be of such a deal on the mobile ad market.

With Google and Apple arming themselves with mobile ad firepower, rumors surfaced in January that Apple would dump Google for Microsoft Bing as the default search engine. This rumor came and went three times (also in April and May) before Jobs quashed it at the D8 conference earlier this month.

At an event to prepare the world for Apple’s future work, Jobs unveiled iAd, the ad platform designed to help Apple help its developers make money by injecting ads within their applications. Again, no clearance appeared in sight for the Google-AdMob deal, casting doubt on Google’s mobile ad future.

Things began to heat up in May. The FTC was reportedly set to sue Google to block its proposed purchase of AdMob. Application developers and bloggers railed against the FTC for their clear ignorance of the mobile ad market. Google argued that the market had significant competition to thrive.

Something got through to the FTC. On May 22, more than six months after Google agreed to buy AdMob, the FTC unanimously agreed to close its investigation of Google’s deal for AdMob. Ironically, after looking into iAd, the agency argued Apple presented a strong challenge to Google. “As a result of Apple’s entry [into the market], AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not.” Google closed the deal May 28.

In concert with the unveiling iPhone 4, Jobs and Apple introduced iAd June 7 at the Apple Worldwide Developers Conference. Jobs said advertisers have committed to $60 million worth of ads for the iAd platform, which launches July 1 to run on iPhone 4.

Bloggers discovered language in the revised iPhone operating system’s developer terms of service that indicated iPhone developers would not be able to collect data without users’ consent and sell the data to advertisers that are owned by a distributor or developer of mobile devices. That includes AdMob, Google and others. AdMob founder Omar Hamoui complained aloud. The FTC is reportedly looking into Apple’s practices in the mobile ad market for possible transgressions against Google and Adobe’s Flash technology. Capitol Hill is reportedly interested in both Google and Apple for their competitive ways.

There is a lot at stake in the mobile ad market, which provides another way for Internet companies to make money from software used on smartphones. Apple’s iPhone OS market share nearly triples that of Google’s Android platform, Nielsen said. Quantcast said June 14 that the Android browser’s share on mobile phones has increased 12.2 percent and is now used by one in five mobile Web users in North America.