Google accuses Apple of blocking its mobile ads on iPhone platform

The mobile war between rival giants Google and Apple is heating up, after the internet search giant attacked the iPhone-maker for effectively blocking its new AdMob advertising service from being used on the iOS platform.

The company has blasted Apple as anticompetitive, noting Apple is preparing to launch its own iAd platform on July 1 with a view to control nearly half of the US mobile advertising market by the end of the year.

But more importantly, Google says, thousands of developers who depend on AdMob ads for cashflow will be cut off from their main source of revenue.

Omar Hamoui, the executive in charge of Google’s AdMob service, says the changes will negatively affect the entire mobile advertising market.

“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,” he said in a blog post.

The controversy began in April. Apple’s original license agreement effectively banned third-party ad sellers from creating in-app advertisements after it stifled their ability to use analytics to track user behaviour.

Last week, Apple chief executive Steve Jobs built on that by saying the company was not interested in banning rivals to the iAd platform, it only wanted to stop third-party analytics companies.

Now, Apple’s terms of use have been updated to reflect Jobs’ statement. But analysts point out this new wording change the sentiment of the plan by saying only “independent” ad-serving companies would be allowed to collect data.

“For example, 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 would not qualify as independent.”

Google qualifies as a developer or distributor of mobile devices and mobile operating systems. Its Android OS is continually gaining market share, catching up to the iOS platform. This change will mean they will be unable to gain information and data used to determine whether ads have been successful.

Hamoui says this wording will effectively block app developers from using AdMob and other Google ads through iPhone and iPod Touch apps.

“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.”

This could be a huge blow to Google. It spent $US750 million buying AdMob last year, partly due to the company’s success of placing AdMob ads through iPhone applications, which make up about 30% of its business.

Additionally, the US Federal Trade Commission approved Google’s acquisition partly because Apple’s introduction of the iAd platform would help spur competition. The FTC also said it would monitor the market for anticompetitive behaviour.

Google said it will contact Apple to express its concerns and hopefully come to a solution.