Apple to start mobile ads battle with Google

Friday, Apr 09, 2010

The move challenges its Silicon Valley rival's core business model and its plans to expand into mobile devices.

Steve Jobs, Apple chief executive, said that Google's search-based advertisements were not the future for mobile devices because users tended to spend their time inside "apps" rather than browsing the web.

"On a mobile device, search is not where it's at, not like on the desktop," he said. "They're using apps to get to data on the internet, not generalised search."

Apple will launch its iAd network on the iPhone, iPod touch and iPad later this year. In February, the iPhone and iPod touch accounted for 40 per cent of the mobile ads served up by one of the biggest ad networks, AdMob -- a sign of the dominance of Apple's software platform in the mobile ad market.

Under the new ad network -- part of a 4.0 upgrade to the operating system on Apple's mobile devices -- Apple would host adverts within apps and pass on 60 per cent of the revenues to their developers.

Tension has been growing between Apple and Google since the latter has gained a foothold in the mobile phone market by developing its Android operating system for rival handset makers.

Google announced the acquisition of the AdMob network in November for $750m, but the Federal Trade Commission has been scrutinising the deal.

Mr Jobs said Apple had tried to buy AdMob as well but "Google came in and snatched them from us because they didn't want us to have it".

Apple bought the Quattro Wireless mobile ad network in January for a reported $300m instead.

Its announcement of iAd looks set to become a factor in Washington's latest antitrust review of Google.

Staff lawyers at the FTC have been assembling evidence for a case to block Google's acquisition of AdMob, though they have yet to decide whether to recommend such a course, according to two people familiar with the situation.

The emergence of an important new competitor just as the regulatory investigation comes to a head suggests that the market for mobile advertising is in its infancy and big changes in competitive dynamics are possible, according to one person close to Google.

Mr Jobs tried to play down Apple's ambitions. He said the company was like "babes in the woods" and had no plans to be a worldwide ad agency.

Mr Jobs also announced sales of 450,000 iPads up to Thursday and 600,000 downloads from the new iBooks store.

Source CNN