Apple stems Google’s ad ambitions by Seth Weintraub @FortuneMagazine June 8, 2010, 5:43 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Apple yesterday upgraded its iPhone Developer Program License Agreement with very specific terms that give it significant advantages over Google and Microsoft in advertising. Image clipped from Apple WWDC 2010 Keynote Specifically, Apple now states in section 3.3.9 of its license agreement: - The collection, use or disclosure is for the purpose of serving advertising to Your Application; is provided to an independent advertising service provider whose primary business is serving mobile ads (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); and the disclosure is limited to UDID, user location data, and other data specifically designated by Apple as available for advertising purposes. Clearly, this language is directed at Google’s recently-acquired Admob (as well as Microsoft MSFT which also does ads and mobile operating systems). There is certainly some bad blood here. Apple AAPL originally bid for Admob only to have been outbid by Google. The move was said to have enraged Apple CEO Steve Jobs and started a buying war with Google GOOG in the Valley. Google recently cleared regulatory approval to fold the company into its operations, meanwhile Apple bought Quattro Wireless to fold into its own iAds program. Some may wonder if having access to analytics makes any difference to an advertiser’s bottom line. It absolutely does. Without analytics, advertisers have no idea how well their ads are performing. They don’t even know for sure if they are even showing up on the devices. Without click-thru rates they can’t determine if advertising is successful and can’t fine tune the programs to become more appealing to consumers. Geo-targeting also won’t be available which is highly sought after, especially in regional campaigns (think politics/elections!) Google will likely be able to track clicks once a user leaves the app using its technological know-how, but it will be crippled in impressions. It’s like flying blind. Is Apple justified in blocking Google’s advertising analytics? Steve Jobs used Flurry, an analytics company that published Apple device data to leak iPad information, as an example of why they are locking up data. He also said that consumers shouldn’t be subject to outside parties collecting data on them without their knowledge. The consumer protection argument doesn’t hold water if Apple is letting independent analytics companies collect analytics data (as well as Apple and its advertising partners). That breaks the argument into one of competition. Apple, justifiably, doesn’t want Google to have demographic information on its customers, which it can currently get from its analytics data from Admob. In fact Admob publishes iPhone sales data fairly often. Google can find out how iPhones are selling in particular regions and could forecast iPhone sales almost as well as Apple can. So there is no easy answer to this situation. What’s at stake? Apple CEO Steve Jobs yesterday said that US mobile display advertising is estimated to be about $250 million this year, using JP Morgan June 2010 statistics. Apple plans to start competing in this field half way through the year and has $60 million in advertising locked in. That means that Apple plans on being half of the mobile advertising spend in the second half of 2010, which Jobs colorfully illustrated in his wood Keynote pie chart below. That pie chart alone should be all Google needs to do to throw off government regulators in mobile advertising, by the way. Also, $250 million is just a drop in the bucket. Mobile advertising is expected to skyrocket over the next few years and it certainly wouldn’t be surprising for it to one day surpass desktop advertising. Yes, the very same desktop advertising that generates 90% of Google’s revenues. This is a big deal. So what is Google’s response? Google theoretically could take the low road and change its Maps or YouTube terms of service to where it were only allowed to be accessed by independent companies that didn’t compete with Android mobile operating systems. Should Google go to the very same FTC that took almost half a year investigating its Admob acquisition to say that Apple was using its power in the market unfairly? Doubtful that would carry much weight. Perhaps Google could somehow assure Apple that its analytics data wouldn’t leave its advertising business. I’ve reached out to Google to see if they’d comment on the new additions to iPhone developer license agreement and look forward to hearing any insight they might have.