Apple Changes Developer Agreement Again: AdMob Feels Adobe’s Pain

by Matt Klassen on June 10, 2010

Amidst the glitz and glamor of the official unveiling of the iPhone 4 on Monday, Apple quietly made another move; they once again changed their developer agreement. I you don’t recall, the last time Apple changed its developer agreement it sparked off an ongoing war with Adobe over the latter’s antiquated Flash software; a fight that is still going on today. It turns out that this time around the change in the developer agreement focuses on mobile advertising, as Apple continues to develop its iAd product that will allow developers to place advertisements in mobile applications.

So what does this mean for the rest of the mobile world? For starters, it means that AdMob, Google’s latest mobile advertising acquisition, probably feels a lot like Adobe right now…totally screwed; and I would wager that after dropping $750 million on the acquisition, Google isn’t so thrilled either.

If preliminary interpretations of the developer agreement alterations are correct, it looks like Apple has altered the terms that govern advertisements in iPhone applications. The move is designed to effectively prohibit developers from inserting advertisements into their applications that share analytic data with “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.”

This means, simply enough, that independent mobile advertising companies will have no problem with the agreement, as they will still be able to place whatever adds they want within the mobile applications they create. The problem, it seems, is if the mobile advertising company is owned by one of Apple’s chief competitors; say, Google.

Google, who beat out Apple during the acquisition race for AdMob and had to endure several months of scrutiny by Federal regulators probing possible antitrust violations, certainly can’t be pleased about this move, as following its $750 million dollar acquisition of AdMob, it now seems that the mobile advertiser has been banished from one of its most lucrative markets. Suffice it to say, whatever collective high Google was on from having its acquisition of AdMob finally go through, this news will certainly bring the search engine giant back down to earth. 

What is abundantly clear is that Apple is further tightening its grip on its own piece of the mobile market, but is this sort of monopolization good for the market as a whole? If there’s one thing that capitalism has shown us over the years it’s the competition breeds innovation, and innovation breeds advancement. By creating these arbitrary barriers, designed solely to block its competitors, Apple may be doing favors for its shareholders in the short term, but the long term effects of such totalitarian controls will only serve to hurt Apple and the rest of the mobile market.

For me, one thing has always been readily apparent: Apple doesn’t play well with others. Perhaps this is because Steve Jobs was bullied on the playground as a child, perhaps it’s because of a smug sense of technological superiority that hovers over the company itself, it’s hard to say. But if Apple doesn’t start to effectively incorporate competition into its business model, I would wager that it will continue to see the same steady drop in shares it has been experiencing over the past month.

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{ 1 comment }

Jordan Richardson June 10, 2010 at 6:09 am

Every corporation lives to outdo and outlast its competitors, so why would Apple follow a different path? As with every American corporation, it is mandated by law to maximize profits for its shareholders. It isn’t mandated to “foster competition” or “play well with others.” No companies are. The idea that Steve Jobs should do otherwise is delusional with respect to the way businesses are legally orchestrated to operate.

That said, Apple doesn’t have anything even close to a monopoly and won’t have one anytime soon. While the number of market players inevitably diminishes as sectors evolve and mature over time (the less experienced and less viable products fall by the wayside, etc.), it is rare that an actual monopoly takes place in any particular sector.

In one example, Apple (28%) still trails RIM (35%) in smart phone OS market share in the United States, with Microsoft, Android, Palm, Linux, and Symbian all still charting. Apple grew by 2% in the first quarter of 2010, says Mobile Insights.

Even so, the example shows that there’s still a significant disparity of options in the smart phone market with respect to operating systems and platforms.

As to the idea of innovation, I guess I’d question how much “innovation” there is to be had in the smart phone market. Mobile phones have now become so far removed from their original purpose (making calls, remember?) that they’re miniature app runners that occasionally help us communicate with fellow humans. This is due in large part to “innovation” and the idea that we consumers always want more of the “good stuff.” I think it was Jason Finnerty who wrote an article on here a few months ago about how much speed was too much speed. This speaks to the idea of innovation as a crowding force, not a beneficial force. A funnier example would be Malibu Stacy’s “new hat.”

In other words, competition doesn’t always breed true innovation. More often than not, competition breeds a “new hat.” Perhaps Apple’s sales figures are due to the fact that the public has finally caught on to that fact.

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