Apple and Google getting in each other’s way

By Ronan Shields

US companies Apple and Google have edged closer toward a head-to-head clash in the mobile industry with their respective announcements of mobile-ad-network purchases and Google’s handset launch this week. Mobile advertising has been put firmly back on the agenda, and the stage has been set for a fierce battle between the two California-based giants for dominance in the smartphone and mobile Web markets.

In recent weeks Google and Apple have attempted to purchase mobile ad networks – AdMob and Quattro Wireless, respectively – amid renewed confidence in the mobile advertising market. And with Google’s unveiling of the Nexus One device before this year’s Consumer Electronics Show in Las Vegas, both will now compete in the handset-hardware sector too. Google’s role in the handset market until now has been that of a provider of operating-system software. Now, for the first time, it is entering the consumer-electronics industry.

The California-based giants have, together, attempted to fork out more than $1bn to buy rival advertising networks – Apple spending $275m, according to unconfirmed media reports, and Google agreeing to pay $750m for AdMob. And, interestingly, media reports suggest that Apple had been in contention to purchase AdMob before the ad network switched sides and consented to a Google takeover in November instead. The alleged tussle over AdMob suggests that the two are starting to get in the way of each other’s mobile strategy.

Google has taken the opportunity to point out that Apple’s purchase of Quattro Wireless is further proof that the mobile advertising sector continues to be competitive. “That’s ultimately great for users, advertisers and publishers alike,” read a recent blog post penned by Paul Feng, Google’s group product manager. However, this may be a case of public posturing by Google in a bid to offset renewed scrutiny from the Federal Trade Commission in the US after two consumer-interest groups, Consumer Watchdog and the Campaign for Digital Democracy, complained to the FTC that the AdMob purchase would stifle competition in the mobile advertising industry. The deal still has to receive the green light from the regulatory body.

All this comes after Eric Schmidt, Google’s CEO, resigned from the Apple board of directors in August 2009, three years after accepting the position (before Apple had commercially launched the iPhone).

Parting of ways

Steve Jobs, Apple’s CEO, said that Schmidt’s departure was unfortunate but that as time wore on, it made more and more sense for Schmidt to part ways with the Apple board. “As Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished,” he said in a public statement last year.

Now that Google has gone public with its Nexus One handset – which is widely touted as a move to defend its share of the mobile search market from Apple’s iPhone – the battle lines are clearly drawn.

Google has announced that Nexus One – manufactured by HTC – will launch first with T-Mobile in the US and eventually with Vodafone in Europe. Meanwhile, Apple is extending the availability of its iPhone by ending exclusive distribution agreements with single operators in each territory. As Google and Apple seek the widest possible distribution for their handsets, operators could play a significant role in the tale of these two behemoths that have come a long way from their respective origins in the worlds of IT and Internet search.