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Today, Apple announced the new features of the iPhone 4 OS. According to Macworld, these features include iAd, a new advertising platform designed specifically for the iPhone. iAd will allow Apple developers to embed advertisements in their applications, which could result in cheaper or free applications from iPhone’s App Store. In addition, it will allow Apple to take advantage of its acquisition of Quattro Wireless, another advertising service.
It is possible Google may view this as a good thing because of the regulatory pressure surrounding its proposed acquisition of AdMob, one of the world’s largest advertising networks. According to the Wall Street Journal, the Federal Trade Commission has not yet made a final decision on whether to challenge the deal. Google has responded to the criticism by noting Apple’s likely entry into the market, as well as pointing out several other competitors that are active in the only two-year-old mobile advertising market.
The Big Money characterized the regulators as being “concerned that Google could extend its dominance of the desktop search market to mobile Internet devices, crippling the infant industry and stifling consumer choice and competition.” However, blocking this deal could actually stifle consumer choice by increasing the dominance that Apple’s App Store holds over the mobile application market, where Google’s Android system is a relatively small player. One of the toughest jobs of antitrust regulators is to balance these considerations, especially in a new area.
One solution would be to foster competition in the area by preventing the dominant computer-based Internet advertiser from acquiring one of the largest mobile application advertising firms. On the other hand, Google is not known as a company that lags in innovation, even when it has a dominant market share. In addition, it could be argued that this industry is too young to effectively regulate because too little is currently known about the market and its players. I will admit that I am a fan of Google and use an Android-based phone, but I find the arguments supporting Google’s acquisition of AdMob persuasive.
While I don’t particularly enjoy the little ads at the bottom of my Pandora application, it looks like they are here to stay. It is certainly better, in my opinion, than having to pay for the applications.
– Josh Lee
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