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FTC May Probe iOS as War Over Mobile Customer Data Heats Up

By Kimberly Hill MacNewsWorld ECT News Network
Jun 11, 2010 9:19 AM PT

Accusations have been flying for months about mobile ads. Various companies' attempts to acquire AdMob caused all sorts of commotion. Eventually, Google won that round with the feds backing off the transaction.

FTC May Probe iOS as War Over Mobile Customer Data Heats Up

Now, though, it's Apple's turn to take the heat, as rumors circulate that federal authorities are looking into its newly proposed terms for developers that stipulate that the makers of iPhone and iPad apps cannot deal with ad-servicing companies that run competing mobile platforms.

The most prominent example of such a company, of course, is Google. The Federal Trade Commission is indeed taking interest in Apple's move, according to the Financial Times, which based its report on two unnamed sources. Whether or not the interest will turn into action remains to be seen.

Not a Fight Over Ads

The conflict, though, is "not a fight over ads," according to Carl Howe, director with the Yankee Group.

"This is a fight over customer information," he told MacNewsWorld.

The issue at hand is that the company that services ads on a mobile platform is the company that ends up with all kinds of customer data -- what ads they click on, which products they're attracted to and eventually buy, noted Howe.

The fear, then, is that Google -- or Microsoft, for that matter -- would simply move that information over to its mobile platform businesses and thus gain unfair advantage over Apple by having access to what could arguably be called Apple's proprietary information about its own customers.

"This is a war about knowing what your customers want and giving it to them," Howe stressed.

High-Value Developers

In fact, it may be a war worth fighting, even if the Federal Trade Commission gets involved. While Apple came under fire in recent months for the ad cut it gives its mobile app developers -- a 70/30 split -- it announced that it will bring those terms in line with the industry standard 60/40 with the release of iAd in July.

That, along with a very integrated development environment, makes iAd extremely attractive to developers, Adam Christianson, producer of MacCast, told MacNewsWorld. The environment is attractive enough, he noted, that developers might be influenced to choose Apple over other app development platforms.

To attract those developers back to competing platforms, it makes sense that other ad-servicing companies, Google's AdMob in particular, would make their pitches to developers as well, and those incentives surely will trickle out in coming months.

It also makes sense that companies would balk at terms that limit how developers can parse out their ad space, but that's not necessarily anticompetitive, said Howe.

In fact, AdMob CEO Omar Hamout appealed directly to those developers in his blog post following close on the heels of the release of the proposed terms.

"Let's be clear," he said. "This change is not in the best interests of users or developers."

Earlier this month, AdMob announced that it had enhanced its tools for developers to support their work on all devices supported by Apple's OS: the iPhone, iPod touch, and iPad. There even were some jabs at Adobe's Flash, making observers wonder how Google might mend fences with Adobe after releasing its own tablet PC, which may itself support Flash (Apple's devices famously don't).

High-Value Customers

At the core, however, is the fact that iPhone and iPad users are customers well worth fighting for, according to Howe.

iPhone users are more than twice as interested in conducting mobile transactions than the average smartphone user, his recent research indicate. They buy more apps than the average user. They are almost three times as likely to shop using their smartphones.

"They're Apple's customers," Howe concluded, "and they're pretty valuable customers."

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