Wednesday, May 12, 2010, 07:55 am PT (10:55 am ET)
Apple's iAd leads government to extend Google-AdMob reviewThe U.S. Federal Trade Commission has extended its review of Google's proposed purchase of AdMob by two weeks, as the federal agency will use the time to gauge the impact of Apple's iAd mobile advertising platform.
According to The New York Times, the initial agreement between Google and the FTC was set to expire last Monday. Now, a decision on the deal is expected as soon as Friday.
The report also reiterated that the FTC has been leaning toward opposing the deal, on the grounds that the combination of Google and AdMob would create a company too powerful in the mobile ad space. But as the FTC has scrutinized the deal, Google has highlighted Apple's purchase of Quattro Wireless and subsequent iAd announcement as evidence that there is competition in the market.
The Times reported that the FTC's review could be complicated by "Apple's famous reluctance" to disclose its business plans.
"It is unclear what kind of effect that the iAds system, which Steven P. Jobs, Apples chief executive, unveiled last month along with new software for the iPhone, could have on the overall mobile ad market," the report said. "Apple's iAds, unlike mobile ads from Google and AdMob, will appear only on the iPhone, and the system will cater exclusively to high-end advertisers, at least at first."
Some alleged details were uncovered late last month, as Apple has been pitching iAd to potential buyers. The Cupertino, Calif., company has reportedly set an initial fee as high as $10 million to advertise with iAd at launch — much higher than the $100,000 to $200,000 that most companies pay with existing mobile advertising deals. After the initial high-priced launch, Apple aims to charge close to $1 million for ads on its mobile devices this year.
Advertisers would be charged a penny each time a user sees a banner ad under the proposed plan. Tapping on the banner brings up the interactive advertisement within a mobile application, and Apple charges the advertiser $2. A $1 million ad buy would gain an advertiser $1 million worth of ad views and user taps.
Signs of trouble in the $750 million Google-AdMob deal first arose in early April, when a report alleged that staff with the FTC were prepared to recommend blocking the purchase for anticompetitive reasons. Sources at the time told Reuters that Google's purchase of the largest mobile advertiser could present a "significant competitive problem" in the advertising market space.
Soon after the planned acquisition was announced, consumer groups asked the FTC to block Google's planned purchase of AdMob, citing both antitrust and privacy issues. The group alleged that the combination of Google and AdMob "would be harmful to consumers, advertisers and application developers."
Google tried to offset some of the negative buzz surrounding its AdMob acquisition and belief that it could be anticompetitive by highlighting Apple's purchase of rival mobile ad firm Quattro Wireless. Apple's acquisition paved the way for the iAd announcement, which Google cited as evidence of growing competition in the market, and justification for the AdMob deal. Google went as far as sending e-mails to reporters in order to keep them apprised of rumors surrounding Apple's anticipated iAd platform before it was announced.
Soon after, at its introduction of iPhone OS 4, Apple unveiled the iAd platform, which will allow developers to include richly interactive ad experiences that offer unique content within a mobile application. Developers will keep 60 percent of the revenue earned from the advertisements, according to the term's of Apple's plan.
As the FTC has inquired with developers and AdMob about the Google deal, it has also reportedly been asking questions about Apple's iAd. The questions are said to relate both to the possibility of a Google-AdMob deal, as well as concerns from existing mobile ad networks, who complained to regulators that changes to Apple's iPhone developer agreement could give the Cupertino, Calif., company a leg up on its competition.
At that April introduction of iAd, Apple co-founder Steve Jobs admitted that Apple tried to buy AdMob, but the company was "snatched" by Google before the iPhone maker could close the deal. One report alleged that AdMob had agreed to a 45-day "no-shop" provision with Apple, to prevent the sale to another company. But as soon as that provision expired, Google pounced and paid $750 — a premium price that the search giant was reportedly willing to pay to keep the company away from Apple. Apple then settled for Quattro Wireless for $275 million.
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