Google will fight to keep AdMob, calls Apple's iAd discriminatory

In his interview with Reuters, Schmidt said AdMob has been left with a "significant disadvantage" as the FTC reviews the deal.

Google announced it would purchase AdMob last fall after it noting Apple's interest in the leading mobile ad network. Jobs characterized Google's acquisition by saying the search giant "snatched" AdMob away from Apple.

A report by The New York Times said that Google willingly overpaid in its $750 million purchase of AdMob just to keep the company away from Apple, which subsequently bought the second place Quattro Wireless ad network this January.

iAd vs AdMob

At the unveiling of iPhone OS 4, Apple announced a program to turn its new Quattro subsidiary into iAd, a specialized advertising platform native to the iPhone OS. The company outlined upscale, interactive advertising designed exclusively for placement in App Store software titles at prices only big brands could afford.

The iAd platform is therefore significantly different than Google's AdMob efforts, which are very similar to the company's AdSense program on the web: fairly subtle ads that just launch an external web page when clicked. User clicks and ad display volumes are so high for AdSense that Google pays very little to content providers who display its ads. That also makes the ads affordable to anyone, including many dubious or even obviously shady advertisers.

Google makes the vast majority of its revenues from paid search placement, not from display ads. However, the company also sees mobile devices as a critical market as consumers flock to smartphones and other mobile devices like iPad and the iPod touch. However, Google has not yet revealed a mobile ad strategy that strays very far from its AdSense program.

Like AdSense, Google's AdMob ads are just simple links to external websites or other App Store titles in iTunes, although the company also places them on all smartphone platforms beyond the iPhone OS. Unsurprisingly, AdMob now reports the most ad requests from apps on Google's own Android platform, which sells fewer paid apps and relies more upon free titles supported by ads.

Jobs: iAd doesn't suck

In presenting iAd, Apple chief executive Steve Jobs described existing mobile ads, typified by AdMob, as undesirable both for users and for developers. Clicking on an AdMob ad leads users away from the developer's app, and users have to find their own way back.

Apple's iAd platform is designed to open up richly interactive experiences within the app, which then returns the users back to their app when they exit. The interactive iAd experiences are created in HTML5, enabling ads to support animated features that respond to touch, play back movies and even support embedded games.

Quattro has also outlined a program called ViP to link its ads to Apple's iTunes Store to enable advertisers to access proprietary data on the effectiveness of their ads as users download apps featured within the ad. Other advertising networks can't offer this feature.

Schmidt: App Store ad rules "discriminatory"

Apple has also acted to forbid iPhone apps from sharing personal information with third parties, a step that protects user privacy but also eviscerates efforts by advertising networks to track users' behaviors and target them with relevant ads. Jobs has reportedly characterized this as granting users "freedom from programs that steal your private data."

Critics claim Apple is trying to kill rival ad networks on the iPhone platform by preventing them from harvesting users' private data, such as their GPS location, as they display ads within apps. Schmidt said Apple's ad restrictions were "discriminatory against other partners."

Android does not appear to have any restrictions on the private user data apps can forward to third parties. Google also does not have an app approval process like Apple's, which has led to malware attacks from apps listed in the Android Market which destroyed users' data, installed adware, and sent spam to their email accounts.