Mobile Moves Bring Apple, Google Under Federal Scrutiny


With Apple reportedly facing a federal antitrust probe over its iAd mobile ad platform as well as its ban on third-party development tools on the iPhone, Google may be feeling a bit of schadenfreude.

After all, the search giant has been the subject of a separate investigation by the Federal Trade Commission over its $750 million bid for mobile ad network AdMob last November. The BoomTown blog reported Monday the FTC could file a request for a preliminary injunction as soon as this week to block the deal. And the agency's staff is urging the filing of an antitrust suit to challenge the acquisition, according to Bloomberg.

If nothing else, the government appears to be an equal-opportunity antagonist when it comes to looking into anti-competitive practices by major technology companies entering the mobile ad market. To help its own cause, Google in recent weeks had actually pointed to Apple's launch of the iAd system as a sure sign of thriving competition in mobile advertising.

That argument appears to have fallen on deaf ears with Apple now under antitrust scrutiny itself. Nor are regulators backing off simply because mobile advertising is still at an early stage without any one company dominating the sector. Instead, the government seems intent on insuring it stays that way by keeping a close eye on Google and Apple as they push into the space.

Apple's acquisition of mobile ad network Quattro Wireless may have sailed through unchallenged, but the recent changes to its licensing agreement with iPhone developers caught the notice of the FTC and Department of Justice.

Besides new restrictions that prohibit developers from using Flash and other tools not approved by Apple, the revised terms appear to block competing ad networks from gathering data needed to serve targeted advertising through the iPhone operating system. Developers wouldn't be able to share data with third parties, which would also include analytics firms, without Apple's okay.

A key question is what the relevant market defines as monopolistic practices. In a Q&A in The Wall Street Journal, Kenneth L. Glazer, a partner at K&L Gates and the former deputy director of the Bureau of Competition at the FTC, suggested Apple's 25% share of the smartphone market would be well below the 40% threshold for bringing an antitrust case.

Google's acquisition of AdMob, which according to one estimate would give the combined company a 21% share of the U.S. mobile ad market, would also fall below that threshold. But regulators could also try to build a case by defining a separate market for advertising within mobile applications or advertising on the iPhone. Then Apple's new developer rules might look more threatening.

Whatever course the feds end up choosing, the potential for a formal investigation has reportedly been enough for the company to consider changing the language in its developer agreement to avoid further scrutiny of its trade practices.

Last year, Google CEO Eric Schmidt stepped down from Apple's board after the FTC investigated whether Apple's sharing directors with other companies ran afoul of antitrust rules. Since then, the companies have become more-direct competitors as a result of their expansion into mobile. But ironically, they now find themselves again in the sights of antitrust regulators.

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