Apple Attracts Antitrust Scrutiny Over Restrictive Mobile Advertising Policies

Strategic Insights -

Apple Inc.'s recent move to restrict its largest competitors, including Google Inc. and Nokia Corp., from advertising on its mobile devices has sparked antitrust scrutiny from U.S. regulators. According to a report by the Financial Times, Apple's new mobile advertising network, iAd, aims to generate over $60 million in revenue for 2010, representing 50% of the total estimated U.S. mobile ad spending for the second half of the year.

Apple's new developer rules prohibit third-party apps, including Google's AdMob service, from collecting ad analytics on the iPhone and iPad, thereby reducing competition in the ad mobile space. Google, which acquired AdMob for $750 million in late May, has claimed that Apple's actions will hinder technological progress and affect users and developers in the long run.

This move by Apple is expected to give the company a toehold in the emerging mobile search market, currently dominated by Google, Microsoft, and Yahoo. With a new policy requiring iPad and iPhone software developers to use only Apple programming tools, Apple is seen to be consolidating its control over the mobile ecosystem.

Key Takeaways:

  • Apple's iAd mobile advertising network aims to generate $60 million in revenue for 2010, representing 50% of total estimated U.S. mobile ad spending for the second half of the year.
  • Apple's new developer rules prohibit third-party apps from using Google's AdMob service, reducing competition in the ad mobile space.
  • Google has claimed that Apple's actions will hinder technological progress and affect users and developers in the long run.
  • Apple's move is seen to give the company a toehold in the emerging mobile search market, currently dominated by Google, Microsoft, and Yahoo.
  • Apple has adopted new policies to restrict third-party developers from using its exclusive software tools.
  • Zacks Equity Research believes this action will greatly alleviate competition and generate higher sales and profits for Apple.

Statistics:

  • Apple's iAd mobile advertising network aims to generate $60 million in revenue for 2010.
  • 50% of total estimated U.S. mobile ad spending for the second half of 2010 is forecasted to come from iAd.
  • Google acquired AdMob for $750 million in late May.
  • Apple's new developer rules prohibit third-party apps from collecting ad analytics on the iPhone and iPad.
  • The emerging mobile search market is dominated by Google, Microsoft, and Yahoo.

Sources:

  • Financial Times
  • Zacks.com
  • Zacks Equity Research
  • Zacks Investment Research, Inc.
  • iAd
  • Google
  • AdMob
  • Nokia Corp.
  • Microsoft Corp.
  • Yahoo
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  • Zacks.com performance data