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Is Google-AdMob Deal Bad for Consumers and Apple?

admob iphone

Uh-oh, one of Google's ever-expanding business tentacles has latched onto a target that's got consumer groups all in a tizzy. It's the Google-AdMob deal, and the worry is Google's consolidation will actually hurt consumers.

Not in a kick-down-your-door-and-punch-you type hurt, of course, but more as a stifling effect on a rapidly-growing and potentially vital new market: Mobile advertising. The Consumer Watchdog and the Center for Digital Democracy called this new market a "vital and growing segment of the online economy" in their joint letter to the FTC asking the body to block Google's $750 million acquisition attempt.

The consumer group's argument hinges on the fact that Google's a business megalith (yes, it's so big it's beyond a mere monolith) and by buying AdMob it'll effectively establish a monopoly over the field of mobile adverts. And that means, without "vigorous competition" Google could stamp out competitive innovation, and become the main influencing decider about which smartphone users sees what advert placements at what time. But the consumer's rights advocates also throw another worry into the mix: Privacy. According to these guys, acquiring AdMob would give Google a huge slew of data on consumer practices, right down to their location, and added to Google's already vast (and faintly unease-stirring) user database, this is a step too far.

So, do these guys have a point? We do know the future of mobile phones is the smartphone (and we can include the slew of new tablet PCs in this too) and that more and more people are moving to a mobile internet/mobile apps/portable digital lifestyle. Recent stats show that in the run up to Christmas more people than ever before shopped for goods online actually from their smartphones. Wire these facts together, and it becomes clear that advertising products and services to mobile digital users is going to be a gargantuan business in the very near future—it may even outstrip the desktop PC ad market.

Given that suggestion, it's totally obvious why Google was interested in AdMob—and it explains why the ever lateral-thinking Apple was also rumored to be on the verge of buying the company before Google swept in (Apple's payback, some say, was snatching Lala from Google's burgeoning music search engine, a move worth every penny of the reported $85 million Apple paid).

But will Google steal a monopoly by pulling this trick off? That's harder to pin down, of course. It might do, but to say that this is bad for the consumer is perhaps misleading: Google's aim is to make money by selling ads, and as an innovation-centric company, it knows if it doesn't innovate continually how it delivers ads, then consumers will be turned off. That means the advertising "experience" of smartphone users probably will remain innovative.

The bigger question is about all that lovely user data. When news of the Google-AdMob deal first popped up, over at Forbes they correctly pointed out that what Google was really after, rather than a vehicle for selling ads to smartphone users, was the data. Data on who buys apps for smartphones, which apps yield the most ad clickthroughs, which apps people buy and so on. And since Apple is leading the smartphone charge, this data is a peek inside Apple's own remarkably successful App Store—a peek that will reveal secrets Google could use to power-boost its own not-quite-so successful Android App Marketplace. Is that peek worth $750 million? Could be, if you take a five year view of exploding smartphone sales...and you have your own-brand smartphone ready for sale to the public. That sounds like bad news for Apple. But the folks at Cupertino are smart, and have their own tricks for understanding the app advertising marketplace—thanks to systems like the new in-app purchases.

Will Google abuse the data, and invade user privacy? Again, that's tricky. Google would certainly apply its coders to work out to which smartphone users it should serve up which adverts. And location-specific data on where and when users are accessing apps (which Google could work out by data on the AdMob-served ad instances when an app is running) is certainly highly personal and intrusive. But that's only risky if you distrust Google—which, lets face it, already has a massive bunch of data on all of use and our habits. I'd say it's a wait and see thing, on the whole. The Consumer Watchdog and the Center for Digital Democracy are doing a good thing, but ultimately the FTC will be probing every corner of this deal to smell a rat.

[Via PaidContent]

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