Is Apple Closing Off the iPhone to Rival Ad Networks?
Is Apple, which just launched its own ad network, crippling competitors that want to sell ads on its iPhones and iPads?
That’s how some competitors are interpreting a clause in the developer agreement Apple released last week when it announced the new operating system that will power its mobile devices.
They’re concerned about language in the contract that seems to ban apps from transmitting data that third-party ad networks would use to track their ads’ performance. If they’re right, Apple’s contract would severely handicap rival “in-app” ad networks–like Google’s AdMob–without formally banning them.
“Ads don’t exist without analytics,” says a mobile ad executive. “Can’t measure it, can’t bill for it.”
The language in Apple’s agreement that worries ad networks also seems to cause problems for companies that only sell analytics, like Adobe’s Omniture.
I’ve included the full text of Section 3.3.9, which falls under the “User Interface, Data Collection, Local Laws and Privacy” section of Apple’s agreement, at the bottom of this post. But here’s what seems to be the crucial bit:
“Notwithstanding anything else in this Agreement, Device Data may not be provided or disclosed to a third party without Apple’s prior written consent. Accordingly, the use of third party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited.”
As I understand it, Apple is arguing that app makers can’t pass along information that incorporates each phone’s “unique device identifier” to ad networks and measurement companies.
This doesn’t expressly prohibit ad networks from selling ads, but it prevents them from selling targeted advertising, which is close to the same thing when it comes to mobile devices. The same problem would plague analytics companies, which might be able to compile very broad usage info about apps, but little else.
I’ve asked Apple (AAPL) for comment, but haven’t heard back. I’m also waiting to hear from Adobe (ADBE), which is already battling Apple over a clause in the developer contract that more or less prohibits its Flash standard, and Google (GOOG), which has been cheering on Apple’s entry into mobile ads.
I did talk to Peter Farago, who runs marketing for Flurry, a mobile app analytics company; he says Flurry executives noticed the language in the contract when it was released last Thursday and have been trying to figure it out since then. Farago says Flurry is worried, but figures there will be some way to work with Apple.
“It’s too early to tell. No one’s freaking out,” he says. “There’s more to understand about it, and we’re dialoguing with Apple about it, but it looks we may have to modify the way we collect and distribute information.”
3.3.9 The following requirements apply to You and Your Application’s use, collection, processing, maintenance, uploading, syncing, storage, transmission, sharing and disclosure of User Data:
– All use of User Data collected or obtained through an Application must be limited to the same purpose as necessary to provide services or functionality for such Application. For example, the use of User Data collected on and used in a social networking Application could be used for the same purpose on the website version of that Application; however, the use of location-based User Data for enabling targeted advertising in an Application is prohibited unless targeted advertising is the purpose of such Application (e.g., a geo-location coupon application).
– You may only provide or disclose User Data to third parties as necessary for providing services or functionality for the Application that collected the User Data, and then only if You receive express user consent. For example, if Your Application would like to post a message from a user to a third party social networking site, then You may only share the message if the user has explicitly indicated an intention to share it by clicking or selecting a button or checking a box that clearly explains how the message will be shared.
– Notwithstanding anything else in this Agreement, Device Data may not be provided or disclosed to a third party without Apple’s prior written consent. Accordingly, the use of third party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited.
– You and the Application must take appropriate steps to protect any User Data from unauthorized disclosure or access. If a user ceases to consent to Your use and/or Transmission of User Data, You must promptly cease all such use and/or Transmission and destroy any such information from Your records (except to the limited extent necessary for Your Application back-ups and record-keeping or as otherwise prohibited by law).