Peter Kafka

Recent Posts by Peter Kafka

Don’t Kid Yourself, Mobile Ad Companies: Apple Really Does Want to Lock Up the App Market

Is Apple really trying to shut out other ad networks from its iPhones and iPad apps? That’s what it looked like at first blush last month.

Recently, though, I’ve talked to some mobile ad companies that are more hopeful. They think Apple will let them compete with its iAd platform in a fair fight.

Maybe they’re saying that because they have to appear optimistic. Maybe they really believe it. But I think they’re wrong. I think Apple intends to own the ad market for its app ecosystem.

A refresher: No one says Steve Jobs is formally preventing rival ad networks from selling ads within the 200,000-plus apps his gadgets support. But the language in the developer agreement for Apple’s new mobile operating system reads as if the company is effectively crippling competitors, by making it hard for them to target ads and track their performance.

That ability, which requires transmitting data from iPhones and iPads to third parties, is standard in Web advertising. But Jobs’s agreement seems either to rule it out altogether or require “opt-in” approval from consumers. Which is almost like ruling it out.

The optimistic mobile ad folks, whom I talked to on background, think things won’t be so dire. They make a couple arguments to support their “we’ll be okay” reasoning.

1) “We’re talking to people at Apple, and they’re hinting that we’ll be okay. Or that at the very least, things haven’t been settled yet.”
2) “It makes no sense for Apple to shut out other mobile ad guys. What it really wants to do is encourage developers to build for the iPhone/iPad, by helping them make more money. The best way to do that is to allow multiple ad networks.”

The problem with these arguments:

1) At a different company, you could argue that a developer agreement is just legalese, not a strategy. But Steve Jobs seems to takes his developer agreements quite seriously. Remember when it looked like he was using a clause in the new contract to kick Adobe (ADBE) and Flash in the teeth? Turns out he really was trying to kick Adobe and Flash in the teeth.

2) Sure, Jobs could generate more money for himself and his developers by opening up his platform to outside ad networks. But you could make the same “open it up” argument about his App Store, and that’s not happening. Instead, Apple insists on approving every app, by hand. Apple also insists on approving the tools developers use to build their apps. If you want to build for a platform that lets in every app, Jobs argues, head over to Google’s (GOOG) Android. It will even let you use Flash.

Not convinced? Check out the first thing Jobs wrote to Gawker’s Ryan Tate over the weekend*. Apple, Jobs said, was offering “freedom from programs that steal your private data.”

I’m almost certain that Jobs is talking about apps and ad targeting there. And sources tell me Apple (AAPL) is defending its policies to federal regulators with the same argument: We’re doing this to protect our users’ privacy.

And perhaps that really is Apple’s primary intent. But it looks like the effect is the same regardless of their motive: It’s going to be very hard for outside ad companies to sell ads inside Apple’s apps.

*I believe, but don’t know, that the Jobs-Tate exchange is authentic.

[Image credit: stp243]

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus