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Apple blocks competitors' ad networks from apps universe

Apple will block the release of user data from iPhone and iPad applications from going to the operators of other large advertising networks. The device maker has its own in-app ad network, iAds.10 Jun 2010

Google-owned ad network AdMob has accused Apple of stifling ad network competition and restricting revenue to app developers. Apple claims that its changes are designed to keep web analytics firms from analysing data to breach user privacy.

In order to satisfy advertisers, ad networks must be able to provide details of viewing, clicking and actions related to the ads that they put in front of web or application users.

Apple blocked third-party access to that information, but in a new agreement with developers of applications published this week it allowed some companies access to that data. It will not, though, allow AdMob and other ad networks which are owned by companies that compete with Apple, to access and use the data.

AdMob chief executive Omar Hamoui said in a blog post that the new agreement locked it out and would harm competition in the ad network market.

"[The agreement] would prohibit app developers from using AdMob and Google’s advertising solutions on the iPhone," he said. "These advertising related terms both target companies with competitive mobile technologies (such as Google), as well as any company whose primary business is not serving mobile ads.

"This change threatens to decrease – or even eliminate – revenue that helps to support tens of thousands of developers. The terms hurt both large and small developers by severely limiting their choice of how best to make money.  And because advertising funds a huge number of free and low cost apps, these terms are bad for consumers as well," said Hamoui.

Apple's new agreement says that companies may only use the user data with its consent. It said it would not provide that consent for firms whose main business is not being an ad network.

"[The information will be] provided to an independent advertising service provider whose primary business is serving mobile ads (for example, an advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple would not qualify as independent)," said the agreement, according to news site All Things Digital.

These conditions seem to lock out ad networks owned by Apple competitors Google and Microsoft. Google competes with Apple in the markets for operating systems and mobile devices. Microsoft competes on operating systems and music devices.

Small, cheap and free applications that run on Apple's iPhones and iPads have been a major success for the hardware maker and the legion of small developers which creates them. Apple has encouraged those developers to embed its iAds platform into their applications so that it handles the administration of adverts and earns a slice of the ad revenue.

AdMob's Hamoui said that he believed that Apple's restrictions on the use of ad data would damage the markets for advertising and for applications themselves.

"Let’s be clear. This change is not in the best interests of users or developers," he said. "In the history of technology and innovation, it’s clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress."

The Financial Times reported this week that US competition and consumer regulators could investigate the locking out of ad networks with parent companies that compete with Apple.

It said that two sources had told it that the Department of Justice, which handles competition investigations, or consumer regulator the Federal Trade Commission are considering investigating Apple's move.

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