The Federal Trade Commission’s (FTC) decision not to challenge Google’s acquisition of AdMob is understandable given the nascent and changing nature of the mobile advertising market and Apple’s emergence as a likely formidable competitor in this market. The American Antitrust Institute (AAI) agrees with the FTC’s conclusion that, particularly as a result of Apple’s recent actions, current market shares are unlikely to be an accurate predictor of future market shares or whether the Google/AdMob combination will be able to exercise market power. Indeed, press reports indicate that Apple’s licensing agreements with iPhone application developers may prevent developers from using competing mobile ad networks.
The AAI does not believe that two mobile advertising networks – Google and Apple – are sufficient to provide adequate competition to protect mobile publishers, application developers, and advertisers. The FTC’s statement indicates that the Commission believes that other advertising networks may emerge, including those supported by other mobile operating systems. We hope the FTC is correct. But, if application developers who use the iPhone platform are unable to use other ad networks, then the AAI fears that other ad networks will be deterred from entering the market. We urge the FTC to closely scrutinize Apple’s agreements with developers to determine whether they may be unreasonable restraints of trade. Indeed, a legal remedy ensuring the openness of the iPhone platform to multiple advertising networks was a possible alternative to allowing the Google/AdMob merger. In any event, the acquisition should not become an excuse to permit Apple to monopolize advertising on the iPhone platform.
AAI plans to issue a White Paper next week containing a more in depth analysis of the acquisition.
