On Thursday, Apple published an “App Store Tip” for developers that it will reject apps which “use location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location.” We have received dozens of questions from developers about what this means for applications and application business models.
It’s important to note the catalytic role Apple’s iPhone played in the mobile ecosystem. The integration of hardware, software, development environment, retail environment and commerce provided, at last, the platform for which users and developers had been waiting. For the first time, app developers were able to create fun, innovative, useful experiences and get them in the hands of consumers. User adoption fueled the app economy and the app economy in turn fueled user adoption.
From the beginning, Apple established tight control over their platform – every app sold in the iPhone App Store must have Apple approval – to ensure the development of stable development environment. There are both pluses and minuses to this approach and they have been widely discussed. The success of the App Store itself, however, is beyond dispute.
The explosive growth in iPhone adoption and usage has also driven a vibrant mobile advertising environment over the last two years. A range of companies – AdMob included – enabled developers to offer free applications with media business models. Apple has made it clear that they consider advertising on the iPhone, iPod Touch and iPad a company priority.
Thursday’s “App Store Tip” sparked speculation that Apple would use its tight control over the iPhone platform to include mobile advertising. Randall Rothenberg, President of the IAB, wrote last week about the risks around “controlled” or “closed” ecosystems and the challenges they present for the developer community. His post captures the concerns iPhone developers are feeling right now. To speak in generalities, advertising on any given media requires some form of openness and standardization to thrive.
We share the community’s concern that the removal of location-based information could inhibit the business model for developers of free applications. We hope this is not indicative of a new approach by Apple and that many different companies will continue to have the ability to contribute to the rapid innovation in mobile advertising on the iPhone.
The iPhone represents an important segment of AdMob’s business and we are excited to continue our work with the developer community. We believe that the strong competition amongst mobile ad networks has directly benefited application developers thus far and the entire iPhone ecosystem will benefit from continued competition as mobile advertising enters its next phase.
Jason Spero
