Apple Clarifies Stance on Third-Party Ads Following Regulatory Scrutiny

Following increased regulatory scrutiny of its entry into the mobile advertising space, Apple CEO Steve Jobs declared the company does not intend to ban third-party ad providers from applications on its mobile devices.

In April the company made changes to its application developers’ license agreement that appeared to outlaw the use of third party analytics products and advertising from third party networks. That could potentially force advertisers to use Apple’s proprietary iAd product to reach consumers through apps on the iPhone, iPod Touch, and the iPad.

Apple has been vague about its intentions for the updated agreement and how it intends to enforce it, leaving ad networks wondering if they were about to be shut out of Apple’s mobile platform altogether.

Speaking at the Wall Street Journal’s All Things D conference yesterday, however, Jobs said Apple will not inhibit developers’ use of third-party ads in their applications, and that the update was mostly intended to protect users’ privacy. “We’re only going to allow analytics that don’t give device information, and that are solely for the purposes of advertising,” Jobs said. “In other words if a developer needs to put some analytics in their app that sends some information out to an advertiser so that they can make some money, they can do that. We’re not going to be the only advertiser. There’s others, and we’re not banning other advertisers from our platforms,” he continued.

Following its scrutiny of Google’s acquisition of AdMob, the Federal Trade Commission published a statement referring specifically to Apple’s control of its developers’ license agreement, arguing it provides a “unique ability to define how competition among ad networks on the iPhone will occur and evolve.”

According to Andrew G. Berg, a lawyer involved with that investigation on behalf of an AdMob competitor, the Commission’s concerns will now trigger a more detailed investigation by either the FTC or the Department of Justice. “The restrictions in the developers’ license agreement is a significant issue the FTC or DOJ is going to look at,” he told ClickZ.

Berg said Jobs’s comments are unlikely to deter regulators from probing the matter in more detail, stating, “I highly doubt that the FTC will take Steve Jobs’ word on the subject, and it will have no impact on any FTC investigation decisions at this stage.” He added, “Words and conduct are often not consistent – as President Ronald Reagan once famously said, ’Trust but verify.’”

Jobs’s comments are likely to be well received by mobile ad providers, though, which may find their businesses threatened if Apple does decide to exclude them from its platforms. Millennial Media CEO Paul Palmieri demonstrated his concern in a statement reacting to the FTC’s approval of Google’s AdMob acquisition. “The burden is now on regulators, and Apple in particular, to preserve an open [a” competitive market that will provide the most choice and value for developers and consumers, no matter how tempting it is to do otherwise,” he said.

In related news, AdMob officially launched its iPad software development kit (SDK) today, allowing advertisers to serve standard ad formats such as mid-page units and leaderboards directly into iPad applications. Amazon.com is among the first advertisers to use the service, and is currently running ads promoting its Kindle for iPad app which are appearing in free iPad games such as Harbor Master HD.

Follow Jack Marshall on Twitter at @JackMarshall.

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