U.S. Regulators to Probe Apple Over In-App Ads

Following changes to Apple’s developer license agreement that appear to ban third-party advertising within applications on its mobile devices, U.S. regulators are reportedly launching a preliminary anti-trust investigation into the matter.

According to reports in the Wall Street Journal and the New York Post, sources “familiar with the situation” have said the Federal Trade Commission and the Justice Department – both of which have the power to enforce federal antitrust laws – are holding discussions over which agency would hold the inquiry. A preliminary inquiry would not necessarily lead to a full investigation, but would determine whether or not one is deemed necessary.

According to the WSJ, the FTC has already contacted executives in the mobile advertising space to discuss the implications of the updated developer agreement, and the overall impact of Apple’s iAd mobile advertising product on the market.

The agreement now states, “The use of third party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited.” That provision, in theory, forbids the use of third-party analytics services and cripples the serving of ads into applications from networks other than Apple’s own iAd offering.

In addition Apple will not allow the serving of ads based on users’ location – a targeting functionality the company is currently pitching to advertisers via its own iAd network.

Speaking with ClickZ last month, Michael Becker, North America managing director for the Mobile Marketing Association, said, “Apple appears to be doing what Apple does best… controlling the end-to-end value chain.” It’s that control that appears to be concerning regulators.

Becker also expressed concerns surrounding the integrity of a model in which reporting and analytics would be handled by Apple alone, stating, “Third party audibility is critical, and we’d like to see that happen through Apple devices. Right now it appears they’re saying they’re not going to allow that.”

Mobile ad networks, including AdMob and Millenial Media, have not returned requests for comment on the potential impact of Apple’s updated agreement on their businesses.

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