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How Apple could slay Google at WWDC 2010

Daniel Eran Dilger

Apple is a company with thick skin. It takes an awful lot of prodding to rile the company or even provoke a response from its executives. Those jerking the company’s chain better hope this resilience to their attacks continues, because a single response from Apple at WWDC could wipe out Google and the bloggers that support it. Here’s how.
.When Steve Jobs talks, people listen

On the rare occasions that Apple does respond to an issue, it does so in a brutally open and devastating way, such as when Jobs lambasted the idiot chatter about music and DRM with clear cut reality, or his more recent donkey punch delivered to Adobe’s Flash.

Jobs is also famous for succinctly explaining what he thinks about technologies or specific approaches to design, such as his castigation of the mini keyboards covering a third of the face of smartphones or mouse or stylus-based interfaces in the modern era of mobile multitouch devices.

Pundits and competitors, from John Dvorak to the CEOs of Palm and RIM, spent years explaining why Jobs was wrong about all this until meekly changing their collective tunes once they realized that it was them, and not Jobs, who had all the trouble seeing plain reality.

Thoughts on Music
Thoughts on Flash

Better wrong than in the way

The only thing worse that doubting Jobs is competing directly against him. Microsoft’s Steve Ballmer was probably a little embarrassed to have been so wrong about smartphones back in 2007, but he’s no doubt far more upset that his company was completely run out of the smartphone business by Jobs’ iPhone, even as it ineffectually tried to counter the iPod with its Zune, and after having been emasculated in the area of media formats by Jobs’ iTunes+QuickTime and Apple’s support for open codecs like the ISO’s MPEG AAC and H.264 in opposition to Microsoft’s proprietary Windows Media Audio/Video.

Similarly, while it was certainly humbling in retrospect for Palm’s former CEO to have said Apple was “not going to walk in” and immediately succeed in the competitive smartphone market back in 2007, it’s far more humbling for him to have to watch as Palm’s decade of experience that he touted be erased as irrelevant by Apple’s first strike into the smartphone business.

I’ll also bet that Verizon’s VP Jim Gerace, who told the media “we said no” to the iPhone back in 2007 because Jobs wanted too much control over hardware and service support and software bundling and branding (among other issues) is now wishing his team had stuck it out on the negotiating table three years and billions of dollars ago.

Myth 8: iPhone will lose out to Steve Ballmer’s Windows Mobile 7 in 2010
Why Apple’s Tim Cook Did Not Threaten Palm Pre

How Apple could tear bloggers and Google a new one

These days, Apple’s primary competitors have all fallen down on their knees while clutching their gutted bellies. Nobody is talking about Microsoft anymore, apart from stories about how the company is letting go of its most poorly performing star executives for doing so poorly against Apple in the area of consumer electronics.

Other big competitors from Sony to Nokia, once considered the major powers in consumer electronics and mobile devices, are in a similar state of panic as they work, not to make a comeback against Apple, but to simply survive as entities. Even Nintendo is worried about losing its game to Apple, something that nobody has really rivaled before. Apple has outgrown both HP and Dell in terms of value and growth.

Who is left? Google, the paid search giant that backers hope will beat Apple in hardware and software platforms… despite Google being neither a hardware vendor (nor marketer nor retailer nor support provider) nor having any real experience in managing a software platform for consumers. Fans of Google suggest that the company will take on Apple by acquiring a competing version of everything Apple has built over the last decade: iTunes, a mobile platform, hardware expertise, user interface design savvy, development tools, and a user base.

The problem is, they don’t also foresee that Apple could compete against Google in its own home territory of ads. When Apple entered the mobile ad network business by acquiring Quattro, it was taking a page right out of Google’s vaunted playbook: buy your way into a market. But Apple didn’t just make a speculative purchase; it had a plan.

Apple’s iAd program appears set to bring far more interesting (for users) and valuable (for developers) and rewarding (for advertisers) advertising to the mobile arena. That’s a novel strategy Google didn’t happen upon on its own. Google is still using 1990s style ad-click banners that induce or force users to leave developers’ apps and take them to external web ads. That doesn’t even work very well on the web; its far more annoying on a mobile device.

Reality Check: Nokia’s iPad patent infringement headlines
iPhone 2.0 SDK: Video Games to Rival Nintendo DS, Sony PSP
iAd: Is Apple taking mobile ads in a new direction?

Oh but wait, there’s more

While Apple’s iAd strategy shows that the company can and will take on competitors and can potentially take far more than it gives up, there’s also another potential strike Apple could unleash upon Google and its blogger advocate groupies. Apple could kill web ads.

Apple has over 50% of the mobile web market, and people have already postulated that the new iPhone OS 4 SDK’s restrictions on forwarding private user data to third parties could deliver a devastating blow to the current mobile ad market. However, the current ad market for mobile devices is rather small.

Imagine what could happen if Apple introduced Safari 5 at WWDC with support for a plugin API (as sort of postulated, teased, hinted or simply hoped for by John Gruber this week), and then demonstrated this new plugin architecture with a free, bundled plugin that blocked web ads. This would be a bit like Tivo for the web, except far easier to do in a way that web advertisers would notice.

Web blocking plugins are common on Firefox and Chrome, and already exist for Safari (using undocumented or deprecated APIs like SIMBL/InputManager). However, no major browser vendor, and certainly no major platform vendor, has ever shipped their browser with an ad-block plugin, and certainly not one that was activated by default.

One might think that it could have occurred to Microsoft that doing this in Internet Explorer could have killed off Google some time ago, back before IE’s market share began dropping below the level of full critical mass. Apple’s share of the desktop web browser market is a tiny sliver below 5%. But that 5% is extremely visible on the Mac, and were Apple to promote Safari as not just fast, but ad free, it would likely blaze deeper into the Windows world, just as Firefox and Chrome have.

Daring Fireball: Safari extension API suggestion

Hitting Google where it counts.

Google currently pays Apple hundreds of millions of dollars to capture the audience of Safari Mac and iPhone users performing search queries (just as it singlehandedly also supports Firefox development the same way). Apple could continue to get this revenue (because paid search ad placement is the most valuable thing to Google) while also stripping Google of its display advertising revenue via an ad-block plugin.

This would increasingly bleed Google of both ad reach and revenue in the area of display ads on the web, which are already not all that profitable. Google’s only recourse would be to match this capability in Chrome and Chrome OS and Android, but this would be a painful way to try to compete with Safari’s ad-free experience. If Microsoft were to realize what was going on, it could match Apple’s efforts, resulting in Google’s ad monopoly over the web simply being ignored to death by web users.

The casualties to this siege on Google’s adware web would be the content publishers who are monetized by Google’s ads. These are also the bloggers who are ripping Apple apart, so why not starve them out of business? After all, Apple now has an alternative business model to the ad supported web: native apps on the iPhone and iPad. It could also launch desktop, web-based apps within Safari that allow companies to develop HTML5 content monetized by subscription or by App Store purchase.

This would rid the web of ads and turn content into a paid model much like what existed before the web destroyed print, periodicals and newspapers with low quality content framed by copious amounts of irritating, flashing ads that pay just enough to perpetuate themselves and starve out good content, but not enough to actually fund high quality writing, reporting and other content.

Web ads are a noxious weed choking the intelligence and sophistication out of our society’s media, and Google is making its massive fortunes delivering this scourge. Do no evil? How ridiculous, that’s Google’s core competency!

Why Apple Plays God with the iPhone SDK
Apple vs Google: it’s all about who pays

Other casualties of the war on ads

While content creators (a group that includes yours truly) would simply have to adapt to a paid subscriber model to survive, other casualties would find the death of Google’s ad support far more destructive. This group includes “Search Engine Optimizers,” who create fake websites that Google happily monetizes with its ads.

It also includes groups that scrape content from legitimate sites and plagiarize their content with either no attribution or a meaningless little link that directs people back to the original item (but doesn’t). Google puts lots of ads on those pages too, so it has a financial interest in not stopping this practice. That’s just part of the evil Google does without anyone ever pointing it out. Google cultivates an adware pandemic.

There’s lots of other spamming and fraudulent activity that Google facilitates through its free Gmail accounts linked to ad supported websites that generate clicks through a mess of highly ranked SEO adware garbage that Google says it doesn’t like but ultimately benefits from as the merchant of that adware. Erasing all those ads right at the browser would dry up not just Google’s display ads but wipe out the business model supporting all those fraud sites and spamblogs.

Of course, the other big casualty of a war on web ads would be Adobe as the vendor of Flash, the preferred platform of web ads. I’m sure Apple wouldn’t mind killing both birds with one stone.

Would this be Apple’s biggest accomplishment?

The big question here is: does Apple have the balls to revolutionize the web and return the world’s journalism and entertainment to a paid premium model (like magazines and books and newspapers and HBO) rather than an adware garbage model?

The company has already established a paid model for music, movies, TV, iPhone and iPad apps, audiobooks, and iBooks. It also supports the distribution of entirely free content such as podcasts, iTunes U, free iBooks, free apps and so on.

The next step for Apple is simply cutting the adware jugular that feeds Google’s voracious appetite for acquisitions and fuels the world’s SEO spammers and their fraud sites and spamblogs. If the company could get that done, Jobs’ iPad would become the second most important thing the man has ever accomplished.

Apple: fix the web. Kill the ads. Everyone will follow, even the whiny bloggers.

54 comments

1 cadillac88 { 05.26.10 at 10:57 am }

What’s more brutal than brutal? Starkly brutal? Brutally brutral? I don’t know. But what ever is, if Apple ever did what this artical suggests, that would be more brutal that brutal. The question is, why hasn’t this happened yet? The Telcos and Cablecos could also screen web traffic and strip ads and replace with their own. Could it be that the outcome in a case like this is revenue sharing? Don’t block my ads and I’ll give you a cut? It boggles my mind. BTW – this article is likewise more brutal than brutal. Awesome stuff.

2 gus2000 { 05.26.10 at 10:59 am }

I really like Google. The maps, free mail, the search.

So it hurts to see you brutally put them down, particularly since they’ve been so successful. You’re absolutely right that Google funds the worst attributes of the web, but those all existed before Google did. They were simply the best at monetizing what was already going on.

There should be room for both ad-supported content and paid content on the web. Can’t Google exist, even without contributing to the Dark Web?

3 Thunderdome { 05.26.10 at 11:04 am }

Apple could put some serious hurt on Google by requiring iDevice users to choose their default search engine (Google, Yahoo or even Bing) with the next OS update and on all new iDevices. Even if a third of the users choose a different search engine, that would cause Google some serious pain.

4 stefn { 05.26.10 at 11:06 am }

Google spends a lot to cover up the fact that it’s ONLY profitable product/service is advertising. All its “open this and that” talk is lipstick on a pig. Ads are the “sin tax” that we all pay today to pay for Google goodies. Goodies, by the way, that destroy all sorts of honest competitors who simply cannot afford to charge nothing.

5 Thunderdome { 05.26.10 at 11:06 am }

Plus Apple can use eternally righteous justification that it just wants to offer consumers “choice” in search engines, and as we all know, “choice” is always good.

6 David Dennis { 05.26.10 at 11:11 am }

Usually I agree with most of what you say, but unfortunately I really don’t like the collateral damage this brings to all web publishers.

This includes yourself, the New York Times, the Washington Post, Engadget, etc, etc. In fact, the only publisher that would not lose horribly from this model is the Wall Street Journal, which has a substantial base of paid users.

Why are you interested in writing your own death warrant? I really doubt you or any other lone blogger will be able to get many subscribers. The NYT might but even the partial paywall of Times Select was a flop.

I could block ads, but I don’t, because I want the publishers whose sites I view to survive. Of course I only click on about 0.01% of all ads I see, but that’s a lot better than nothing.

Google is too useful to kill entirely. The only way you could come close to doing it is to come up with a better search engine. This might be possible with sufficient resources but it would be an enormous diversion of focus within the company.

If there’s one thing Apple is about, it’s focus. So I doubt that Apple is going to compete that way, but I would surely be entertained if I was wrong.

*

On a related issue … what would really kill Google’s Android is if Android Market is a lousy experience and people don’t buy apps for it.

I have read fairly old stories that say it’s a complete fiasco and nobody is making any money worth pursuing, but I am wondering if things have changed with the ascent of the Droid and other products.

Does anyone know? 50,000 apps seems impressive. Is there now an app for that in the Droid universe?

And how are developers doing? The only article I was able to find said not too well:

Android sales strong, but market for apps lags

If this is so, it could seriously damage Android in the long run.

Thoughts?

D

7 ludachrs { 05.26.10 at 11:28 am }

As much as I don’t like Google right now, I think the competition is good for Apple, and they have a better product. I would like to see Apple buy http://www.cuil.com or someone and complete with them in search, but I don’t see that happening.

8 ObamaPacman { 05.26.10 at 11:46 am }

Today:

- Dan mentions the nuclear option.
- Google backpedaled on the anti-Apple attacks.

Good job dan! ;)

9 Josh { 05.26.10 at 11:50 am }

Clever idea, but it wouldn’t work. Your logic fails at the point where you make the assumption that Apple’s introduction of an ad-blocker would somehow force everyone to introduce ad-blockers. First of all, Apple would never officially do this. It would draw too much attention of the U.S. government in the form of monopoly charges.

Secondly, it would backfire. The ad-supported web has already devised ways to block the blockers. They would simply block Safari, the iPhone, or any other device sporting an Apple-endorsed, high-profile ad-blocker. It isn’t that difficult to do and, if money is at stake, someone will figure out how to do it well and make a business of it.

Finally, since you pointed out that you are also ad-supported, your blanket assumption that ads are evil is really kind of silly. You are one of the brightest tech journalists on the web and your content is excellent. Ads can support good content and bad content alike. Trying to claim that all ad-supported media is drivel is really going overboard.

Besides, Google isn’t a bad company. Google makes a lot of cool stuff that people like. And it’s a good thing that Apple now has some serious competition on multiple fronts. In fact, Apple could learn a thing or two from Google when it comes to its web presence (like MobileMe and iTunes). The rivalry will keep both companies honest and it will hopefully produce cooler toys for us consumers.

In your unwavering defense of Apple, your rants against Google are too dismissive and too condescending to be taken seriously.

10 DesperateDan { 05.26.10 at 11:51 am }

Think of this. Around the world there must be many, many thousands of publications which survive mainly through advertising. On the web there are only a handful in the whole world. One, Google, basically sucks up an enormous percentage of the revenue for itself. This is incredibly unhealthy and unfair. For this reason alone Google should be stopped. Add in the truly shocking privacy concerns and it’s obvious that no single company should ever be in such a powerful position.

I’ve never really thought of it this way before but Google, when you strip away all the ‘do no evil’ crap, does a huge amount of harm.

Every time someone elects to go with one of their many ‘free’ services they choose not to pay for a similar service which would have put food in a developers mouth.

When you click on an Adwords link you are finding a product without using your local paper/radio/TV etc… services which are very valuable to your local economy. I know in this case that that’s really how the internet works, but all of the revenue leaving your local area and getting sucked into the US economy is bad for everyone outside the US.

I think the web needs to evolve into a place where there are many smaller search companies, each working slightly differently and none holding so much of your information (and I’m involved in SEO…). And now Google TV is arriving, sh!t… People really need to wake up and see what’s going on (but free is a hard habit to kick I suppose).

Dan, I think this is your best piece yet. My head is buzzing. Brilliant stuff.

11 lmasanti { 05.26.10 at 11:55 am }

Why destroy Adobe in such a convoluted way?

Just include two plug-ins: AdBlock and ClickToFlash.

But –to avoid judicial problems– just give them off, and a clear advice to turn them on.

12 Josh { 05.26.10 at 12:01 pm }

@DesperateDan: “Every time someone elects to go with one of their many ‘free’ services they choose not to pay for a similar service which would have put food in a developers mouth.”

Huh? That doesn’t make any sense. Your use of Google stuff generates ad views which, in turn, generates revenue. That income doesn’t come directly from you, the consumer, but it comes from the advertiser who has paid to have his text link inserted on a little line above your e-mail.

13 Blad_Rnr { 05.26.10 at 12:20 pm }

I LOL’d at, “donkey punch.” That was worthy of a good laugh.

Great writing as usual. Please tell us what you think about the MSFT layoffs in more detail. I’d like to know just how scared !@#$less Steve Ballmer really is these days, especially in light of the market cap ascension made by Apple today. Think about it: Apple is worth more than Microsoft. Unbelievable.

14 John E { 05.26.10 at 12:25 pm }

ads have provided the economic support for almost all journalism (and a great deal of entertainment) for a couple of centuries. that’s not the problem. the problem is Google has broken this connection for journalism, inserting itself as a parasitic middleman the diverts much of that essential economic support away from the vital content creators. its excuse is that it adds value for consumers by aggregating the information for easy access. but in fact it is starving the geese that lay those eggs.

the real answer is straightforward – revenue sharing/fees by Google and all others for linking to copyrighted material. just like radio, TV, et al have to pay writers via ASCAP for every song they play. the problem is our laws have not kept up with our technology. (like patent abuse too, but that is another topic).

15 David Dennis { 05.26.10 at 12:52 pm }

John, I think that’s still a bad idea – then anyone commenting on a news article would have to pay.. I don’t think that kind of requirement would pass a First Amendment test, and I think it would enormously reduce the amount of commenting on article and links to them.

I don’t think you would like the results.

D

16 ChuckO { 05.26.10 at 1:22 pm }

I think a lot of the comments point out why this plan would be less effective than um, er, advertised. Not that it wouldn’t be worth a try.

@John E 12, You could make the same argument for Apple’s products diverting money away from Artists say for instance with the iPod. Once your done paying for an iPod and the needed peripherals you have far less to spend on music.

I think the other argument that the web and the ads is responsible for the problems in publishing isn’t 100% on target or probably not even 50%. Go to any Borders or Barnes and Noble and there is a tidal wave of drivel sitting on the shelves. People seem to prefer it. About the only thing people do seem to be willing to pay forthese days are devices that reproduce this bilge anywhere they are or allow them to communicate with friends like neurotic loon’s. It’s a world of madness and misplaced priorities.

There’s a lot of negative energy out there about Apple lately but c’mon everybody let’s not get all apocalyptic about it. Have faith in the brain trust they’ve come this far.

17 petemonsy { 05.26.10 at 1:36 pm }

you never know Apple , M$ & Yahoo could team up do search/web ads …squeeze Google balls a bit… than see if Google can afford all these open & freebies nonsense they advocate so much… after all companies are in business to make money … the arrogance of Google, who they think they fucking around with ? Wanna kill Apple/M$ … go take a queue number, Google…

18 TheMacAdvocate { 05.26.10 at 1:44 pm }

While a nice fantasy, this would put the DoJ firmly up Apple’s backside. You can’t offer your own ad tools and profit from them on one platform and use your installed browser to block them on another.

As much as I’d enjoy the resulting hand-wringing and the blogger community’s wailing and gnashing of teeth, I don’t see this happening. I gets zero click-thrus on my blog, so it certainly wouldn’t impact my business model. :)

19 marian_ { 05.26.10 at 2:02 pm }

Daniel, I won’t pay to read you. Even if now I read every article that you write.

20 SteveS { 05.26.10 at 2:11 pm }

Yeah, the “donkey punch” comment made me LOL as well. Anyway, interesting idea, but flawed assumptions along the way.

First, Safari’s browser market share is insignificant.

Second, there is no incentive for anyone else to follow suit, especially Microsoft seeing as they’re trying to make Bing successful, etc.

Third, iAd is an innovative approach to mobile advertising, but it has yet to be proven successful and even if it is on the iPhone, that’s just one platform of many. Apple could only hope that other phone makers followed suit. Maybe Android would…. oh wait, they’re owned by Google/Ad Mob… (see my point)?

Unfortunately, Apple is more dependent upon Google than Google is dependent upon Apple. Apple’s ability to negatively impact Google is very limited, even in the best case scenario.

21 pixelkisser { 05.26.10 at 2:40 pm }

John E,
I think you’ll find that not all journalism has been ad supported. For instance the world’s most trusted international broadcaster – the BBC – has for the last 80+ years been publicly funded, not ad funded.

22 stormj { 05.26.10 at 2:41 pm }

There’s no reason why Apple can’t include a Flash blocker or an ad blocker in Safari. They have no monopoly there… but as I’ve mentioned several times in the comments here, they do have an issue with music and antitrust.

But that gives you by contrast an idea of how silly some of the other antitrust claims levied against Apple are.

23 nonlinearmind { 05.26.10 at 3:14 pm }

Daniel, ordinarily, I’m right with you and totally enlightened by your analysis, but I think you’re SO wrong on this one. Apple blocking ads so that it could sell its own is underhanded and right out of the MS playbook. Also, the billions of web users in the world would not stand for the internet going to a paid model. It would negate the democratizing power of the internet. Think of how doing so would affect education and research and the millions of small business owners who rely on the traffic web ads bring them. Look further down the road at how doing so could play out. Someone above mentioned the anti-trust implications, but think of the retaliatory tactics this could spawn. Google could choose to provide special services only for PC users as retaliation. Web ads really are a pain, but there’s a reason none of the major browsers come with an ad block pre-installed. It’s bad business. If anything, I could see apple creating a plugin architecture for safari and saying, “and look, someone has just happened to write an adblock filter for it. It’s not ours, but you can download it here.”

24 Ben Brooks { 05.26.10 at 3:30 pm }

Daniel,

Spot on, this is a great analysis and I truly hope that Apple launches something like this. I don’t know if it would kill Google, but it certainly would force them to get serious about making money and to stop resting on the Ad cash cow that they have created. Thanks!

25 John E { 05.26.10 at 4:13 pm }

@ pixelkisser – notwithstanding BBC and PBS and various nonprofits, i gotta think 90+% of journlism is ultimately ad supported (and 99% of US TV news). subscription revenues are the other much smaller source.

@ david dennis – there are fair use provisions of standard copyright law that leave plenty of room for public discourse.

@ chucko – artists get paid via iTunes already when you first legally acquire that music for your iPod. and Apple is not subsequently showing/making you listen to ads on the iPod.

if Google and others had to pay 1 cent for every click on a copyrighted story link, that would add up to $10 million for every billion clicks. instead of killing the news industry they could save it and launch a new era of web journalism.

but they are too greedy and want it all. do no evil my ass.

26 scottkrk { 05.26.10 at 4:33 pm }

Dan,
I agree Apple will start to define what ‘good advertising’ is for all participants. As a user I would define this as relevant/targeted advertising with no animation (btw I find the twitter widget you have on pages very annoying because it is animated, please consider disabling the animation/scrolling on article pages).

In addition to defining ‘good advertising’ I expect announcement in two other areas at WWDC

1. Siri Acquisition
2. HTML5 authoring tools

Siri could deliver the promise of Sherlock and relegate search as a background service the user rarely sees. Great for users bad for Google.

If Apple can provide its developers great HTML5 authoring tools to keep them in the cocoa objective C fold, it will create further pull towards HTML 5. Great for content/application developers bad for Adobe.

27 tonortall { 05.26.10 at 7:17 pm }

There’s at least on issue on the ad blocking front. I know there’s not consensus on this issue but there is most definitely a copyright issue with the use of these tools. I think Apple would tread a very fine line in supplying the market with such tool.

Firstly, as I understand, ad-blocking in effect creates a derivate work of the page being retrieved. Remember that you don’t have to do anything to gain copyright on material you create. It’s automatic. Has the adblocker been given the right to create a derivative work? I think the honest answer would be no. There is no fathomable reason to include advertising content if the intent was not to earn revenue. That intent is embodied in the page and in the markup delivered to the browser.

Secondly, there’s a moral rights issue which is related to the content. The author of the content intends that the page be rendered in certain way, or at least faithfully to that vision. Adblockers also interfere with that.

It’s not worth the time or effort for copyright holders to go after individuals on this point, but bring a large (huge) market cap company into the equation and that equation changes significantly. Apple could be open to contributory infringement claims by supplying such tools.

In short, and in my humble opinion, this vision is fantasy.

28 macsdounix { 05.26.10 at 7:31 pm }

Dan, I am impressed. This post combines the best of what you do. It offers your insanely amazing knowledge of Apple and its competitors with your zeal for political change. Your writing here is pithy, logical, provocative and high-minded. A++

29 mbossert { 05.26.10 at 8:19 pm }

Hi Daniel,

Long time fan, first time poster…

Great article – as always. Your thinking and true analysis is much appreciated and at such a high standard compared to the majority of Apple drivel on the blogsphere. Much Appreciated Sir!

As @John E states above, advertising has been the backbone of broadcast media for a long time. Paid subscriptions have never covered costs and broadcast media have neither the gonads or the smarts to make that work. A subscription to content model – as sole revenue provider – has only ever worked in specialized niches where the value of the information outweighs the cost. News and opinion (IMO) will not meet that standard…

While a fantastic (truely — I hate advertising and our family has been broadcast TV free for 3 years now – and it’s Good!) theory, the time frame needed and the confluence/cooperation/behind the scenes maneuvering… of factors that would allow Apple, Microsoft, (and whomever else) to drive a stake through the heart of Google’s brilliant (but effing hated…) business model is seriously hard to imagine.

I love the strategy, I love the startling unique thinking behind it…

I also think there are far too many embedded stakeholders for this to take place. What happens to those hundreds of thousands of bonafide, value producing affiliate marketers whose business is destroyed by the elimination of advertising? The worldwide effect would be millions of people without an income source. Who’s buying iPhones and new Macs then?

[Yes news organizations have been selling ads to support their work - but they do it first hand, not through a middleman like Google that takes the majority of it. Google has become to advertising what Microsoft was to the PC market: a tax collector that eats up all the profits leaving the hard workers to limp along while it blows the profits on stupid schemes to become ever more powerful.

I'm not saying there shouldn't be any advertising, I'm saying that the web shouldn't be monetized by a single entity with the power to block views of things it doesn't want seen, including potential competitors. Google pulls your AdSense and or PageRank and you don't exist anymore. - Dan]

30 Dude { 05.26.10 at 9:53 pm }

Barron’s is reporting a theory from analyst Trip Chowdhry that Microsoft will have a 7 minute presentation during the WWDC keynote. “Chowdhry says the new version of VS will allow developers to write native applications for the iPhone, iPad and Mac OS.” I would appreciate your comments on this theory. What would Apple get out of it?

31 Manxious63 { 05.26.10 at 10:26 pm }

What no one seems to be mentioning is that Apple has never needed to sell the most devices to win. What is even more amazing is that Apple is feared, hated or respected as if it were a monoply, when it is really just a small player in most of it’s markets.
Plenty of people can make lots of cheap knock offs of the iPhone, Android can out sell the iPhone three-to-one and Apple can still destroy them with revenue growth. Bloggers love to fantisize about Google doing to Apple what Microsoft did to them with PCs, but everyone fails to mention that Apples PC market share continues to grow while Windows is slowly shrinking, and Apple is earning by far the most revenue of all PC makers.
What is most interesting is that Google is earning the least money of them all from Android.
I suspect Apple’s attack on Google will be more subtle than what Dan is suggesting, it seems this plan has too much possibility of unintended consequences. I would like to see them play Microsoft a little more, maybe Apple should buy Yahoo and work there magic there. I would like to see them really hammer Googles core business.

32 splamco { 05.26.10 at 10:30 pm }

Well, lets hope you’re right because there are millions of people who advertise including the big brands and they will all be thrilled with Apple. Hopefully Apple continues to alienate anyone not inclined to join their cult where you get to pay ridiculous premiums for magical industrial design while buying overpriced Apple stock and having Apple dictate everything you get to experience online. It would be fun to see Apple burst it’s own bubble.

33 adbge { 05.26.10 at 10:37 pm }

What’s it like living in the reality distortion field?

You lead with the false premise that Apple consistently crushes its competitors and the implication seems to be that no one can take on Apple. That’s laughable, really. Android marketshare has pulled ahead of the iPhone, not to speak of RIM devices and Nokia’s offerings. Microsoft still dominates the OS market and they have for how many years, now?

[Speaking of living in a distortion field - Android has not pulled ahead of Apple in market share. Android, according to Google's AdMob(!) has half the installed base in the US and Apple has 3.5x globally. And that's assuming that AdMob's numbers, which say half of all the iPhone OS devices are no longer in use (!), are accurate. It's only NPD that has ever reported that retailers (and NPD doesn't count Walmart nor direct web sales) are showing that within the US, Android phones have eclipsed sales of the year old iPhone 3GS.]

adblock is going to kill Google? Get real. It’s trivial to block ads on all major platforms. Oh hey, Google is still here! Apple doesn’t have any magic silver bullet for web ads. They don’t control the web. iPhone OS is a fraction of Google’s revenue and, quite frankly, Apple wouldn’t dare switch the default search provider. You think advertising is going to dry up and go away? Are you out of your mind?

[There's a big difference between some small number of people instlling something on their own, and having it installed by default. Want an example? Compare Netscape to IE. Why did Microsoft win? Think. - Dan]

34 Maniac { 05.27.10 at 12:09 am }

Wow. I hadn’t quite grasped how profoundly iAds could change the status quo. Thanks for the insight, Dan. It will be interesting to see what Steve has to say about iAds at WWDC.

Google would suffer a huge hit to its image if Steve does what you said he might. An instant, devastating blow that would shatter their phony “Do no evil” facade. And over time, ad-free Safari plus iAds could hit Google’s bottom line too.

Not to leave Adobe out of the fun, if Ballmer demos Visual Studio with full native Cocoa app generation for iPhone OS, Adobe will completely lose face. If Microsoft, formerly Apple’s arch enemy, publicly starts playing by the App Store rules, then Adobe will look like idiots. With an illogical, self-destructive, and ultimately futile agenda.

I had expected the WWDC 2010 Stevenote to be the predictable iPhone HD announcement plus a iPhone OS 4.0 demo on iPad plus a description of iAds. Instead, it just might end up as one of the most important keynotes Steve has ever delivered.

iAds could end up being the most important piece of Apple’s long-term strategy. Eventually, consumer-level hardware will be so cheap and fast that not even Apple will be able to sell it at a profit. It’ll essentially be free, subsidized by ads and paid content.

And content could be the final puzzle piece to put into place in Apple’s vision of the future. MGM is in big trouble now. And Steve has had plenty of experience managing content creation as former owner and CEO of Pixar. I wonder if it makes sense for Apple to buy MGM…

35 Berend Schotanus { 05.27.10 at 12:56 am }

“…because a single response from Apple at WWDC could wipe out Google and the bloggers that support it.”

Duh, Apple obtained its current market position through hard working and long term vision. Not through short-sighted hit and run tactics.

Default ad blockers will not only hurt Google, they will also deprive content providers from their source of income. It’s an unjust thing to do.

36 cjlacz { 05.27.10 at 1:20 am }

A great article. Even with a built-in ad blocker I’m not sure Safari market share would increase that much though. Although it’s likely to hurt Google and maybe Adobe I’m of two minds if Apple should adopt that strategy. I’m not sure Apple really wants that big of a market share either. That would make them a target of governments and probably stifle some of their innovation. Apple can be quite successful with a portion of the market because of their hardware sales and leave themselves open enough to continue out innovating their competition.

37 DesperateDan { 05.27.10 at 2:13 am }

I know I would be unlikely to pay for content from single sites but what if like-minded sites grouped together into networks and offered subscriptions to the whole network. I’m thinking along the lines of a tech blog network, say for a very rough example you could have RDM, AI, DF and 5 or 6 others which appeal to the same type of folk. You pay a couple of £ or $ per month and the money is split between them depending on the success of each site within the network. You would have different networks for every possible taste/interest group. This way content producers get paid without users getting exposed to the whole spyware/adware disaster.

Just a thought.

38 gslusher { 05.27.10 at 2:59 am }

@David Dennis:

“I don’t think that kind of requirement would pass a First Amendment test …”

Please explain how the First Amendment applies to private corporations. The only way it does is if they use their power to intimidate or suppress speech OUTSIDE of their own channel. No newspaper or magazine is forced to print every letter to the editor nor run every ad that is submitted.

Dan:

“Yes news organizations have been selling ads to support their work – but they do it first hand, not through a middleman like Google that takes the majority of it.”

In truth, many ads ARE placed by “middlemen”–they’re called “ad agencies,” who create the ads for their clients, then purchase the ad space/time, making a markup or fee on top of the direct cost of the ad. That’s how those #@$& “color supplements” end up in the Sunday newspapers, for example. I have a friend who had her own small ad agency. She made enough to retire at age 48 with a good income.

39 Norm Potter { 05.27.10 at 5:25 am }

Jobs should be royally pissed off at Google for other reasons. This Gundotra guy has clearly been taking lessons on how to copy Steve’s speaking style. Of course he fails miserably:
http://techcrunch.com/2010/05/20/google-gundotra-video/

40 Alastair Sweeny { 05.27.10 at 5:34 am }

Dan:

Excellent analysis. However the main thing about Google AdSense – a brilliant invention at the time – is that small and large advertisers advertisers can bid on keywords to precisely target ads based on a user’s preferences. This has produced quite a revolution in advertising, that banner ads can’t match, with their scattergun approach. You really can get the best bang for the buck with AdSense.

The smartest thing Apple could do is write their own algorithms to match preferences to banner ads. Not the intrusive top of the page screamers, but the smaller right side box ads.

So far Google has avoided visual ads, but look for this to change.

41 batfart { 05.27.10 at 5:57 am }

I like Steve, but I don’t believe in cruelty to animals.

42 ChuckO { 05.27.10 at 6:48 am }

@DesperateDan 33, Along the lines of what DD is saying I’ve been throwing out this idea at various blogs trying to get some interest. People seem to like it. Tell me what you think.

What if a “clearinghouse” was created where we all pay $10 or $20 a month. We then get a certificate or something similar that gives us the right to view content for magazines, newspapers, blogs, etc. The clearinghouse then distributes the money to content providers based on page views. Browsers and apps handle the certificate verification so that you can view content thru different means.

Second proposal:
Apple creates an ad network for AppleTV and any other devices where this could apply (iPad right now, who knows in the future). We get to pick companies whose “content” we would be willing to view based on our interests. I’m a musician so I’m willing to watch a infomercial about a new guitar Fender is putting out. I then get credit for TV shows. We get to filter what infomercials Apple presents to us and we also pick the ones we’ll watch at least for longer ones maybe quicker stuff could just get pushed to us to support the TV or movies we watch. This could probably be used to support any kind of content even apps.

43 WaltFrench { 05.27.10 at 6:53 am }

Just one thing is missing: why would this be a strategic move for Apple?

Would it help them sell more iPads or iPhones or iMacs? No, more likely it would increase Google’s resolve to get Apple off THEIR oxygen hose, which as you say, is getting as many eyeballs as possible looking at their ads.

Apple can — and I believe, must — compete on the quality of the experience they provide to users.

Jobs commented back in 2004 about how a Jobs-less Apple acted like it had a monopoly over GUI computing and priced itself nearly out of existence. Since his return, he’s focussed on one startling, “disruptive technology” (aka, “creative destruction”) after another.

Apple Inc has just surpassed Microsoft in its economic value (to investors, and likely, to the overall economy). To take on the business model of the company you just vanquished, while diverting energy from what has worked fabulously well, strikes me as the epitome of stupidity.

iAd may be a strategic move for Apple, or it may serve to open a new front. But it cannot (yet, and probably never will) be the basis for a frontal assault on the only other successful firm in the individual technology space.

44 BradBell { 05.27.10 at 7:39 am }

Evil is relative. When people have a go at Google, they seem to forget about what it was like before Google. I believe it was generally called, “The Death Of Search.” That was when search engines turned into the Yellow Pages. To get listed, you paid, ie. you were a very big company with deep pockets. You bought attention. And the web was on track to be entirely controlled by corporations broadcasting marketing messages and propaganda at us.

Google democratised search: sites ranked not by how much was paid, but by the assumed relevance to the rest of us. If we all linked to Roughly Drafted, it got listed high in search results.

When Google invented AdWords, it applied a similar democratic model to advertising. Instead of providing dumb banner ads created by agencies for giant corporations, AdWords provided intelligent, targeted, text ads for the rest of us.

Google operates on the principle that you can’t buy attention. I think of this a bit like network neutrality. Without it, we turn the greatest advance in human communications into an advert.

Google may have too much power, and Apple may well have too much power. But they have got it by working for us, instead of working for Rupert Murdoch. The worst thing we can do is treat Google like Microsoft, or FOX. To some extent Google helps protect us from unfathomably worse evils.

[Yes you are absolutely right. Google did save the world from awful Yahoo/Microsoft style ads back in the late 90s. But since then, they've reverted to supporting some of the same things. So their good deeds can't be used to excuse the destructive things they're now doing.

The other problem is that Google has so much power that even if it was wonderfully non-evil in every way, it would still be in a position to do bad stuff, and there's no real recourse possible for those trampled because there's no real competition in that market. - Dan]

45 Bryon { 05.27.10 at 10:52 am }

Daniel: have you ever thought about putting up a donation button on your website?

[Maybe it's too subtle, but at the end of every story there's a link to PayPal, and a link to Amazon, which pays me a small affiliate bonus when you buy things after clicking through it. I very much appreciate donations because I don't make much from ads haha - Dan ]

46 feroze { 05.27.10 at 11:41 am }

I think you are a little too quick to hit on Google. Remember that they democratized the ad market for small content publishers by enabling the long tail of advertising. You are right that they do have power because of their market share for ads. And they should get some competition from Apple and others to keep them honest. Just as Apple should not walk away with the Advertising pie – any one company wielding too much power can lead to loss of choice, both for content producers and consumers.

47 Gazoobee { 05.27.10 at 4:36 pm }

I find this article a little “way out there” even though I usually agree with Dan. Mostly however, I’m just stopping by to comment about the term “donkey punch.”

Please stop using it, it’s absolutely disgusting. It sounds funny until you know what it really means. There are two different meanings or origins of the term, both are horrifying/degrading etc. Please just don’t use it.

48 egoblin6 { 05.28.10 at 8:43 am }

Dan, it’s rare that I do, but this time I gotta disagree.

I like having access to free lousy content also. It’s existence doesn’t ruin having the paid premium content option functioning side-by-side.

Just because your tremendous work has rewarded you with donations from people like me who recognize and appreciate it, isn’t the case for everyone. Quite often I also want to read passable, and potentially even lousy stuff, and I’m willing to wade through a trash-ridden wasteland to do so… but only as long as I don’t have to pay for it. A fair trade-off option.

So, long live free lousy content (it’s no threat to paid premium content).

49 addicted44 { 05.29.10 at 9:48 pm }

I think Apple may have an easier way of hurting Google.
Simply display the top 5 direct links while the user is entering their search terms.

This way people don’t even go to the Google website, and so no one sees those ads.

50 airmanchairman { 06.02.10 at 2:17 am }

Well-reasoned, truly excellent arguments on both sides of this intriguing, fantastically debated issue.

Leading the cons, there’s Berend’s reminder that “Duh, Apple obtained its current market position through hard working and long term vision. Not through short-sighted hit and run tactics”.

Although I wouldn’t call the tactics short-sighted myself, they are certainly a “nuclear option” (ObamaPacman), “more brutal than brutal” (cadillac88) and could have untold consequences (Manxious63). Besides, it wouldn’t really help Apple sell more iPods, iPhones, iPads or Macs (WaltFrench).

Leading the advocates for the Google death penalty (aside from DED himself), John E laments the fact that Google have profitably interposed themselves between content providers and the vital economic support they derive from advertising, and suggests replacing the AdSense system with a paid revenue-sharing one to revive Web journalism; DesperateDan and ChuckO hit on the wonderfully lateral thought of like-minded bloggers banding together in the wake of the iHolocaust that this nuclear option would trigger, and sharing a revenue pool (is this the post-Dark Web future? If so I LIKE IT!).

And yet other lateral thinkers eschew the negativity of confrontation to champion equally enlightened responses, like Alastair Sweeney’s reminder of the untapped potential of visual ads, scottkirk’s suggestion that the Siri acquisition be absorbed into Sherlock and used with HTML5 authoring to advance Apple’s interests via developers and content. Also of note is maniac’s slightly worrying glimpse of the future, where “Eventually, consumer-level hardware will be so cheap and fast that not even Apple will be able to sell it at a profit. It’ll essentially be free, subsidized by ads and paid content. iAds could end up being the most important piece of Apple’s long-term strategy.”

Unlike marian_, I would gladly pay for these great articles and equally fantastic comments, and in a slight re-phrasing of egoblin’s last words, I say “So, long live Google (free lousy content) – it’s no threat to Apple (paid premium content). At least not any more, now that their CEO no longer sits in on Apple’s board, sucking up their short and long-term plans and noting the implications for the future mobile market.

This is one article + comments where the whole is Way-y-y-y-y greater than the sum of its parts…

51 SunnyGuy53 { 06.03.10 at 9:39 am }

> I think that’s still a bad idea – then anyone commenting on a news article would have to pay.. I don’t think that kind of requirement would pass a First Amendment test, and I think it would enormously reduce the amount of commenting on article and links to them.

Since when does the First Amendment stipulate free access for web comments for all Americans?

Anyway, it is fundamentally no different from the venerable Letters to the Editor section, found in print journalism. When one “posts” to a “public forum”, one does not retain copyright for the content. So one cannot demand or expect payment of any kind.

I don’t understand why so many geeks want to put Google on some sort of noble pedestal. Free always has strings attached.

When we were kids, back in the 70s, we used to have a facetious saying about drug pushers, “The first two are always free.”

It’s not Apple who distorts the tech marketplace. They charge a premium, and if you don’t like it, you don’t pay it. Plenty of people do like it.

It’s Microsoft, and now Google, who shun honest, fair competition, in favor of stealthy monopoly-based market dumping. Microsoft has mostly failed. In the long-run, I think Google will too.

Sunny Guy

52 gslusher { 06.03.10 at 1:37 pm }

@SunnyGuy53:

“When one “posts” to a “public forum”, one does not retain copyright for the content.”

Could you cite the part of US copyright laws that says that? Perhaps you know of a court decision that does.

53 WWDC 2010 Prediction & Speculation — RoughlyDrafted Magazine { 06.04.10 at 8:01 pm }

[...] How Apple could slay Google at WWDC 2010 [...]

54 PhilipWing { 06.06.10 at 9:44 am }

I had to laugh at a web-based game publisher who got upset that the ad blocking software I use made his game unplayable. Of course I no longer play his game… :) I refuse to shop at Swarovski because of an ugly Java or Flash based ad they had over another game I no longer play which would cover the game screen, very slowly on my PowerBook G4.

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