by Tom Kaneshige

Steve Jobs’ Two Faces: On Display in iAd Moves

Opinion
Jun 14, 2010
MobileSmall and Medium Business

He's a techie's techie - and a shrewd CEO. Apple's iAd offers a glimpse into the popular CEO's way of thinking.

Gotta hand it to the Apple chief.

When Steve Jobs speaks, he does so with a kind of honesty and passion that makes believers out of cynics. Yet he’s also a shrewd businessman. Over the last two weeks, we’ve witnessed both at play: his famous passion and ability to call the right business shots.

At the D8 Conference, Jobs candidly talked about his values being tested during the stolen iPhone fiasco. During the WWDC keynote, Jobs described the new iPhone 4 as, “One of the most beautiful things we’ve ever made.” He sure sounded convincing.

At both events, Jobs said the purpose of iAd—Apple’s iOS 4 mobile advertising network and platform for building dynamic ads inside apps—is to get money into the hands of starving developers so that they can continue to create great apps at bargain prices for iPhone owners. Sixty percent of revenues generated from iAd will go to developers. Jobs seems to be in the corner of techies.

For Jobs, it seems Apple products and policies are tinged with personal feelings. Rival CEOs, on the other hand, often speak more about business motives than personal feelings. During an interview with Walt Mossberg at the D8 Conference, for instance, Microsoft CEO Steve Ballmer combatively swatted away questions that called into question Microsoft’s greatness.

Compared to Jobs, Ballmer appeared insincere.

The Dark Side of Steve Jobs

All of which makes iAd somewhat of a mystery. As Jobs sings the praises of iAd’s worthy cause, the Apple developer contract tells a different story.

Recent changes in the contract’s wording essentially bans Apple’s chief rival Google and its AdMob network from selling advertising on the iPhone and iPad. The contract has caught the attention of U.S. regulators. According to the Financial Times, iAd might face an antitrust investigation.

The controversy stems from a recent change in the contract that disallows companies with an interest in rival mobile devices from collecting consumer data on the iPhone. Mobile ads, of course, are sold based on consumer data and analytics.

The contract revision might as well have named Google’s AdMob, given Google’s stake in the fast-rising Droid smartphone. The loss of a major ad network such as AdMob from generating ad sales is a blow to the very iPhone developers Jobs claims to be helping.

“This change is not in the best interests of users or developers,” wrote AdMob founder Omar Hamoui in a blog post. “Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress.”

Developers aside, the money-making potential of iAd is enormous. Apple has been selling ads on the iAd network for only eight weeks. Commitments from vendors such as Target, Disney, GE and Nissan have already totaled $60 million in the second half of the year. Apple pockets 40 percent of iAd sales.

By banning Google, Apple appears to score a competitive business advantage. But Jobs rarely makes moves with some emotional component.

Steve Jobs: “What the Hell?”

Krishna Subramanian, founder of Mobclix, an operator of a mobile ad exchange marketplace that connects developers with ad networks, can shed some light inside the mind of Steve Jobs. He tells me about trying to predict Jobs’ moves since April, when iAd was announced as part of iOS 4.

At the time, the developer contract stated that device data can’t be shared with any third party. Mobclix’s future, or at least a chunk of it, evaporated overnight. “There was definitely some fear and uncertainty,” says Subramanian, who had to re-focus his company on other mobile platforms such as Android. “It was unsettling, similar to what Omar and AdMob are dealing with right now,” he says.

Then, true to form, Jobs said at the D8 Conference that the reason for the rigid stance in the contract was a personal one. The policy originated from a bad experience with a third-party analytics company whose unscrupulous behavior violated Job’s right to privacy—a cornerstone of Apple’s modus operandi.

“One day we read in the paper that a company called Flurry Analytics has detected that we have new iPhone and other tablet devices that we’re using on our campus,” Jobs said. “We thought, what the hell? The way that they detected this was that they were getting developers to put their software in their apps, and their software is sending out information about the device, its geo-location and other things, back to Flurry. No customer was ever asked about this, it’s violating every privacy policy with our developers, and we went through the roof.”

A CEO Unlike Any Other

When Subramanian heard Jobs speak these words at the D8 Conference, he felt comforted. The exclusionary contract wasn’t a business move after all. Jobs wasn’t out to take control of the mobile advertising universe with a kind of iAd Death Star. Rather, he wanted developers to make money, iPhone and iPad owners to enjoy the experience, yet maintain Apple privacy.

“What is his end goal? Does it revolve around user experience of having a magical device that has beautiful applications? A text banner ad that looks crappy ruins the whole thing,” Subramanian says. “You can imagine him seeing an ad that looks like junk and just going crazy.”

The following week, Apple revised the contract to allow third-party ad networks to obtain device data and run on the iAd platform. Analytics can only be used for advertising purposes. Mobclix was back in the game. But while the revised contract opened the doors to third-party ad networks, it blocked Google and AdMob. “I was surprised by this,” Subramanian says. “I figured it was either everyone or no one.”

The Google-AdMob ban ensures Apple’s iAd will be the dominant ad network on the iPhone, which is why U.S. regulators are reportedly looking into it. Subramanian, though, says that he suspects the ban runs deeper than a business decision.

Google had reportedly outbid Apple to acquire AdMob for $750 million earlier this year. The deal was cleared by the FTC this spring. “Maybe he’s a little ticked off,” Subramanian says, adding, “You can see that things he’s pretty passionate about draw a hard line.”

Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline. Email Tom at tkaneshige@cio.com.