This struggle has been simmering for a while but now appears to ready to become an open pitched battle. The FCC is investigating why Apple refused to allow Google's voice application onto the iPhone, despite the fact that Apple SVP of Marketing Phil Schiller himself tried to usher the program through.
At issue is the entire future of the mobile Internet. Increasingly, customers who subscribe to high-speed mobile data plans view the mobile Web as an extension of their broadband connections at home. Likewise, they view their high-performance handsets as analogous to their PCs. And rightfully so. Customers are paying a hefty premium for these mobile data plans which often run $60 per month and higher, usually on top of plain vanilla cell phone service.
Naturally, these mobile broadband customers believe they should be able to do anything they want with those connections. That's pretty much the way their broadband home and work connections are set up. No one can tell them what software to purchase and run on their own PCs - not Google, Apple, Microsoft (MSFT), Dell (DELL) or anybody. Apple could conceivably try such a thing but in all likelihood that would warrant a fast smackdown from the Federal Trade Commission.
Giving users, software developers, and hardware makers complete and total control over the mobile Web is the core value of Google's mobile strategy. Rather than try to herd users to a single App Store, Google has built an infrastructure that will let virtually anyone with the proper technical acumen set up their own store for apps that can run on mobile phones equipped with Google's Android OS. And Google views the mobile broadband connection merely as a pipe, agnostic of applications or services delivered over the pipe.
That mirrors the status quo in the PC universe, where services and applications delivered over the Internet are myriad and uncontrolled by any central authority. Customers vote with their wallets and their Web browsers. The ecosystem aligns accordingly, with popularity equating to either profitability or notoriety, depending on the business model of the service or application provider.
Not so with Apple. The makers of the iPhone believe that control is paramount to quality. The iTunes store is a tightly controlled environment with Apple enforcing usability standards and quality of product. There is some merit to that position. Apple's iPhone clearly is the dominant force in mobile broadband at present, with iPhone users constituting an enormous percentage of mobile broadband usage. Culturally, Apple has always been about vertical integration of hardware and software to create a more seamless and higher quality user experience. So for Apple, maintaining control over the mobile connection is part and parcel with its business strategy of vertical integration and quality control.
But another, more cynical argument holds that Apple's partner AT&T has told Steve Jobs to pull Google Voice. There are two obvious reasons AT&T would ask this. First, Google Voice could destroy two highly lucrative portions of AT&T's business, SMS and international calls. Google Voice users can easily send text (SMS) messages over Google's own network, cutting AT&T out of the loop. Since AT&T is currently charging users for text messages and likely pulling in obscene margins on this part of the service, such a shift could seriously damage the profitability of the iPhone to Ma Bell.
A similar argument holds for international calls, which on the cell phone remain highly inflated as compared to VoIP rates. In fact, TUAW speculated that Apple has allowed similar apps from Skype and Gizmo that make it easy for users to make VoIP calls precisely because those apps only worked on WiFi connections rather than on AT&T's 3G connections.
A less sinister rationale for Apple pulling down the Google Voice app is that AT&T's mobile networks simply can't handle any more bandwidth intensive applications, a point suggested by TechCrunch. Google Voice makes international calls so cheap as to be practically free. And Google Voice also makes all calls in the U.S. free (with the exception of calls to and from Hawaii and Alaska). When something is free, it gets used a whole lot more. So considering that AT&T's networks have appeared a bit creaky of late, AT&T may have asked Apple to pull the app in order to preserve general network performance for all users. This is a slightly less evil but still unacceptable explanation.
Now that the FCC is involved, the true debate over the future of the mobile Internet will likely begin. Is it a dumb pipe that paying customers can use as they choose? Or will the mobile web be closely controlled by mobile carriers such as AT&T, and application service sellers and providers, such as Apple? Schmidt disentangling himself from Apple's Board is simply clearing the decks for a protracted battle. At this point, Apple is clearly in the lead. But Apple has been in a similar situation before -- many moons ago -- when Windows was just a tiny little operating system and Apple was the dominant PC and operating system maker. Sounds familiar, no?