The $750 million acquisition of mobile advertising network AdMob by search giant Google (GOOG) signals a new stage of the battle for the soul of the mobile Internet between Google and its arch-rival Apple (AAPL). The acquisition gives Google the strongest player in the fast-growing market for putting advertisements on smartphones. And it's the latest brawny move by Google in an unspoken war that has broken into pitched battle in the past two weeks.
On Friday, Google for the first time put an advertisement on its home page, a spot for Motorola's (MOT) Droid smartphone. The Droid, offered exclusively by wireless behemoth Verizon (VZ), is powered by Google's own Android mobile operating system. Early indications suggest the Droid will be the strongest competitor to Apple's iPhone to date. Real estate on Google's landing page is a priceless gift from the Google gods, letting Verizon easily reach millions and millions of users who go to Google.com to search.

Add these to Google's ongoing proxy battle with Apple through its moves to push cell phone carrier AT&T (T) to allow Google's VoIP application onto iPhones and the gloves have clearly come off in what will be a brutal brawl between tech giants. With the AdMob buy, Google acquires another piece for advertising revenue generation in a rapidly expanding space.

The deal is fairly analogous to Google's acquisition of online banner ad-serving giant Doubleclick in 2007. Google's strategy, it appears, is to become a key player in as many critical customer-facing and revenue-producing parts of the mobile Internet as possible. It also wants to be able to sell advertisers any type of ad they want for the mobile Internet including text, display and in-application advertising.

In a way, this is very logical. Ages ago, when the command-line interface ruled computing, Apple and Microsoft (MSFT) both brought out graphical user interfaces (GUI) that they believed would make it much easier for the average user to work on a computer. Whoever controlled the user interface controlled the greatest part of the value equation. And in the world of computing, Microsoft quickly outstripped all comers in hardware and software based largely on its ability to control and extract revenue from the key user interface segments, such as the core operating system and productivity software. For its part, Apple maintained a smaller market position but, in the same vein, Apple retained its power by maintaining control over the user interface.

Now that battle is playing out again in the mobile space, which is by most accounts the primary growth driver for Internet usage and applications in the next decade. Apple grabbed the early lead with its iPhone and a brilliant user interface that encouraged massive data consumption and, by extension, tremendous variation in applications. True, BlackBerry maker Research in Motion (RIMM) has a significantly larger market share than Apple in smartphones, but its users consume far less data and spend much less time on the Internet. To them, the handset is an email and voice tool and not much more. Apple is also rapidly gaining market share on BlackBerry products, as TUAW points out.

Google has shrewdly observed this trend and has extended its own strategy into a multi-forked attack on Apple's perceived strong suite. The first leg was Google search. Search is a key function of mobile and, as voice-activated search replaces hunt-and-peck on tiny virtual keyboards, Google and everyone else expects more search to happen. Google has made its search engine an even more dominant player in the mobile market than on PCs. And Google actually is the default search engine provider on Apple's Safari browser, the only browser application that works on an iPhone.

So even if a user is searching on Safari (made by Apple) on an iPhone (also made by Apple) powered by Apple's iPhone operating system (also made by Apple), the user interface they see in front of them is Google (which is exactly why I suggested that Apple will need to go into the search market on mobile).

Next, Google began to push out in a big way its Android operating system. Android begin appearing on multiple devices in October and should be on dozens of devices, including those from most of the major third-party cell phone makers, by early 2010. By pushing the operating system, Google gains control over another user interface. Sure, the individual phone makers and carriers have some control over how the phones look and operate. But the underlying operating system has a strong influence on the user interace.

And with Google quickly building brand credibility for the Android brand, the carriers may not have much of a choice but to go along with Google's wishes in terms of how to structure the interface and how to make them similar and interchangeable. Both carriers and the handset makers have witnessed the frenzy around the iPhone and are now clearly grasping their own failure to win real customer loyalty to any specific type of smart phone operating system over the past decade. Now, they appear more inclined to let Google take the lead in the effort to best the two big players, Apple and Blackberry.

With Google mobile search and the Android operating system humming along, Google is also moving aggressively to grab a strong position in other parts where mobile will mean money. Google's new free navigation software works closely with its search engine and also should bring in millions of new users who formerly paid for a GPS device from Garmin (GRMN) or TomTom, or for an application on the iPhone. While the Google voice-recognition technology in the iPhone has made big news, Mapquest (an AOL subsidiary) has long offered a similar service, albeit for a monthly fee.

But the big noise around Google's move into GPS is yet another indicator of how quickly the Google brand is spreading out. Google is also moving quickly into music and video content on mobile devices. Google's YouTube has a mobile application that runs on multiple platforms and makes it much easier for users to view YouTube videos on mobile devices. In music, Google is rapidly pushing ahead with plans to build out the type of music search capability that could some day rival Apple's iTunes software and song catalog.

Now, with AdMob, Google has not only a good tool to offer to advertisers looking not only to sell into Google's own properties but also into other mobile applications and various places in the mobile ecosystem. Google's advertising sales force will soon be able to offer clients ads on search engines, ads on contextual advertising networks, display ads, video ads and now mobile ads -- a veritable one-stop shop for any seeking to buy spots anywhere.

So, unlike Microsoft in the last decade, Google is aiming to own not only the key user interfaces on the phones but also the key touch points with the advertisers. Having seen this movie before,

Apple knows that inaction and jumping up and down screaming "Mine's better than yours" may not be the most fruitful strategy. So look for some big moves out of Cupertino where Apple CEO Steven P. Jobs is sitting on a kitty of over $28 billion in cash that he can use for all sorts of buys. As it continues to gain market share in smartphones, Apple clearly has some time to flesh out a broader strategy but this time Google is coming hard and its playing for keeps.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.

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