Ad nauseam

Apple/Google: Cops are supposed to stop fights from getting out of hand. But antitrust regulators shouldn’t be too quick to step in decisively on the growing spat between Apple and Google. The latest clash of the tech titans has Steve Jobs essentially moving to bar Google from serving ads on iPhones and iPads. While this may seem anticompetitive, the sniping between the two is actually a healthy sign of vibrant rivalry.

Apple has decided to prohibit any ad network owned by a company that also produces rival mobile devices or operating systems from collecting user data from ads on the applications that make its phone and tablet device so popular. This could block advertisers from tracking how well their promotions are performing — one of the main attractions of Internet advertising.

Apple app developers could see a drop in revenue — Google’s AdMob delivers among the highest volumes of mobile Internet ads. Independent ad networks could suffer collateral damage too. It’s easy to see their values decreasing in the eyes of big potential suitors such as Microsoft or HP if their networks can’t work with iPhone users. This all makes Apple’s move seem undesirable from a regulatory standpoint.

Yet effective tech antitrust policy is tough. The benefits of size mean dominant industry standards are often established before regulators can react. Strength in one market can be used to muscle in on new ones. And effective relief is difficult to implement, a point made all too clear by Microsoft’s long fight against regulators.

Indeed, the Federal Trade Commission was investigating whether Google would have de facto control over the mobile ad market by acquiring AdMob. But the agency recently dropped its probe after Apple said it would enter the market, with plans to capture nearly half the US mobile Internet ad market in the second half of the year. And now the FTC has turned its attention to Apple.

Either company’s strengths could lead it to victory. Apple rules apps and Google Internet ads. Moreover, an increasing number of smart phones are using Google’s operating system. If regulators want to stoke the rivalry — and they should — the best strategy would be to keep rattling sabers whenever one starts exhibiting signs of dominance.