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How Google Is 'Closed', Just Like Apple

When it comes to the key revenue-generating aspects of their businesses, both Google and Apple are quite closed.
Posted October 27, 2010
By

Mike Elgan

Mike Elgan


A war of words between the CEOs of Google and Apple makes for great headlines, but does little to illuminate reality.

Google says its Android OS is "open," while Apple's iOS platform is "closed." Apple, on the other hand, claims Android is "fragmented," while iOS is "integrated."

They're both right about Apple, at least with their respective spins, but wrong about Google. Google, in fact, is at least as "closed" as Apple. I'll tell you why below.

But first, let's take a quick look at the spat.

He Said, He Said

Google CEO Eric Schmidt held court at a conference called TechCrunch Disrupt recently, where he explained why iOS is closed. Speaking of Apple, he said "You have to use their development tools, their platform, their hardware, their software — if you submit an application, they have to approve it — they have to use their monetization and their distribution."

That, Schmidt said, "would not be open… The inverse would be open."

Schmidt gave an example of how Android was more open than iOS by pointing out that Google allows Adobe Flash to run on its mobile OS, and Apple doesn't.

Apple CEO Steve Jobs countered in a statement during an earnings call. He did this not by disagreeing with Schmidt's basic argument, but merely disagreeing with Schmidt's interpretation and judgment.

The iOS isn't "closed," according to Jobs, but "integrated," resulting in a better user experience. Both Schmidt and Jobs mean the same thing, but disagree about whether Apple's "closed" or "integrated" approach is bad or good for users.

What Jobs didn't say was that Google is every bit as "closed" as Apple. Here's why.

Google's Real Product is 'Closed'

The CEOs are comparing Google's mobile OS with Apple's. It's the wrong comparison because from a business perspective Android and iOS are incomparable.

The iOS, along with iPhone, iPod Touch and iPad hardware, are products that Apple sells to its customers for money. That's Apple's business. In fact, it's the biggest slice of Apple's revenue and profit pie, the fastest growing and most important to its future.

Android, on the other hand is not a product that Google sells to customers for money. Android is not a business. Google's business is advertising — a whopping 99% of Google's revenue comes from selling ads.

Let me clarify by way of analogy. Donald Trump and McDonald's both buy land and organize the design and construction of buildings. Donald Trump builds buildings in order to sell (or rent) buildings. McDonald's builds buildings in order sell junk food.

In this analogy, Apple is like Trump. Both Apple and Trump make something in order to sell it. Google is like McDonald's. Both Google and McDonald's make something in order to sell something else.

The companies are different, and what they're "open" about reflects that difference. For example, Trump is very secretive about pending real estate transactions, but would probably be happy to share the details of food served at one of his golf courses. McDonald's on the other hand, isn't all that secretive about real estate transactions but they're very secretive or "closed" about their Secret Sauce.

In other words, companies are very closed, secretive, and controlling about the part of their business that makes the money.

So in the case of Google, the company is like any other: "closed" when it comes to the business.

AdWords and AdSense are Google's products in the same way that the iOS and iPhones are Apple's products.

Schmidt says iOS is "not open" because "You have used their development tools, their platform, their hardware, their software... their monetization and their distribution."

But with Google AdWords, you have to use Google's tools, their platform, their hardware, their software code, their monetization and their distribution."

I'm sorry, Schmidt, but that would not be open. The inverse would be open.

Further, you have to get Google's approval to use your keywords. Google bans AdWords keywords relating to pharmaceuticals, hacking, student essays and other things Google has decided will pollute the AdWords environment -- just like Apple bans apps for the same reason.

And Schmidt uses the example of Flash to demonstrate that Google is open and Apple is closed. It's not a fair comparison. Flash both competes with, and affects the user experience of, Apple's core moneymaking business, but not Google's.

Apple allowing Flash to operate inside the iOS is comparable to Google allowing adCenter code to execute inside of a Google display ad in a way that enables Microsoft to keep the money. Google would never allow it.

So the next time Google slams Apple for being "not open" about its core bread-and-butter business, ask when they are going to open up AdWords.




Tags: Google, Android, steve jobs, Adobe Flash, Eric Schmidt


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