Report: Google purchased AdMob out of spite
Have you ever purchased something just to keep someone else from getting it? Perhaps at an auction, or at a sale? Sure it’s spiteful, but sometimes you do it just to do it. Course, when you’re companies such as Google and Apple, buying something out of spite will run you into the hundreds of millions, and that’s exactly what it cost Google.
The New York Times has run a story on the growing fight between Apple and Google has been escalating over time, and it came to a real head last fall when Apple made a bid to purchase mobile ad service AdMob.
Apple purchasing a mobile advertising platform makes a lot of sense, especially AdMob as it is quite popular with iPhone application developers. It would have added another App Store revenue stream to Apple. The company made a bid of $600 million and signed papers for a 45-day due diligence period in which Apple had to make up its mind and finalize the deal. For whatever reason, Apple did not finish up the deal during that time period, and that left the door open for other companies to approach AdMob about a potential purchase.
It was at this point that Google stepped in and offered the advertising company a 25 percent premium over what Apple had for a total of $750 million. The search giant also offered the fact that it was experienced in the advertising field as an incentive of why it was the better fit for the potential purchase. An unnamed Google executive said of the deal, “There is no way AdMob would have gotten $750 million if [Google CEO Eric Schmidt] wasn’t worried that it would end up in the hands of Steve [Jobs, Apple CEO].” He went on to add, “Are they going to get $750 million in cash flow back? No way.”
If things continue this way, expect this war to get much uglier.
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March 14th, 2010
If AdMob remains popular with iDevelopers, and if the iPad is a hit, Google could EASILY make that back. But Apple would have nobody to blame but themselves, right?