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Notwithstanding anything else in this agreement, device data may not be provided or disclosed to a third party without Apple’s prior written consent. Accordingly, the use of third-party software in your application to collect and send device data to a third party for processing or analysis is expressly prohibited.”

This recent addition to Section 3.3.9 of Apple’s developers’ agreement appears to allow only Apple’s fledgling iAd service to identify, target and frequency cap ads in iPhone and iPod applications. No analytics, no frequency capping, no targeting of devices for advertisers that don’t send their money to Apple.

And If that wasn’t enough, changes to Section 3.3.1 disallowed Adobe (NSDQ: ADBE) Flash and any other non-native technologies in applications and, on April 29, in a lengthy open letter Steve Jobs outlined the timeline for including Flash in the Safari browser: never.

We in the ad developer community have all been talking about what was really behind Jobs’ screed against Adobe and Flash.

While some of this might be attributable to the defense of Apple’s magical user experience, there is more to it than that. Apple (NSDQ: AAPL) is acting true to its DNA: trying to build a walled garden with a premium rich media advertising experience at an ultra-premium price. What’s new and should be concerning to the advertising industry is the attempt to put hurdles in front of other rich-media advertisers to access Apple users even through the browser, long deemed the one place where the platform vendor stepped aside and let the Web do its thing.

While blocking non-Apple-targeted advertising from applications and almost the entire unwashed Flash-based video advertising ecosystem, Apple is showing pretty iAd demos with interactive HD video ads, and its sales execs are sending out pitch decks claiming “exclusive integration with the App store,” and other benefits. With Flash out of the picture, Apple would face few real competitors for a premium advertising experience. This makes the timing of Apple’s move all the more important. The iAd platform is based on the Quattro Wireless acquisition Apple made earlier this year after its failed bid for AdMob, which is well-ahead of Quattro in market share. Regulatory bodies in Washington have thus far blocked Google’s acquisition, based, ironically enough, on anti-competitive concerns. Now the same regulators are expressing interest in Apple.

Everyone knows that iPhones and iPads are as much tiny entertainment centers as anything else. So, let’s consider the world of online video and interactive advertising without Flash. Online video advertising is hard to do well, which is the dirty little secret behind that segment’s slow rise. Online video players are complex software that offers branding, playback, targeted advertising, audience profiling and analytics, playlists, social sharing, etc., while integrating code, APIs and streams from multiple parties. Even with the help of IAB standards, it has taken years for these pieces to come together nicely on the Flash platform that is controlled by Adobe, which deeply values cross-platform development.

Given the early stage of HTML5 technologies, the likely differences in browser support for HTML5, the disagreements between major vendors over supported video formats, and the increasingly dynamic nature of the advertising value chain, it will be awhile before HTML5 video advertising solutions (and the ecosystem of vendors backing them) reach an equivalent level of capability and flexibility. While many vendors have HTML5 video streaming, advertising and analytics solutions in various stages of readiness, everyone I’ve talked to says they are not exactly sure how these separate pieces will fit together.

“Malvertising” will not go away in an HTML5-only world. Consumers will still be lured to click on ads that are too good to be true. Instead of hiding malicious code in Flash SWFs, the bad guys will put it in dynamically downloaded, minimized, obfuscated JavaScript files. Digital security is a constant battle between good and evil. Bad guys don’t have to go through a W3C or IAB standards process to do their deeds. They move quickly to exploit weaknesses. Response speed is very important in dealing with security issues online. Speed, however, is not something open standards efforts are good at. In fact, for all their other qualities, they are terrible at making good progress quickly because of the politicking behind the scenes.

On PCs and Macs there are third-party privacy and security browser add-ons, such as Ghostery, that innovate much more rapidly, but Safari on Apple’s devices is not open to extensions, so it is unlikely that iPhone and iPad users will have access to the same enhanced and up-to-date browser privacy and security features available on other systems. Browser Wars II may accelerate innovation and make everyone better off in the long run, but in the short run it means more cost and complexity for the advertising ecosystem and a bigger malware problem.

Apple has always done things its own way, with less regard for market share than for nurturing its brand and signature experience. This credo has kept Apple from becoming more like its competitors, even as its laptops run Intel (NSDQ: INTC) inside, and in recent years has made the company an enviable example to follow, pulling the rest of the mobile and PC industry forward. However, unlike in the past, Steve Jobs is not just running forward. Now, he’s taken the time to blow some of the bridges behind him.








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