Apple vs. Google, a War of Content

[Originally published: May 26, 2010]

Most technology pundits have said that the rivalry between Apple and Google started when Google got into the cellphone market in direct competition with Apple’s iPhone offering. The reality is that the rivalry is deeper than that, the rivalry is about open content vs. proprietary content.

Google’s success came about on the web. Millions of websites sprung up during the Dot-com era to the point that nowadays every self-respecting business, organization or club has a website. There was a mad rush to be on the web, most of the time, offering the content for free. Web users got accustomed to free content. Content on these websites were mostly written in HTML, a format that allows you to peek into the text itself and even the structure and formatting. That is, even if you write “exclusive content”, anybody can cut and paste or plagiarize your copy. Because the text of this content can be easily read by humans or machines, Google had a relative easy job in creating a search engine for the entire web. By “relative easy”, I mean, Google did not have to create the content, convert it or spend a penny obtaining the content. The content was just there to be read. Google then, to its credit, developed something that most of its search engine competitors have not done at the time, a business model. Google was the first to develop “paid search”, ie. charging money for a preferred position in a search result. This revolutionized the search market.

Years later, Google came up with “AdWords”, an advertising mechanism that allowed content providers display ads created by Google and get paid. These ads were auctioned to advertising businesses based on keyword selection and price. AdWords became the model for advertising on the web, filling the coffers of Google. With paid-search and AdWords, Google had essentially “killed” the business model of every newspaper and magazine on the planet. In essence, as a result of leveraging free content.

In 2001, when Napster and music file sharing was all the rage, Apple came up with iTunes, a proprietary marketplace that sells a song for 99 cents. Apple came up with a business model where there was none. This parallels Google’s coming up with a business model for search. With the introduction of the iPhone in 2007, iTunes not only became a successful music marketplace, but a marketplace for iPhone applications or “Apps”. iPhone apps allowed content creators create their application experience with their own graphics, copy and interactions. In other words, iPhone apps have created a fence to Google, no longer can Google sneak in and parse my content or display ads on a corner. The public Internet had now seen the creation of successful gated community where everybody wants to go, but that is controlled by Apple, not Google.

So the battle continues. In retrospect, most companies (including companies that sell content for a living) rushed to gates during the Dot-com era to offer their wares for free and forgot to charge for it. As a result, they have gone bankrupt and money has gone to Google. Google is now more of a media company than a search company, all their money comes from advertising. Apple apps have become a “second chance” for companies to think about about their business model before giving up their content for free.

Come to think of it, the aim of HTML was not to make money, it was invented by researchers at CERN to open up every piece of content. Content providers have just committed suicide when they went to the web before thinking about their business models and giving up all their money, first to Google … and then to Apple.