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Comment by acgourley | Hacker News Reader

So obviously I don't understand this market at all, can someone explain to me why google couldn't just copy ad-mob's business practices and features?

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The opportunity cost would likely be much more than $750 million. Google isn't a nimble, agile startup. AdMob is already a key player in this market[1] serving display ads in apps as well as sites.

[1] Given analysts use AdMob metrics to figure out market shares of various mobile phones

Also, defensive. Consider the other big players - Google would prefer MS or Yahoo don't snap Admob up.

Google might be able to replicate the Adbob business but it would take time. Admob + Google's existing strength is a big head start.

They did. Google's been running mobile ads (first in Japan, then worldwide) since 2006. But AdMob just plain does it better -- nicer interface and significantly higher CPMs for publishers.

I'm sure they also wanted the talent. I've met one or two of the AdMob guys and they seem pretty sharp.

Seems like google could have used some of that 750M to operate at a loss, pay out higher CPMs and attract publishers. It also seems like google could have, in theory, copied their interface or even improved on it. Could it be that google's now too big to make those kind of adjustments once it builds the momentum?

The talent angle of course makes sense, they are both pulling in top tier employees and removing top tier competition.

Its possible that operating at a loss would attract ire (because it really would be like the behavior Microsoft is/was so criticized for).

scenario a: operate at a loss for a while, maybe achieve target (but maybe not), draw the ire of regulators for anticompetitive behavior

scenario b: spend cash you can easily afford, have an immediate cash flow return, get a solution that is known to work, eliminate competitive threat without pissing off anyone in the process while ingesting talent at the same time

it's fairly easy to see why GOOG chose the latter option.

won't this also draw concern from regulators?

Admob has a lock-in on the iPhone ecosystem that's hard to break.

Bingo. In order to beat admob you have to move their advertisers to your system (may be easy) and try to get app developers to run your ads instead of Admob's ads (hard).

It's a bit of a chicken-and-egg scenario (devs will not move until the advertisers are there, etc.) and much easier to just buy them outright.

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