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Apple and Google both win by killing the native iOS YouTube app, but we all lose

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Apple and Google taking YouTube out of iOS 6 is a win-win for them, and a net loss for consumers.

YouTube Icon Android (STOCK)
YouTube Icon Android (STOCK)

It may be hard to remember now, but the YouTube app bundled with iOS is a holdover from the very first days of the very first iPhone — before the existence of the App Store, and when pre-loaded programs were really the only functionality offered by the device. Apple and Google were tightly connected in those days — Google's then-CEO Eric Schmidt was on Apple's board at the time, and Steve Jobs invited him on stage when the first iPhone was announced. "You can't think about the internet without thinking about Google," said Jobs. "We've been working very closely with them to make this all happen." For his part, Schmidt was effusive about Apple and the iPhone. "If we just sort of merge the companies we could call them AppleGoo."

Today's news that Apple will not include a native YouTube app in iOS 6 in favor of a forthcoming standalone app to be built by Google marks another endpoint for that partnership, a split that began when Apple abandoned Google Maps in iOS 6 — the very feature Eric Schmidt was on stage to announce in 2007.

But while the two sides are pulling apart, each new split has different motivations, and both Apple and Google stand to win and lose in different ways. And the specific repercussions of YouTube no longer being bundled in iOS are no different. Let's examine what it means for both sides — especially in the context of Apple saying its "license to use the YouTube app in iOS has ended."

YouTube ads on iOS could end up being a big boon for Google

First, Google will have a lot more flexibility with a standalone YouTube app. It will be able to update the app much more frequently — and hopefully bring it up to date with the mobile web YouTube experience, which is markedly better than the native app. Perhaps more importantly, Google can now control how it displays lucrative pre-roll advertising in the app. Video is becoming a sweet spot for mobile marketers, and YouTube ads on iOS could end up being a big boon for the search giant.

Apple, on the other hand, no longer has to pay whatever license fee may have existed for including YouTube in iOS. (YouTube has public APIs, but they don't seem to be a good option — Microsoft has formally complained about Google interfering with its Windows YouTube Phone app.) What's more, Apple doesn't have to pay its own developers to build an app for a service operated by a direct competitor. Instead, it can assume Google will want to keep YouTube in front of the huge numbers of iOS 6 users and build its own app. Which is exactly what's happening.

YouTube is peerless — the very definition of web video for most people

In the end, both Apple and Google had something to gain from this split — a markedly different situation than the removal of Google Maps from iOS earlier this year, where Apple had to acquire a mapping company and spend years building a directly competitive product before announcing the change. YouTube is peerless — the very definition of web video for most people. Apple's simply passing the cost of developing the iOS app back to Google, and Google is gaining the ability to monetize that experience much more directly. (It's notable that YouTube remains on the Apple TV, where only Apple can develop applications. YouTube is basic functionality for a connected TV device, so Apple has to keep development going.)

In fact, it seems like the only losers here are consumers — we'll get a less integrated YouTube experience in iOS 6, and probably end up watching more ads. Business as usual in the land of the free (web service).

Ben Popper contributed to this report.