“Google Maps for iOS arrived today and it is clearly the best maps app for the iPhone and perhaps, according to some reports, over all mobile devices (including Android),” Joshua Gans writes for Digitopoly. “What is interesting, of course, is that one suspects that Google had it in them to produce this type of app for some time; possibly years.”

“It may be that Apple had held them back on the inbuilt app but that doesn’t explain why Google didn’t just produce an independent app,” Gans writes. “But the alternative story which appeals to me as an economist is that there was a competitive issue. Put simply, while Google had real estate on every iPhone it had a muted incentive to up the game — especially when it was getting all of the search and activity data and it had its own competing Android platform. Now that they lost that real estate, Google, if it wanted the search traffic, really had to up their game on the maps app and do it quickly. And that is consistent with what we are seeing today.”

Gans writes, “This is the theory that Dennis Carlton, Michael Waldman and I outlined in a paper a few years ago (see also). Basically, it demonstrates how platform owners may choose to embed their own inferior, in this case, app, in order to provide stronger competition for other apps that add value to the platform… For Apple, kicking Google off the default for both maps and YouTube, forced them to create apps that were better as well as giving Apple greater ability to defend the platform.”

Read more in the full article – highly recommended – here.

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Tim Cook open letter: We fell short with new Maps app; we are extremely sorry – September 28, 2012