An economist explains how Apple forced Google to up their Maps game

“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.

Related articles:
Why Google just crowned Apple’s iPhone king – December 14, 2012
Analyst: Google Maps for iPhone a mixed blessing for Apple – December 14, 2012
Apple wins again: Much improved Google Maps iPhone app vindicates Cupertino’s strategy – December 13, 2012
Google Maps hits Apple App Store, Google admits iOS Maps app is better than Google Maps for Android – December 13, 2012
Apple promises to fix Maps glitches by rearranging earth’s geography (with video) – December 6, 2012
Apple’s Eddy Cue racing to overhaul Maps – November 28, 2012
Apple to Maps manager Williamson: Get lost – November 27, 2012
Days after Tim Cook’s apology, Apple’s Maps shows improvements – October 12, 2012
Tim Cook open letter: We fell short with new Maps app; we are extremely sorry – September 28, 2012

27 Comments

  1. Looks like a big win for Apple. Now they finally have a feature-complete google maps app (even with turn-by-turn voice directions) that Apple neither has to develop themselves nor pay any money to Google for it.

  2. Do you really believe what is written? This is nothing but a significant mistake by Apple, which they admitted in their apology. Blindly supporting a company and putting a positive spin on the mistake does not help Apple become a better company, constructive critism does.

    1. How else do you explain goggles NOT supporting turn by turn and actually insisting that Apple pay fees and allocate Apple engineers for development/upkeep of the App one minute and then completely flip the next?

      Take your head head out your ass and smell the whiff of being played.

    2. It is both. They are not exclusive.

      Apple’s mistake wasn’t their dumping Google Maps, but releasing their own Maps app too early, and/or not putting a beta label on it while it still had significant teething issues (those about to reflexively reply that there are none or they’re minor because *they* personally haven’t had issues, sit down and shut up, you’re wrong).

      Google’s mistake was thinking Apple didn’t have the balls to dump them, even if problems at launch cause short- to medium-term damage to the brand.

      1. Just because some people complained about Apple maps, and the tech press lives off the hits that any Apple “controversy” brings to their sites doesn’t make it a “significant teething issue” either. If you think these make Maps a major problem, you should follow the advice you’re giving to the other side of the aisle.

        1. Did I say “major problem?” Hmm, let’s see…. No, I said “significant teething issues.” Don’t confuse the two and think they’re equivalent. And don’t copy the Apple-haters do by blowing things out of proportion.

          Significant does not imply people are running into life-threatening situations every day. It means there are a range of issues big and small being brought up by a lot of people, far more than usual for an Apple non-beta product. It means Apple did not manage expectations or give enough guidance to manage key differences in the new Maps’ features or results.

          Siri not working perfectly at launch was fine. There was some gentle ribbing at some results, but it was new, it didn’t replace an existing service or remove notable features that lots of people were used to and liked, and it was marked as beta. iOS6 Maps only had “it’s new” in its defense.

          1. Here I was thinking the opposite of your use of “minor” was “major”. I apologize for taking your words out of context.

            People are – individually and anecdotally – pissed because *they* have had issues with Apple Maps.

            People are – individually and anecdotally (myself included) – delighted because *they* love Apple Maps.

            If you think slapping a “beta” label would have toned down the Apple-bashing, you must be new to the Apple tech beat.

            1. Major and minor are not absolutes, nor at exact opposite ends of the scale.

              I used “minor” where I did because it was less wordy than “insignificant” and in context meant the same thing. I deliberately chose “significant” instead of major earlier because as we’ve just seen, even in context they are very different.

      2. NOTHING that has been reported…..melting towers or displaced small outback villages in Australia is actually a PROBLEM! Melting towers…how is that a problem for a v1.0 software of this size. Going to desolate outback villages….use you COMMON sense!!, use at least two corroborating pieces of information to make sure. Stop this idiotic molehill to a mountain crap like Antenna Gate was.

            1. That was pretty sad. It isn’t trolling to recognize that Apple isn’t perfect in all things, otherwise MDN is an “obvious troll” because they haven’t supported Apple in their every move.

  3. I’d rather want an economist to explain Apple’s current stock slide and where do they think it will stop?

    Hope it comes back up, but you never know…

    Glad I didn’t listen to those saying aapl was a buying opportunity during the last dip that the current price dwarfs!

  4. What this doesn’t account for is Google’s tardiness in bringing their maps to the App Store. It was public information from the earliest builds of iOS 6 that Apple’s maps were going to be part of the offering. Instead of getting off their asses and queuing up their Maps to launch with iOS 6, they sat around and watched Apple swipe their data pool with their own offering.

    This is either incredible hubris on Google’s part – or incredible incompetence.

    1. Watching Google’s behavior over the past few years, and following the usually bemused reactions to it, used to be a high-calibre spectator sport, while both ingredients—hubris and incompetence—bubbled merrily in Dr. Jekyll’s beaker.

      As the radical experiments continued, a dark, long-obscured identity emerged, laying bare the intrinsic cynicism and soullessness of what had devolved into a tawdry ad brokerage, shedding its civilized principles whilst groping about for any remedy to the dwindling revenues that once fueled a renaissance.

      The Maps debacle had been avoidable, but the increasingly toxic cocktails

  5. Since it’s become a sport to search for errors in map apps, I thought I’d give Google’s latest a look and see if any flaws surfaced. Well, I didn’t have to look far. Google conveniently displays businesses which I presume are listed in Yellow pages or something similar. But, they mistakenly place a business that is located 6 blocks from my house only two blocks away instead. The cause is the business has a Suite number and a hyphen joining it to the street address, and Google Maps treats the Suite number as the street address instead. Then I tried it with Apple’s Maps…same address, hyphen and all, no problem! I’ll stick with Maps, thank you very much.

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