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). It is beautifully and sensibly designed as Google’s latest iPhone app offerings are. More significantly, it is a considerable advance for the Google maps that was native to the iPhone before iOS 6. This app has vector graphics that allow you to zoom smoothly in and out (just like Apple maps), it has turn by turn directions (just like Apple maps) and it has street view that allows you to see what you would expect to find on a street (just like Bing maps has had on the iPhone for a couple of years). It also includes public transport directions and you can of course now get more accurate maps which is useful if you are driving to Mildura.
Interestingly, it does not offer voice control that Google has brought to the iPhone for its search app.
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. Nonetheless, there is a possible story that poor maps was part of long-standing Google-Apple negotiation shenanigans.
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.
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. This perhaps explains why Microsoft built in free browsers and media software into Windows back in the day, Apple have built in features to their camera app, and why Twitter acquired popular paid apps and made them free. 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.
Digitopoly 
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