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Apple’s Maps on iOS 6

Apple has released iOS 6, their newest operating system for “i” products. In this release, they decided to use their own implementation of Maps rather than use Google Map as the included navigation app. Because Apple’s Maps application has not been receiving positive review, and it is far less superior to Google Maps right now, Matthew Yglesias wrote an article about Apple’s decision, and wonders why the two companies has come to the current decision. He mentions that “Neither Apple nor Google seems better off than they were under the old arrangement.”

From a game theory point of view, Apple and Google have their respective strategies of either to keep Google Maps as a native app on the iOS platform, or pull the app from iOS.

If Apple wants to keep Google Maps, and Google also wants to keep Google Maps on iOS platform, business will continue as usual, no one will gain or lose anything.

If Apple wants to keep Google Maps, and Google decides to pull Maps from iOS platform, Apple lose a navigation app for their platform, which is a significant part of smart phone competition, and Google just loses the iOS user base. Google hosts Maps online, on their own Android platform, among other places, so the iOS user base is only a small portion of their users.

If Apple wants to pull Google Maps from iOS, and Google wants to keep it, Apple has to put in resources to implement their own Maps app, and Google loses the user base, and they lose time to implement their third party version of the app.

If Apple wants to pull Google Maps from iOS, and Google also wants to pull the app, Apple has to put in resources to implement their own app, and Google loses the iOS user base.

The payoff matrix would look something like this:

Apple Google Payoff Table

From this table, we can see that there are two Nash equilibria. Either both Apple and Google decides to keep Google Maps, or both decides to pull Google Maps from iOS. Even though the second equilibria of both deciding to pull the app is worse off than the original arrangement of both wanting to keep the app on iOS, it is still an equilibria, and it seems Apple and Google are stuck there at the moment.

Article source: http://www.slate.com/blogs/moneybox/2012/09/21/ios_6_maps_is_terrible_what_business_strategy_is_behind_it_.html

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