Soooo, their users don't matter? "Business strategy" is more important?

This is Apple?!

See: The In-App Purchase controversy with eBooks and other applications. For example, did demanding the removal of all links to Amazon.com from the Kindle app (because Amazon didn't want to hand their eBook margin to Apple by using Apple's IAP API) make anyone other than Apple better off?

[1] http://en.wikipedia.org/wiki/Internet_Explorer_for_Mac

I wouldn't be surprised if Cook decided next week that they might as well buy TomTom outright.

Yeah, it's not like Apple is sitting on a mountain of cash right now! Oh wait...

If nothing else, it's certainly possible that writing their own maps app and taking the initial PR/UX hit of "it's not as good as Google's yet" was the only reasonable option available to them.

(Not that we have any idea.)

Ask yourself, "How can Google make sooo much money on search advertising?" I mean seriously, rounded to the nearest billion they don't have any other businesses. The insight that explains it is that search advertising exploits the fact that the consumer is "looking" and they have what they are looking for "the query". When that signals a possible purchase intent "car safety reviews" for example, at that instant in time Google gives advertisers a way to put their message in front of the consumer's eyeballs when they are most receptive to that message. The effectiveness of a car dealership advertisement in a Harry Potter movie preview? Lots of eyeballs, few if any looking for a car. In a search query on cars? Lots of eyeballs, many if not most of which are looking for a car. This is what makes search advertising an insanely better advertising vehicle then pretty much any other form of advertisement.

Now lets look at maps on mobile devices. This has the same fundamental super power as search advertising, mobile maps are a search api. Many people don't put that together but when you are using your mobile device's maps you are seeking out directions, what you are looking for signals intent, and on that intent one can build a very profitable advertising platform. If I pull out my iPad and click 'coffee shops' on the maps search box I have signaled both where I am, and that I'm looking for a coffee shop. As a shop owner how much would you pay to have that person go to your shop? $0.50? $1? $2? How do you know your ad worked? Well there is an NFC payment, or a coupon you can offer up on the mobile device, or your local WiFi hotspot (remember that?) can tell you that the wifi mac address of the device that did the maps search, just walked into range of your hotspot.

Do you see it yet? Mobile Maps is as big a business as Google's search advertising business and its still un-plundered. Apple will do everything they can to 'dominate' this particular 'free to use' service.

[1] Best scene ever in "Charlie's War"

It's also why Apple has waited until now to address it. It's because they are not Google, this is not their core competency. It's a platform hole that has to filled, simple as that. Same as iCloud Mail.

The browser makers (Mozilla & Co) don't pay either if somebody opens the Google maps web site.

Google charges 'volume' users of their maps API, that is part of the way they pay for it. The map "application" on iOS was a client that called Google Maps APIs and displayed the results. It generates a lot of volume, and Apple was going to have to start paying for that this year.

you wrote: "For example if you show a map on your homepage with all the locations of your stores."

If you did that enough times Google would start charging you. They also reserve the right to show ads for somebody else's store on your map. (not that they would just yet, but they keep that right in reserve if you want to use their content.)

Google and Apple sell Ads. Google is much better at it than Apple is, but the great untapped market is effectively advertising to mobile users. A common theme for desktop users is they use web search a lot, a common theme for mobile users is that they use map search a lot.

Apple wants you to sell ads through their network, so they get a huge chunk of the ad revenue that you are getting for your content. They do this because you're showing your ad on an Apple device. When you use Google maps through a browser you get ads from Google's ad network on the page. If you use an Application (usually a better UX) the platform provider has more control over you (they have to approve your App after all) So the fight here is who sells the advertisement into the Maps data stream.

Google has the best mapping product on the planet at the moment. They can use that to demand concessions like "we get all the ad revenue" in exchange for you being able to use our data/api. They don't care if the local restaurant shows a map to their location, the do care if you're an application that millions of people might use.

Its pretty clear that Google and Apple agreed to disagree and end their relationship with respect to Maps. That the Apple product is so horrible suggests that this relationship ended earlier than Apple planned, or their Maps technology has matured more slowly than they anticipated. Either way, the result is that Apple now has a grossly inferior maps application on their most successful products. This is going to cost them both in sales to people who are on the fence with regard to mobile, and in customer goodwill (this is already evident). That is a calculated risk they took. The alternative was to meet Google's requirements, whatever they were, to continue to use their map data in their application.

The part I think you are missing is this. Apple had to know how crappy their Map application was, customer experience is what they do, they don't just forget about it all of a sudden. Given that they are shipping that pile of crap means that they and Google are at odds on this issue. Is there any scenario where Apple would 'approve' an application by Google that would be instantly significantly better than their native App? Or conversely, given that they couldn't reach an agreement on the native App, do you think Google would agree to constraints in a published App that they would not agree to in a native App?

No, the only explanation that is credible is that they walked away and Apple has dug in their heels and bet that they can build out a better map experience faster than Google can take market share away with Android's map experience. From where I am sitting, given the significance of the risk involved in taking that path (some of which we're seeing being actualized as rampant ridicule) I can only imagine how distasteful Google must have made it for Apple to stick with them. And that suggests to me that you will never see another native Google maps product on iOS until Apple capitulates and cedes the space to Google or Apple moves so far ahead of Google that they no longer feel it is a threat to their advertising base.

As for the other story - sure, if Apple had demanded that the Google Maps app shows Apple Ads, not Google Ads, or that they get a share of the Ad revenue, then Google would walk away eventually. Obviously it is also worth something for Google to have their Maps on iOS, so they might even have paid Apple for the privilege for a while (either a fixed sum, or part of the ad revenue).

If Google were to publish a Maps app now (and Apple would accept it), it would simply be free and show Google ads, like all the other Google maps. Apple wouldn't have to pay a dime. Why should it have been different with a Google maps app shipping with iOS?

Maps are a central part of a mobile device, so I suppose Apple was getting desperate to get a share of the pie (Ad revenue and valuable data collection).

Because the world of business development is very different from the world of consumer APIs. In a bizdev world, you want SLAs and contractually understood definitions of how both sides will behave. A company like Apple (or Google, Oracle, Microsoft, etc) isn't going to build a core feature of its product on somebody else's technology without understanding exactly what that means.

And all of that costs money.

Yes. The scenario we're currently in. By approving Google Maps app now, they give their users back the experience they expect without having to pay Google for the use of the Maps API. Meanwhile they can keep working on their own mapping solution until it's ready to take over, at which point they can pull Google Maps from the App Store.

Truly one of the best parts of working at Google when I did was being able to see so much more of the moving pieces in these sort of mini-dramas. Don't miss it enough to go back but it was unique.