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YouTube's Rental Service Intensifies Three-Way War


Google's push into the movie industry is strike two with Apple.

Apple (AAPL) CEO Steve Jobs felt a disturbance in the force yesterday. And YouTube's announcement that it would start testing an online movie rental service with Sundance was the cause.

YouTube already serves up plenty of movies at -- though the selection is pretty lame. Call me crazy, but Apple was never threatened by YouTube letting people watch Cheerleader Ninjas for free.

But paid rentals? That's stepping on iTunes' toes, and a sign that Google (GOOG) and Apple's increasingly antagonistic relationship will get worse. (See also, It's Officially Microsoft and Apple Vs. Google)

Apple has its fingers in a lot of pots in the movie business nowadays. Many hollywood features are edited in Apple's Final Cut Pro software, which only runs on Macs. Then people buy or rent those movies through iTunes, hopefully on a Mac. And those Macs can be bought in Apple stores. It's vertical integration at its finest, or worst, depending on your point of view.

It certainly doesn't want Google in there mucking things up -- especially if Google is more flexible with movie studios on deciding what a fair cut of the action is. That alters the market.

I may be in the minority, but I believe the rumors that Microsoft's (MSFT) Bing will supplant Google as the default search engine on the iPhone. (See also, Why Bing on the iPhone Could Be Merely Symbolic)

The emergence of Google Android-powered phones has given Apple's iPhone real competition for the first time. The iPhone is still the best smartphone on the market in terms of ease of use for the average person. But Android phones like the Motorola (MOT) Droid and Google Nexus One are pretty good, and maybe even better for some people who find the iPhone unusable on AT&T's (T) network.

And now this movie rental thing? That's strike two.

Call me crazy, but if and when Apple introduces the iVapor tablet/pad/bowling ball, Steve Jobs won't be showing off any Google apps on it.

And there's another angle to this three-way war: The Google Chrome OS, which is coming to a netbook near you. The fourth quarter of 2009 saw huge growth in netbooks, most of which run on Windows. Netbooks were so hot that Apple actually saw a rare decline in market share. The Chrome OS is a direct threat to the Windows franchise -- especially because Chrome OS, like Android, is free!

I miss the good old days, when Apple fought with Microsoft in PCs, and Microsoft fought with Google in search. Simple.

Now, Apple and Google fight in phones and media distribution. Microsoft and Google fight in search, and will soon do the same in operating systems. And Apple and Microsoft still fight in PCs, but may be teaming up in mobile search.

Talk about fog of war.
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