An interesting article about Apple and Google’s falling apart, an excerpt below:

Maps added to the rancor. That same year, Apple executives including Mr. Schiller sat down with Google executives, including Vic Gundotra, then a vice president in charge of Google’s mobile apps, to renew the agreement over the iPhone’s mapping app.

New tensions emerged when Apple grew concerned that Google was aggressively gathering data from the app, according to people familiar with Apple’s thinking. Mr. Schiller worried it could compromise users’ privacy, these people said.

Google executives felt Apple was unreasonable in insisting on controlling the look of the maps app and enabling only some of its features—like an “a la carte menu” where Google provided only the “back end” technology that powers it, according to a Google executive.

The two sides bickered over a Google Maps feature called Street View, which lets people see an actual photo as if they are standing in the street. Apple wanted to incorporate Street View on the iPhone just as Google already offered it for Android phones. Google initially withheld the feature, frustrating Apple executives, according to people on both sides of the debate.

Apple executives also wanted to include Google’s turn-by-turn-navigation service in the iPhone—a feature popular with Android users because it lets people treat their phones as in-car GPS devices. Google wouldn’t allow it, according to people on both sides. One of these people said Google viewed Apple’s terms as unfair.

Overall, the fight is looking to be bloody.  When google decided to encroach on Apple with the release of Android, they opened up a few floodgates.  Namely:

• Mobile Ads: Apple’s movement into mobile ads seems to be a retaliatory response
• Siri: Indirectly attacks google’s search functionality by changing user behavior with searching (by encouraging users to use voice commands for search instead of google)
• Apple’s New Mapping Feature: Apple’s new default mapping feature will affect more than just directions.  It means that Google Offers will get faded out (which in many ways is symbiotic with with the location based features).

Controlling the mobile search market is very valuable - I’m not yet convinced that the development of Android was worth the cost of controlling the entire mobile search and ad market which Apple was willing to concede to google prior to the development of Android.