MOUNTAIN VIEW, Calif. ( TheStreet) -- It's war. Google's ( GOOG) mobile Web versus Apple's ( AAPL) mobile apps. And the battle is heating up as a new YouTube video streaming site attempts to climb over the wall of Apple's iPhone fortress. In what's likely to be seen as a growing schism in mobile devices, Google has introduced a site that allows phone users to bypass the YouTube player and watch videos directly off YouTube. The move strikes at Apple's tech-killing stranglehold on the market and potentially addresses two key areas where Apple has run into criticism: the prohibition of Adobe ( ADBE) Flash videos and the vowed ban of Google's AdMob ads.
The move also highlights a possible vulnerability in what's known as Apple's app-savvy walled-garden approach to iPhone features. Apple, it can be said, lacks a grasp on the Internet -- at least as anything beyond a sales channel. Google seems to want to exploit this. With the mobile YouTube site, Google can control the format and quality of the videos as well as the advertising that runs inside the clip. A quick test on the Apple iPhone 4 Thursday showed that a video on mobile YouTube loaded instantly compared with a much slower load time for the same video on the YouTube player. And oddly, the mobile YouTube Web application was not compatible yet with Google Android devices, including the Sprint ( S) HTC EVO and Verizon's ( VZ) Motorola ( MOT) Droid X. Presumably, Google's mobile YouTube push is just a start to what's likely to be a series of mobile Web-based applications in the works. Since 98% of Google's revenue comes from Internet ads, the ability to keep people on the Web as they go from desktop to phone helps feed the machine. Apple chief Steve Jobs has a different view, saying that Internet search is gradually being replaced by search features inside numerous apps that bypass Google. The next stage of this battle will likely be music.
Google is expected to introduce a Web-based service that will let users play and purchase songs through a Google account that can be accessed from any device. This streaming service would vie against Apple's hugely popular iTunes download store, which limits users' libraries to a few authorized devices. Apple is struggling with this, apparently. After acquiring Web music service Lala last year, Apple shut it down last month and is expected to reintroduce it as a feature of its iTunes store. The takeaway: Streams and downloads will probably live in harmony, but Google and Apple seem destined for conflict. -- Written by Scott Moritz in New York.