NEW YORK (TheStreet) -- A reported plan by unnamed European wireless carriers to block mobile ads in an effort to provide an improved mobile experience may face significant backlash from content publishers and advertising-reliant Internet companies, including Google (GOOGL).
If implemented, the plan could have a devastating effect on revenues for digital advertising companies such as Yahoo! (YHOO) and AOL (AOL), but Google would be most severely affected. The company earns more than 70% of its revenues from digital advertising and is expected to dominate digital ad spend in the near future. And nearly a quarter (24%) of its $17.3 billion in revenues in its latest quarter were from the "Rest of the World" region, which includes Europe, but excludes the United Kingdom.
However, the planned move by telecom carriers may be good news for social media companies, such as Facebook (FB) and Twitter (TWTR), as it will not affect advertisements that are shown in a user's social media feed.
The plan's implementation could be thwarted by a number of EU regulations, as well as discontent from content publishers, said Nitesh Patel, director of wireless media strategy at research firm Strategy Analytics. "I don't think it will fly," he said.
As an example, he points to the failure of a similar plan by Swedish telecom giant Teliasonera. In 2008, the company launched a service known as SurfOpen to provide a cheaper, better mobile experience to users. The telecom company transcoded popular mobile sites by redirecting users to another server for a better mobile experience. In the process, it blocked ads (and select content) and inserted its own ads instead. Content publishers revolted against Teliasonera, and eventually, it had to withdraw the service.