There has been a lot of news lately about the fight between Google and Apple. Video codecs, patents, the definition of openness, what have you. The sad thing is that this seems to be a fight Google started, and they are picking on the wrong person. Not that they won’t win against Apple (I have no idea who can win, really), but because they are going after a company that doesn’t care at all about advertisements, search, or really, web applications.

Google is, and has always been, an advertising company. They make money selling ads along side their amazing search software. You use their software, from any device, and Google makes money from the links they show you. You use Gmail? Great! Google makes even more money – now they can show you ads about things that are relevant to you, and they can charge more for each ad. Targeted advertising is lucrative. Something like %96 of Google’s revenue comes from selling ads.

Which is why it’s stupid for them to target Apple. Apple is, and has always been, a hardware company. They make amazing, expensive, profitable hardware. The software that runs on it is part of what makes it amazing, but Apple doesn’t get rich selling software licenses to anyone. They get rich when people buy their top-shelf hardware that carries a %30+ profit margin. I mean really – a cell phone that costs as much as a mid-range laptop? Considering where Apple’s market cap is now, they are doing that very, very well.

Google should be going after Facebook. Facebook has 500+ million users. More and more every day. Facebook is, and has always been, an advertising company. They sell ads to show to users. They have an incredible lock on their users. They know not only what computers their users use, they know what cell phone, what laptop, what digital camera (from EXIF data on photos). They know where you are, they know who your friends are, they know what you like.

This is why the incredible valuations on Facebook make sense. No, they don’t bring in a lot of money right now, but they have won the social media wars. They are on the cusp of making as much money as they want, all day long. By doing so, they are going to eat Google’s lunch. Once the advertisers realize there is another place to sell ads – one where you know exactly what the demographic is – you can charge anything you like.

Google’s attempts at social media have been… mediocre. I don’t know anyone who uses Buzz. I know one person who uses Orkut. Google Wave died on the vine. Google Reader never took off as a social media function. Picasa is used as a toy – almost everyone I know uses Flickr or SmugMug. On top of this, there have been anecdotal reports recently of Google’s search becoming inadequate. This is troubling. If Google loses it’s reputation for being the best search engine out there, a significant percentage of their profit starts to fall away, and right into Facebook’s hands.

So what does Google do? Makes the news over video codecs, apparently to spite Apple. Zuckerberg must be laughing his ass off.