As you may have noticed there are no Ads displayed when you visit YouTube on the iPhone through the built in Application. Odd isn’t it?

Especially more so when you consider that the AppleTV and iPhone are the only Apple products to take advantage of the H.264 converted YouTube clips. So in addition to potentially lost revenue, Google also went through the trouble of converting their entire video base just for two products.

Two products which make no profit whatsoever for Google or at least publicly. You have to consider, how does one actually integrate Ads in an Application without hampering the design interface?

This is a very tough call but I can only speculate why Google is so in bed with Apple on the iPhone. It could come down to Google receiving a cut of Apple’s monthly revenue. It is the only logical explanation to compensate Google for providing YouTube Ad free.