Asked repeatedly about CPC rates, search volumes and various percentages of queries and revenues Gundotra declined to offer those specifics but did say that mobile search query growth was “dramatically higher” (from a smaller base) than PC search growth. He added that Google’s mobile traffic growth has been 5X over the past two years:

These growth curves make sense given the relative maturity levels of the markets and also the rise of smartphones, which now represent almost 20% of the US handset market and a much larger percentage of new handset sales. Gundotra explained, as he has in the past, that mobile search is largely “additive” to PC search. He pointed out that mobile queries spike when people are away from their desks — during lunch, on the weekends, etc.

An unrelated data slide from Compete illustrates that much of smartphone activity happens during “downtime,” “waiting in lines,” at home or during leisure time.

Gundotra showcased Google’s various advertising programs and options in mobile:

Gundotra also discussed Google’s relatively new Click to Call program and echoed that this delivering “a call for the price of a click.” He offered that there was considerable advertiser interest in the program.

During the Q&A session Gundotra was joined by Android VP Mario Queiroz and Google CFO Patrick Pichette. There were questions about the future apps vs. the mobile browser, Android app store growth, the Nexus One, Google’s recent “blue dot” local inventory program, the Japanese market as a model for the West and AdMob, among other areas. There were few specifics revealed and Google wouldn’t discuss AdMob because of the regulatory review going on now. However, Gundotra pointed out that a “surprising  number” of people launch their mobile browser and go to Google.com to search.

What this indicates that Google’s brand equity is very strong in mobile and the company can probably expect continued mobile search leadership notwithstanding competitor “default” search deals that exist or may be brewing. Last month Opera said that Google owned about 68 percent of the search query volume that took place through its mobile browsers (which doesn’t consider the iPhone and most Android devices that see greater percentages of Google search).

One of the soundbites from the webcast that is being widely reported is that mobile ad rates would potentially top PC ad rates at some point in the near-term. While possible and a bit of hopeful thinking, that doesn’t entirely make sense given the current market dynamics.

Google doesn’t have a separate bidding queue for mobile (at least right now) so AdWords on the PC and mobile are the same. In terms of display ads, mobile rates were much higher than on the PC in the past but ad rates have come way down over the past year. This is partly because of ad network competition and the fact that consumers are adopting the mobile web faster than advertisers and there are now many more page views than ad inventory to fill them all. For ad rates to increase there will need to be more advertiser demand and more mobile campaigns, which are coming.

Yet the mobile internet and mobile devices will not simply duplicate the PC experience. There will be overlap and similarity but the mobile internet will evolve and the models will diverge to some degree over time as new advertising, transaction and billing models take hold in mobile.

While the discord between Apple and Google is in part philosophical and involves enormous financial stakes, the battle also has deeply personal overtones and echoes the ego-fueled fisticuffs that have long characterized technology industry feuds. (Think Intel vs. A.M.D., Microsoft vs. everybody, and so on.)

Yet according to interviews with two dozen industry watchers, Silicon Valley investors and current and former employees at both companies — most of whom requested anonymity to protect their jobs or business relationships — the clash between Mr. Schmidt and Mr. Jobs offers an unusually vivid display of enmity and ambition.

At the heart of their dispute is a sense of betrayal: Mr. Jobs believes that Google violated the alliance between the companies by producing cellphones that physically, technologically and spiritually resembled the iPhone. In short, he feels that his former friends at Google picked his pocket.

This morning XML co-creator Tim Bray announced he was taking a job with Google as Developer Advocate, trying to rally developers to the Android cause. He decries Apple’s “closed” approach vs. Google’s “open” one:

The iPhone vision of the mobile Internet’s future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It’s a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord’s pleasure and fear his anger.

I hate it.

I hate it even though the iPhone hardware and software are great, because freedom’s not just another word for anything, nor is it an optional ingredient.

While Apple’s content censorship is extremely problematic and bad form, Google’s approach to Android isn’t exactly laissez-faire either. One source I spoke with recently argued that Google has exercised progressively more control over Android since its inception, culminating in the Nexus One.

Hints of possible frustration from at least one Android handset OEM can be found in the recent announcement that Motorola had formed “a global alliance with Microsoft Corp. to deploy Bing services on Motorola devices powered by Android.” While the Motorola-Bing announcement came in the context of China and finding a mobile search substitute for Google, given the company’s likely withdrawal from that market, pretty clearly this was also intended to “send a message” that if Android is “open” that involves search too.

Meanwhile Google search executive RJ Pittman has reportedly jumped from Google to Apple. The companies were at one point being investigated by the Department of Justice for an alleged handshake deal to avoid poaching each other’s employees. It would seem, if that deal existed, it’s now over.

The New York Times article exposes personal animosity driven by a sense of “betrayal” over the alleged copying of the iPhone by Andoid, which can certainly be persuasively argued. However, copying of features is common in technology and Apple’s own early GUI interface innovations were arguably copied or “heavily inspired” by work previously done at Xerox PARC.

To the extent that Apple is guided in product decision making by Steve Jobs’ personal sense of indignation or injustice it may make choices that are foolish or bad for its products. So far that hasn’t happened but I’m sure we’re only at the end of “Act I” of the unfolding Apple vs. Google drama.

Today the Financial Times is reporting that Google is in fact about to pull out of the Chinese search market as talks have reached an apparent “impasse”:

Google has drawn up detailed plans for the closure of its Chinese search engine and is now “99.9 per cent” certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to a person familiar with the company’s thinking.

In a hardening of positions on both sides, the Chinese government also on Friday threw down a direct public challenge to the US search company, with a warning that it was not prepared to compromise on internet censorship to stop Google leaving.

The signs that Google was on the brink of closing Google.cn, its local search service in China, came two months after it promised to stop bowing to censorship there. But while a decision could be made very soon, the company is likely to take some time to follow through with the plan as it seeks an orderly closure and takes steps to protect local employees from retaliation by the authorities, the person familiar with its position said.

Google will likely have other operations (e.g., research) still in China on a smaller scale. And the closure of Google.cn will not affect Android or its presence in the world’s largest mobile market. Motorola previously said that it would put Bing on its Chinese Android phones. Baidu, the leading Chinese search engine, is also a choice of course. Presumably Apple will do something similar with the iPhone which is reportedly selling reasonably well in China.

Google will likely still have some search visibility in China as people find ways around Chinese government filters to gain access to Google.com and maybe even Google.cn if that domain continues to operate for Chinese language speakers.

Even though this is not the outcome that many wanted, I believe Google should be congratulated, assuming this story is correct, for taking a bold and uncompromising public position and sticking with it. Chinese government censorship is “evil” and Google has clearly lived up to its mantra in this case.

Google is working with a limited number of retailers for the time being but is inviting others to apply to become part of the program. There are data quality and location quality requirements that Google identifies and links to from its blog post.

Product Manager Paul Lee told me that this was only mobile for now but eventually would make its way onto the PC. He said that this offering made the most sense, in Google’s collective mind, for people on the go who had an immediate need for an item.

Here’s what the experience looks like on the Safari browser on the iPhone. It is also available for Palm’s WebOS and Android. It’s available from mobile Google.com results or via Google Shopping in mobile.

Several years ago Google operated Froogle Local, which offered the same proposition and received data from StepUp (now owned by Intuit) and ShopLocal.  Google discontinued that service after roughly a year or so.

This time Google is working directly with retailers and not third parties and, according to Lee, has been helping them to clean up and prepare their data. The group of retailers currently involved are: Best Buy, Sears, Williams-Sonoma, Pottery Barn and West Elm stores.

In testing out the program Google apparently utilized “mystery shoppers” to test the system and go into stores to see if the search data were accurate. Paul Lee said, “We were very surprised and pleased and how well it worked.”

There are several other shopping sites that to varying degrees do a version of this today, including Milo.com, TheFind, PriceGrabber, NearbyNow (partners) and Krillion and its partners (including PriceGrabber). But Google’s visibility and clout will start to make real-time inventory data all but imperative for shopping search engines and related sites (at least in mobile) that want to remain competitive.

I asked Paul Lee about advertising angles here and he declined to comment. But I would image that where an advertiser is a also one of the partner retailers, we’ll start to see the blue dots appear in sponsored search results. But this may be some distance off.

This program will also yield very interesting, with a capital “V,” consumer data including some that should help further document the not-well-appreciated connection between Internet research and offline purchase behavior.

Here are the comScore “expanded” search data:

Meanwhile over on the other side of the globe Motorola has made a very public statement that whatever happens with Google in China, it will be working with Bing search on its Android handsets there. This comes from the press release out yesterday:

Motorola, Inc. today announced a global alliance with Microsoft Corp.  to deploy Bing services on Motorola devices powered by Android. This new offering, launching in China on smartphones in Q1, will provide consumers a choice when using search and map functions on their Android-based devices.

With this collaboration, consumers will enjoy a pre-loaded Bing bookmark on their mobile browser and an enhanced search widget with Bing integration. By enabling users to customize their devices and select their own Search provider, Motorola, with help from Microsoft, is expanding the capabilities and range of services currently offered in the marketplace and opening the doors for increased personalization.

So what’s going on here? There is both text and subtext (not so sub in this case).

Motorola isn’t pulling out of China and has bet the farm on Android. Thus it wants to ensure that it has a viable search option if Google exits the Chinese search market. But more interesting is the fact that Motorola is pushing back very hard on Google with this. Arguably the only thing missing in Motorola’s statement is an expletive.

Note carefully the use of the language “global alliance.” Motorola is putting Google on notice that it may use Bing wherever Motorola handsets are sold. And in the US Motorola remains, ever so slightly, the largest handset OEM with just over 22% of the market.

This is a response to what Motorola may see as a kind of betrayal or strong arm tactics by Google with the Nexus One and its general behavior around dictating the software and user experience on Android handsets. Motorola would never come out and publicly say this — indeed Motorola was present at the Nexus One launch — but the company was caught off guard by the Google-branded handset.

This follows AT&T choosing Yahoo as the default search provider for the Motorola Backflip in the US.

Android is supposed to be an open system and allow for these kinds of alternative choices. However Google largely sees Android as its own platform and a way to grow Google services and search share in mobile.

Bing has very smartly uncoupled itself from the struggling Windows Mobile platform and done mobile deals with Verizon, now Motorola and maybe Apple (rumored). There’s also the successful Bing iPhone App.

Google remains, far and away, the mobile search leader on smartphones around the world. That’s mostly been about the iPhone and increasingly about Android growth and penetration. However this new Motorola-Bing “alliance” is an effort to put Google on notice that it doesn’t “own” Android and that all Android devices won’t equally be Google search devices going forward.

It also single-handedly boosted the profile of all of AdMob’s competitors. As an almost direct response Apple, which was rumored to have been an unsuccessful bidder for AdMob, bought rival ad network Quattro a couple of months later for $275 million.

Here’s what I wrote immediately after the “GoogMob” acquisition was announced last year:

The fact of Google’s intended acquisition and the price tag ($750 million) help validate mobile (display) advertising in a number of ways. It’s the third largest acquisition price Google has paid, after YouTube and DoubleClick. It also shows how serious Google is about mobile advertising in general. According to an interview with Bloomberg, Google CEO Eric Schmidt said, “Our mobile revenue is growing faster than our regular revenue . . . All of the signs indicate a great success in this space.”

And rather than being publicly upset by the acquisition, AdMob’s competitors and others in the mobile ad universe are all but rejoicing. I was sent a link to a “facts” page Google had put together in support of the deal . . .

Late last year the US Federal Trade Commission (FTC) decided to take a closer look at the deal. Interestingly, AdMob’s immediate competitors (e.g., JumpTap, Millennial Media) weren’t complaining about the lack of competition or a negative impact on their market — quite the opposite, they saw it as a big boost for their businesses — but long-time Google critics argued in favor of blocking the GoogMob deal.

At the time of the acquisition Google’s own mobile display ad business was generally weak, which partly explains the transaction, while AdMob was one of the leading independent mobile ad networks. However now it appears that there may be some problems for the acquisition. According to Bloomberg, the FTC scrutiny may be a bit more than routine:

U.S. regulators are seeking sworn declarations from Google Inc. competitors and advertisers as part of their probe of the Internet company’s bid to buy AdMob Inc., indicating the government may challenge the deal, said people with direct knowledge of the matter.

The potential issue here — I’m not sure this is relevant to the immediate anti-trust analysis — is not that “mobile display advertising” itself would be harmed; there are at least 10 mobile ad networks with some scale in the market. The potential issue that arises is how the AdMob transaction may give Google a more complete and compelling mobile ad offering (search + display) than its main competitors: Yahoo, Microsoft and maybe Facebook — although Facebook will eventually emerge as a significant mobile ad platform in my opinion.

Yet those competitors have substantial mobile assets themselves. Yahoo operates one of the largest mobile ad networks in the market and offers mobile search advertising as well. Microsoft is also quite formidable, with mobile search reach soon to include Yahoo’s and a massive search and display ads deal with the largest US mobile carrier Verizon, which has 91 million subscribers. For its part Facebook already has 100 million daily mobile users, and half of the company’s 400 million users have accessed the site via mobile devices.

Approval or challenge will turn in part on how the market is “scoped” and defined. Opponents will probably try and argue that while mobile display itself remains competitive if such a deal goes through the larger competitive outlook for digital advertising generally is potentially adversely impacted because it gives Google even more reach and scale overall vs. competitors. But that’s a challenging argument to successfully make for some of the reasons I’ve already articulated.

Does Google buying AdMob remove a competitor from the market? Yes; Google and AdMob were display ad competitors in mobile, despite Google’s arguments to the contrary. But the mobile display segment remains vital and highly competitive nonetheless.

This is a strange case: the deal’s principal opponents would not appear to be AdMob’s immediate competitors, who benefit from the publicity around the transaction, but general Google critics who don’t want Mountain View to become any more powerful than it already is.

RIM showed modest growth while the iPhone’s growth, according to these figures, flattened. Meanwhile WinMo and Palm lost ground.

Of course with the advent of Windows Mobile 7 and the fact that it’s not shipping until Q4, we should see Microsoft’s current mobile OS continue to suffer declines as users either update with other platforms or wait for the new Windows 7 handsets.

The numbers above basically translate into just over 70 million people accessing the mobile internet with varying degrees of frequency. By comparison 158 million or more are on SMS and just over 198 million are PC-internet users in the US.

Google controls billing for paid apps and gets a 20 percent cut of the revenue. All of the apps will potentially integrate with existing Google tools and services. According to the Google Blog:

Once installed to a company’s domain, these third-party applications work like native Google applications. With administrator approval, they may interact with calendar, email, document and/or contact data to increase productivity. Administrators can manage the applications from the familiar Google Apps control panel, and employees can open them from within Google Apps. With OpenID integration, Google Apps users can access the other applications without signing in separately to each . . .

Google’s partner slide at launch:

Google has enjoyed some momentum in the enterprise with Apps but adoption has been tiny relative to Microsoft’s installed base of software users. This however would appear to be a “game changer,” to use the overly used phrase, by bringing all sorts of creativity and new functionality into Google Apps. It also instantly creates a broader ecosystem around the offering that will drive interest and adoption.

As with other apps marketplaces users can search by keyword and refine for functionality (e.g., “payroll”) as well as see user ratings for apps:

Because all this is in the cloud, expect varying degrees of mobile integration.

We were invited but I was unable to attend and so didn’t get to explore specific questions and issues, such as whether this would become more consumer-facing or a parallel consumer version would emerge at some point. However, there is much more discussion of particulars on Techmeme.

Click here to view the embedded video.

The new bike directions also provide a new view on maps (see below), one that is more “bike friendly” and emphasizes some features while de-emphasizing others (e.g., freeways, busy roads).

The directions and underlying data to support bike directions come from Google’s Street View effort as well as selected third parties that have already mapped biked trials (i.e., Rails to Trails Conservancy). Here’s an example of the difference between driving and bike directions from AT&T Park (baseball stadium) in San Francisco to the Golden Gate Park:

As mentioned, the new bike directions seek to avoid freeways, busy streets and hills and route people along streets with bike lanes or along bike trails, as the case may be. Users can drag and change bike routes just as they can with other directions on Google Maps.

The data and routing are available for roughly 150 US cities today, with more to come. Google said it would also love to be able to offer this in Europe and elsewhere around the world as well but there’s no timing on any such release.

This is not yet available for mobile devices, but will be at some point in the not-too-distant future. Google is also making bike routing and the new bike-friendly maps available to third parties through an API.

I asked Google whether bike trials and routes will also get the benefit of Street View imagery. I was told it’s very limited right now but coverage will improve. That’s partly what the Street View trike is doing, collecting “off road” data:

There are or will be Place Pages for bike trails in many cases. And users can “report a problem” to provide feedback or correct errors in bike routing. Google’s MapMaker toolset is also coming to the US, which will enable cyclists to add to or change Google’s base map data — in this case around bike trails and routes.

Among Google’s major map competitors, Bing, MapQuest, Yahoo, it’s the first company to offer this capability.

Click here to view the embedded video.

However, in the bad-news column for Yahoo, according to PaidContent, T-Mobile has now swapped it for Google as the default search engine on the T-Mobile portal. However it’s no longer clear how valuable these portal deals are, as the market shifts to smartphones. Most of the mobile internet activity takes place on smartphones, though not entirely.

Consumers have more options to access the content and services they are loyal to on smartphones, rather than simply accepting and using the carrier-designated services. Though it’s an “empirical question” anecodotal evidence argues that carrier portals have little or no impact on smartphone users. They may exist in some form but can simply be ignored by consumers.

Google is already the dominant mobile search engine, so this switcheroo of the T-Mobile “default” relationship doesn’t necessarily help Google or harm Yahoo in a major way. There will be some incremental loss or gain (depending on which company we’re talking about) in search query volume and related clicks however.

The US-search engine carrier alliances are now as follows:

• Verizon-Bing (although Android phones feature Google)
• AT&T-Yahoo
• Sprint-Google (and MSFT to a much lesser degree)
• T-Mobile-Google (the company still has a search relationship with Yahoo in Europe)

When Verizon “turned on” the default Bing search deal late last year some Verizon subscribers revolted, which shows that these deals don’t necessarily yield the desired outcome.

Postscript: PaidContent also has details of a Yahoo reoganization that saw the elimination of the mobile group, in favor of a more integrated approach in which mobile is component of everything.