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The FTC and U.S. Justic... e Department have been discussing which agency should conduct the investigation, one of the people said yesterday. Regulators decided earlier this week that the FTC would proceed, the person said.

Regulators want to know whether moves by Apple will result in less competition in the growing market for ads on handheld computers and phones. Spending on mobile ads in the U.S. is expected to rise to almost $500 million this year from $220 million in 2009, according to IDC.

Omar Hamoui, founder of Google Inc.'s newly acquired AdMob mobile-ad service, wrote in a June 9 blog posting that Apple issued rules that would prohibit developers "from using AdMob and Google's advertising solutions" on Apple's iPhone.

Peter Kaplan, an FTC spokesman, and Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment.

Last month, the FTC postponed its decision on whether to approve Google's $750 million purchase of AdMob. The delay was due to FTC concerns with conditions that Apple was placing on software developers and advertisers for the company's iAd program, according to two people familiar with the matter.

The iAd program generates revenue from ads placed on Apple's handheld devices.

The FTC ultimately approved the Google-AdMob deal, in part because of competition from Apple.

The Financial Times reported yesterday that U.S. antitrust authorities are planning to investigate Apple's conduct in the mobile-ad market.

-- Bloomberg News