The greatest threat to Google’s ad business may not be Microsoft, Yahoo, or Facebook, but rather the group of people they work so hard to cater their company to – their users. Here’s how: As mobile phone technology advances, more and more people are content to browse the internet through their cell phones. Now with Apple’s iPhone in the mix, users can experience a clearer and wider picture, and can browse more effectively with a touch screen as compared to a miniscule keypad.

If more and more users are turning to their phones for internet use, how does this affect Google? Ben Kunz over at Business Week reports that “Google can now fit about 10 ads on a standard computer screen…but on your cell phone, if you type in a search query at google.com you get only one or two paid ads in response.” By that calculation, Google can only display between 10 and 20% of the volume on a cell phone as compared to a computer screen.

The more that users look to their cell phones to spend time on the internet, the less ads Google will be effectively be able to display. This translates to advertisers not being able to attract as much traffic to their websites, and ultimately paying a lot less to Google for their ad campaigns. Of course, Google, being the innovator that they are, recognizes this threat and is acting accordingly. They’ve announced an “Open Handset Alliance” to design open source, universal platform for cell phone users. Translation: they want to figure out a system that will make more room for ads, and they want to make sure everyone is using their system.

Read the full story over at Business Week for more details!