Europe’s greatest AI potential isn’t in ethics regulation. Europe should become the world’s pre-eminent training ground for the machines China and the US are racing to build.
Once upon a time, there were nothing but “walled gardens.” For those of you that don’t go back that far, the term refers to smartphone app stores before Google Play and Apple’s App Store were a thing. Back then the phones weren’t very smart, and the stores, phones, and apps were tied to a single mobile operator. You chose an operator, picked something from their dedicated, but limited, phone catalogue, and then lived inside a tiny ecosystem walled off from your friends and colleagues who occupied the garden next door (with different apps but similar frustrations). At least you could make a phone call or pay to send a text.
These pre-Android days weren’t great for developers either. Developers too were confined to walled gardens and small, fragmented markets.
Luckily, the tech marketplace is a highly dynamic and competitive space, and in the decade that followed, phones and mobile operating systems matured and the walls began to come down. We can probably thank the iPhone for this – and a closed smartphone ecosystem where the app store was tied to the device hardware and the operating system, not the operator. The phones were great, the apps terrific, and unless an operator offered the device, the subscribers didn’t come. Operators had no choice but to open the gate and let the iPhone (and eventually Android devices) in.
The end of the walled garden was a blessing for the developers writing the software and building all the great apps to come. Instead of writing and rewriting code to operate on dozens of incompatible devices and operating systems, they could focus on their core application. Instead of trying to create a user market from a mosaic of app, device, and operating system versions, they could rely on the influence of Apple and Google to tame the operator ecosystem, limit fragmentation, and provide access to billions of users while only coding for a few operating system variants. It’s been a golden age for software innovation and consumer choice.
Unfortunately, the golden era is likely to fade away when the European Commission announces its decision on the ongoing Android competition case. The fear is that the EC might decide, in an inappropriate analogy to their old Microsoft analysis, that Google must stop using the Android platform as a tool to promote its own applications. While there’s no such thing as a perfect market or perfect competition, the Android model is more about aggressive marketing than it is about competitive barriers. Consumers want a basic suite of apps preloaded on their devices. Device makers deliver the Google apps alongside as many others as they want. Google’s promotion of its own app portfolio creates little fear with developers, since we know from our own research that consumers consistently add and use multiple apps for core functions, right alongside those that come with their device. Developers weight the benefits of a stable and competitive ecosystem well above any marketing challenge of sharing screen space with Google (as they indicated by their write-in support for Android). In fact, it would be odd for the company that supports the ecosystem to somehow be disadvantaged because of it. There are few examples left of markets where partners don’t also happily compete with each other. So the question must be asked, does EC intervention actually improve things?
For developers, the likely result is the return of the fragmented marketplace. Applications will differ across not just Apple’s IOS and Android devices (one scenario is Google adopting Apple’s vertically integrated hardware/software model), but the likely proliferation of new hardware/software pairings from each of the world’s largest device makers. Developers will feel pressure to specialize by segment or market, since developing for every platform is costly and choosing one over another is risky. Not every platform, and not every developer, will survive. The era of the independent developer is likely fading as well, as competing platforms seek to lock-in the most popular apps and features. It’s ironic, but the future looks surprisingly like the past, with the gardens now belonging to the device makers and not the operators.
Developers are accustomed to a dynamic marketplace, and I have no doubt they will adapt. While the EU has been focusing attention on smartphones, the market has moved on to IoT, digital assistants, “skills” alongside apps, voice interfaces, and the growing complexity of AI and industrial automation – areas where regulators still have much to learn. It’s hard for a regulator to keep up with a competitive market. Like the personal computer market, eventually two or three device ecosystems will settle into place as the world moves on and the smartphone era is eclipsed by the next big thing. I only hope that we can learn from the process, and make the industry transitions easier, rather than harder, for this wave and the next, and the next.
President & CEO
Guest Post by Czech Developer Petr Nalevka
The European Commission substantially intervened in the operating system competition between Google and Apple to the detriment of Android. That is bad news for users, manufacturers, developers and for the freedom to conduct business as well.
Google was able to pull off a tour de force with Android. Even though unlike its competition, it completely opened its system, which benefited the whole market of mobile technology, it was able to maintain some control simultaneously. It allowed mobile phones manufacturers to implement their services as one package via all or nothing principle.
However, the manufacturers still had a choice between Android with Google services and pure open-source Android. But, primarily thanks to the high quality of Google services, in the vast majority of cases they implemented the first option. The users meanwhile were able to get rid of Google services very easily and use services of competitors instead.
This system provided Google with more control of Android user experience on one hand and on the other hand, gave it the option to elegantly monetize Android via its services. Thanks to this it was able to invest in Android, to innovate it and at the same time manufacturers and users did not have to pay for it. Simply a win-win.
The European Commission has punished Google similarly to Microsoft and its Internet Explorer in the past. But the similarity ends there. As opposed to the Explorer, Google’s services count among the top on the market. As a mobile developer, I see a tremendous difference in quality between the Play Store and alternative app stores. The vast majority of technical issues that we have to deal with on a daily basis come from a number of different faulty adjustments of Android by manufacturers.
The whole alleged violation of the law is tailor-made for Google. What is a regular market practice for others - provider of operating system choosing preinstalled services - is in case of Google an issue worth of 5 billion fine.
The reasoning? The European Commission distinguishes between vertically integrated manufacturers, such as Apple or Blackberry, and Google, which only licenses its system, and maintains that thanks to a different approach they are not a competition to each other. Pretty much anyone who engages with mobile technology in any way knows that iOS by Apple and Android by Google are the main and serious competitors on the mobile platform's market.
According to the Commission, another reason for the double standard is Google’s dominant position in the market of search engines. More strict rules apply to a dominant company, even though Google achieved this mainly through the quality of its services. This can be clearly illustrated on the market share of search engines on desktop devices. Even though Microsoft still dominates the desktop market with its Windows and preinstalled Bing, Bing’s market share on desktop searches is minimal.
In the upcoming months it will depend on Google, whether it will be able to meet the Commission’s conditions and at the same time to endanger the Android ecosystem as little as possible. We can only hope it will be able to achieve this without a major fragmentation of Android. However, Google will have to find a different (probably less efficient) model and the difference in efficiency will be paid by everyone, including manufacturers, developers and, of course, users.
The message the Commission sent to the market is clear. It is necessary to either completely open or completely closed operating systems, or the EU will put its foot down. So, at the expense of all, we are more likely to expect closed solutions in the future.