EU Policy

Dear Brussels: Sloppy Policy is Bad Policy. You Can Do Better.

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Once again I find myself siding with Big Tech, this time on Platform Regulation. I feel so dirty.

I’ve written before about policy makers and their growing obsession with reigning in the big tech companies. I understand where this impulse comes from. The tech sector is too important to ignore, but it is also too valuable to break. And so I find myself wading in on yet another aberration brought on by regulator’s zeal to wage war on the wicked, no matter who gets caught in the crossfire.

The challenge this time is how to ensure that online marketplaces (think “Amazon”) treat their business customers (think “the Acme Digital Apple Peeler”) fairly in rankings and such. The goal is a level playing field for all (nevermind how you go about measuring that). Seems reasonable enough.

I’ll start with a simple observation that seems strangely out of place, but is actually being debated at this point: operating systems are not market places. These are two different things. This seems obvious.

For some reason, someone is trying to scoop operating systems into a law designed for digital marketplaces. This leads to another point: sloppy regulation is bad regulation. The best laws are precise, targeted, and limited in their scope. Franken-law tends to spawn unwelcome and damaging second and third order effects. Too often it’s the little guys that suffer.

The digital economy is deeply enmeshed in almost everything we do. Developers and startups in particular are reliant on a vibrant internet ecosystem to collaborate, create, and launch new products. Measured regulation that gently steers things in the right direction is welcome, and in many areas probably overdue. Today’s debates on data protection versus data freedom are a great example of conversations that have been put off for too long.

The EU is coming to the end of a long conversation about the rules under which online platforms should operate. The goal was to prevent bias in the rankings and results, and to ensure transparency so that even-handedness could be confirmed. The targets were a handful of app stores, search engines, and online shopping malls that hold special status in this space - intermediaries that help organize commercial exchanges between their millions of participants.

Unfortunately, the scope of these rules has grown to encompass all platforms where buyers and sellers meet, both big and small, and regardless of whether the market power rests with the platform or the businesses that use them. We’ll ignore for the moment the burdens the law will place on small players, and how this will likely entrench the largest platforms to the detriment of startups and innovators.

What we’ll focus on is the creep in scope that now equates “operating systems” with “online shopping services”.

I understand that there are folks out there that feel their business prospects would improve if everyone else in the digital ecosystem gets labeled as an unfair obstruction. Lobbying, after all, is just another way of capturing marketshare. But using rules designed for one thing to regulate another thing inevitably leads to bizarre and damaging outcomes. Operating systems do not rank, or filter, or manage, commercial markets. App stores are the venue for that, and of course they’re in-scope for this law.

Operating systems and APIs are the technical interface that enables the app economy to thrive. For most developers, they are a critical layer supporting interoperability by divorcing the hardware from the code that developers produce. While ensuring fairness in the various app store markets is a reasonable goal that the stores themselves try hard to achieve, misapplying platform rules to operating systems risks damaging the open source movement and the democratization of the digital economy.

Here is my ask to regulators: don’t staple together mismatched markets and call them the same. They’re not, and you’re making a mess of things.

And to those pushing for the change in scope: if your complaints are legitimate, they’ll stand on their own. Don’t hide them inside something unrelated.

<climbs down off his soapbox>

And now I need to go wash my hands and get back to fighting for the little guys that are collateral damage in all of this.


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Bruce Gustafson
President & CEO

I miss Android already

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.

 

This piece has been published:
In Italy by Le Formiche: Perché sento già la mancanza di Android
In Spain by el Economista: Android, ya te echo de menos


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Bruce Gustafson
President & CEO

Developer's Perspective: Making Sense of the European Commission's Ruling

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.

 

OPINION: A bad Android decision would hurt developers

OPINION: A bad Android decision would hurt developers

Unlike the billionaires driving this case, independent developers and startups are not organized or equipped to effectively represent themselves before the European Commission, and so the Developers Alliance has taken up their cause. Google is a member of the Alliance, it’s true, as is Facebook, Intel, Ford and a pair of U.S.-based Internet service providers. But that short list discounts the much larger list of members from mid-size developers to startups. Vinje, on the other hand, does not — and should not — speak for the developer community on Android or anything else.

Say Goodbye to App Stores

Say Goodbye to App Stores

Two related items crossed my desktop today, either of which will seriously disrupt how developers use app stores to get their software to market. In the U.S., the Supreme Court agreed to weigh in on whether Apple can be sued by consumers for the markup it places on applications purchased through its​ App Store. Meanwhile, in the EU, Google is defending Android from charges that its licensing arrangements, which require device pre-loading of select Google apps, are anti-competitive. The overlap is that Google’s Android alternative is likely to mimic the closed ecosystem that has Apple under fire, and which might be open to class-action lawsuits from multiple directions.