Competition

Google’s I/O News: A Reminder Of How Apps Don’t Just Write Themselves

by Rob Pegoraro on May 17, 2013

SAN FRANCISCO–The second most-important company at Google’s I/O developer conference wasn’t there: Apple.

The competition between Android and iOS often gets played out as a battle between different phones and tablets, operating systems, and shipments and installations of each. But it’s also built on apps, and those programs don’t just write themselves.

The keynote that opened Google’s I/O developer conference here Wednesday shed some light on how that contest has been not as even as device sale and activation numbers might suggest.

Beyond a raft of announcements covering changes to Google’s search, social-media, music and mapping products–much of which involved a level of anticipating a user’s needs and concerns that not everybody may be ready to sign on to–it was remarkable to see how much time Google spent on patching some long-standing issues with the construction and marketing of Android apps.

For example, the company is shipping a new development toolkit to build phone and tablet apps, Android Studio, that streamlines writing for different screen sizes, resolutions and aspect ratios. That might not seem a big deal, but then look up how many coders hate the predominant development environment, Eclipse; Google based this new software on a competing option, Intellij, that’s drawn better reviews.

A similar overdue upgrade is coming to the Play Store: It will finally break out apps that have been optimized for Android tablets (my thought on hearing this was “they’re only fixing this now?”) and provide personalized recommendations.

On the developer side of the Play Store, a revised management interface will allow detailed tracking of revenue, country by country, as well as of which ads worked best to encourage users to download an app. It will also offer professional translation of apps into other languages and help developers conduct beta tests with selected groups of users with, presumably, a greater willingness to file bug reports if things go wrong.

And some new framework code, such as the gaming and location services Google announced and a Bluetooth wireless rewrite it did not highlight, ought to yield more reliable, less battery-intensive apps that are less likely to yield bug reports.

The unspoken context to all this was one thing that hasn’t changed even as Android devices now outnumber the iOS population: Developers make more money in iOS.

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Defamation, Autocomplete And Search Royalties: How Not To Govern the Internet

by Glenn Manishin on May 6, 2013

With the controversy surrounding the International Telecommunications Union (a UN treaty organization) just recently subsiding, it is time to take a look at Internet governance from a different perspective. We all know that laws and legal principles differ among countries. What many do not realize is that these laws — most completely non-tech oriented — are having a massive and negative impact on Internet innovation.

In America we proudly have the First Amendment, the fair use doctrine and the DMCA. The first limits the reach of liability for libel (defamation) at least to cases, for non-celebrities, where a publisher is at fault (i.e., negligent). Section 230 of the last allows ISPs, websites and Internet hosts a legal safe harbor from copyright and other legal offenses resulting from user-generated content or any other content that a customer, client or some third-party has published. These landmark legal regimes are hallowed in the U.S., for instance used to strike down overreaching Web censorship efforts by federal government. Fair use, in turn, permits non-commercial or transformative use of a portion of copyrighted content. Think Google image search thumbnails or blockquotes from a news source in someone’s blog or a movie clip in a televised review.

Things are very different elsewhere. Three cases in point.

  1. In Germany and perhaps soon other EU nations, search engines that display snippets of indexed Web pages in response to user queries are now by statute responsible for paying copyright royalties to the original publisher, regardless of whether the content owner charges for its stories with a paywall. 
  2. In France, Italy, Ireland,  Australia and now Japan, courts permit individuals to recover for libel based on autocomplete and search results that return incorrect or harmful personal information, but against the search provider, not the writer or content publisher.
  3. A Denmark court ruled deep linking illegal, as did Germany, leading some to believe that linking to a website other than the front page was illegal throughout Europe. While the German courts overturned that decision, it was Agence France Presse (AFP) which eventually sued Google News for brazenly daring to send search  traffic to the organization’s news articles.

These results are foreign, literally, to U.S. jurisprudence. But they also illustrate a vitally important point. Legal regimes that have nothing to do with the Web are being applied in ways which upset existing services users take for granted and that threaten to impede future innovation.  Linking is inherent in HTML and represents the essence of the Web. No one in America would argue seriously today that a hypertext URL link represents copyright violation. Search “autocomplete,” in turn, is not a creative activity, but a very useful technical advancement; it applies computer algorithms based on past searches to predict what the current user wants to see, speeding the retreival of information from the Web.

Permitting autocomplete defamation suits against Google or Bing because other Web users have searched for information that damages an individual’s reputation is alien to our American way of thinking. It’s censoring completely accurate factual information about stuff on the Web, although that stuff may itself be factually wrong.  The augmentation of liability is also just plain silly, because both autocomplete queries and search results themselves merely return an indexed link to something someone else has posted on the Web.

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SideCar Approaches A Regulatory On-Ramp

by Rob Pegoraro on May 6, 2013

Can SideCar get a lift from the District of Columbia, or is it only going to get taken for a ride?

The ride-sharing service, which matches passengers with drivers heading in about the same direction, launched in San Francisco last June and began limited operation in D.C. in late March.

The District of Columbia Taxicab Commission is not pleased by the development.

“The DC Taxicab Commission has determined that Sidecar offers a public vehicle for hire service and as a result their drivers must have licenses from the Commission and those drivers’ cars must have L tags,” wrote spokesman Neville Waters in an e-mail Wednesday.

DCTC has yet to take enforcement actions against SideCar. In New York, however, the Taxi & Limousine Commission had police briefly detain two drivers and impound one’s vehicle. In Philadelphia, the city fined three drivers and impounded their vehicles, then fined the company too.

Here’s how the app works: After you open an account in SideCar’s iOS or Android app, including storing a credit card for a “donation” covering each ride, you set pickup and destination addresses. The app suggests the right donation for that route, you confirm the ride, and a driver accepts and arrives. At your destination, you pay what you want, then you and the driver rate each other.

Or so I’m told: The service only runs on weekends for now in the District, and I’ve yet to have an opportunity to use it.

Co-founder and CEO Sunil Paul explained Thursday morning that the company provides a matching, not a dispatching service.

A driver need not accept a ride request, and a passenger can balk when a driver rolls up (Paul said he declined a ride when the car wasn’t the one pictured in the driver’s profile.) Drivers aren’t supposed to drive full-time or even go out of their way; a FAQ states “you share the rides you’re already taking.” And that voluntary payment can be zero.

(The suggested donations on a few sample itineraries are in the range of taxi fares–for instance, $11 to go from 15th and L Streets in downtown D.C. to the Rosslyn Metro stop in Arlington, less than three miles away.)

SideCar also aspires to be a friendlier ride than a taxi. “It’s social versus chauffeur,” Paul said. “Most people sit in the front.”

Passengers and drivers discussing SideCar on Quora have made the same point. As one driver wrote, “Money shouldn’t be your motivation, [….] meeting new people, discovering new places in the city & being a friend giving a ride to another friend should be.”

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Why Harvey Weinstein’s Latest Anti-Internet Outburst is Wrong.

by Matt Schruers on April 26, 2013

On most days, another anti-Internet outburst from Harvey Weinstein wouldn’t qualify as news, but it’s a slow Friday afternoon.

At a Washington event today, the Hollywood producer and Miramax co-founder reportedly complained about Google and YouTube, alleging that consumers can view full-length movies online for free, and demanding legislation to regulate online platforms.  Jason Horowitz, tweeting for the Washington Post, said:

This isn’t a surprise; it is par for the Weinstein course.  He previously received attention for his widely-reported but dubious prediction that the Obama Administration would flip-flop on the Stop Online Piracy Act (SOPA) in the post-election period.  Following that, Weinstein offered remarks similar to his outburst today in a wide-ranging interview, complaining that:

“the internet shortchanges writers, directors and producers in our industry. Their work–10 minute clips, 15 minute clips, whatever–gets shown all the time and they never get any money. The Director’s Guild doesn’t get any money, the Writer’s Guild. Journalists don’t benefit when their stories are taken, and given a link. It would be like me launching a newspaper–call it Link—where I can have the greatest journalists in the world working for me without paying them. It’s inconceivable….  If BMI and ASCAP can monitor the music business, we need a BMI and an ASCAP to monitor these businesses. This will be the one legislation for our industry that I’ll press. We need for writers, producers, studios, and journalists to be protected.”

Setting aside Weinstein’s peculiar hypothetical here, the fact that he lumps news into this narrative suggests that his problem is not copyright infringement at all — for which extensive and potent legal remedies exist.  The problem with news is that traditional media outlets are to some extent competing with individuals using blogs and Twitter, individuals who have decidedly different cost structures.   It’s competition, and there’s a lot of it.

How substantial is that competition?  YouTube generates hundreds of millions of dollars for the music industry alone; PSY’s popular “Gangnam Style” stood to yield $2 million in revenue as of last year.  Over 3000 partners use Content ID, including major broadcasters, studios and labels, who have claimed more than 200 million videos on the site.  (YouTube’s ContentID, it should be noted, is the industry gold standard for DMCA compliance.)   That is a significant amount of content, and revenue, and a non-trivial amount of that revenue is going to creators who are not Hollywood insiders.

This raises another subtext to this morning’s outburst: services like YouTube and Blogger provide tools to people who are upsetting the established content business model.  These platforms enable creative individuals whose motives are not pecuniary.  That is, a substantial number of Internet users write, blog, perform, and create video because they desire attention, reputation, an audience to influence.  The long tail has a soapbox.  It doesn’t just receive; it transmits, and that makes it competition, some of which isn’t necessarily looking for monetary compensation.

And because “the long tail” has a different cost structure, existing content producers are hard pressed to compete.  Competition is tough.  Getting Washington to regulate is easier.

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Resolved: Competing Over Pocket-Sized Screen Resolution Has Gotten Out Of Hand

by Rob Pegoraro on April 26, 2013

By a year or so ago, the leading smartphone vendors could have jointly hoisted a “Mission Accomplished” banner–by then, they’d all succeeded in shipping displays with as much resolution as humans could hope to discern.

Instead, many of them have since escalated this competition by shipping phones with even-denser displays that may now require upgrades to our own retinas to appreciate their awesomeness.

In the process, these companies risk replaying one of the older stories in competition: incumbent vendor overshoots while trying to satisfy one perceived customer demand, then astute upstarts notice how it’s neglected other needs and proceed to eat its lunch.

That’s not what I expected in 2010 when Apple introduced the idea of the “Retina Display” on the iPhone 4′s 960-by-640 pixel screen. Quadrupling the pixel count from the iPhone 3GS’s 480 by 320 screen–and going from 163 pixels per inch to 326–made the usual bitmapped edges on text and graphics vanish.

(Fun fact: According to the display calculator at Is this retina?, my old Treo 650′s 2.7-in., 320 by 320 screen had the first three iPhones beat in terms of pixel density, at 167 ppi.)

It seemed inevitable that other manufacturers would match this new standard. But many have since been vying to demonstrate their superiority by going past it.

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Fair Is Fair In Search

by Glenn Manishin on April 16, 2013

Just a couple of weeks ago I put together a brief synopsis of the now-closed Federal Trade Commission (FTC) investigation of Google, Inc. for alleged monopolization, titled Deconstructing the FTC’s Google Investigation. To make the article fit within the space constraints of the American Bar Association’s Monopoly Matters newsletter, though, a few thoughts had to be edited out. One that is particularly appropriate now is the cogent observation by former FTC Chairman Jon Leibowitz that rivals frequently operate under the “mistaken belief” that criticizing the agency “will influence the outcome in other jurisdictions.”

Last Wednesday’s PR event by the FairSearch.org coalition made that evident in spades. We’ve discussed before that use of competition law to handicap other firms, rather than removing barriers to market competition, is unabashed protectionism, which can (perhaps should) backfire. The FairSearch companies continue to insist, as the coalition’s U.S. lawyer summarized, that the FTC “did not take on the issue of search bias.” That’s hogwash. The Commission found no evidence of harm to competition and, more importantly, rejected the FairSearch call for “regulating the intricacies of Google’s search engine algorithm.” And yet like Chicken Little, these companies continue to claim the sky is falling.

Leave aside for a moment that the FairSearch media event featured four legal presenters, all of whom are supporters of its lobbying positions, instead of a “fair and balanced” debate. And forget for a moment that the European Union’s parallel investigation (wrapped in much of the secrecy typical of an EU approach to competition regulation) is some 42 months old, with a possible end just recently within sight. What is most remarkable about the denial exhibited at the FairSearch media event is its blatant internal inconsistency. Three examples of the group’s positions make this abundantly clear.

  1. “Deception” Warrants a Disclosure Remedy.  Former Assistant Attorney General Tom Barnett testified in 2011, for a founding FairSearch member, that Google acted anticompetitively because its “display of search results is deceptive to users.” FairSearch’s European counsel said the same thing recently, namely that Google “uses deceptive conduct to lockout competition in mobile.” But as I’ve noted previously, deception of this sort raises consumer protection issues, not legitimate antitrust concerns. Remarkably, Gary Reback scoffed at the reported suggestion by the EU’s Joaquin Almunia that a labeling remedy for Google’s revamped universal search results is appropriate, saying it’s “like telling McDonald’s customers they should eat healthy…it will not make a difference.” To the contrary, if deception is the problem then full disclosure has always been the answer. Where consumers are free to choose other search engines, and are told explicitly that some search results point to Google’s own “vertical” sites, whether they opt not to act is something about which competition authorities should be indifferent. Antitrust, at least in the United States, is not a Mayor Bloomberg-type vehicle for social engineering. MORE »

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CCIA Files Comments to US Antitrust Regulators on Patent Troll Activity

by Daniel O'Connor on April 8, 2013

(Cross-posted on Patent Progress)

Last Friday, CCIA filed its comments to the FTC/DOJ’s Public Workshop on Patent Assertion Entities (PAEs) (aka patent trolls).  Although antitrust authorities cannot fix all of the foundational problems in the patent system — such as the patent quality problem — they can certainly use their competition expertise and authority to help rein in some of the most egregious attempts to game the system to the detriment of both consumers and innovation.  Furthermore, the FTC and DOJ should continue their long tradition of excellent marketplace research that can be used as raw material to update competition law, as the patent system does not function in the stylized way that much of our patent law and antitrust jurisprudence contemplate.

Specifically, we stressed three particular areas that the FTC and DOJ should focus on in the short run.

  • FTC 6(b) Study – Much of patent troll activity occurs in the shadows, and it is often covered up by a maze of shell companies and non-disclosure agreements.  In order for antitrust regulators to figure out which business arrangements and relationships violate antitrust law, they need to have a more comprehensive picture of PAE relationships and practices.  Luckily, the FTC is armed with just the tool for this — a 6(b) study.  This allows the agencies to send out subpoena-like questionnaires to PAEs and their associates that they are compelled to respond to.

  • Ensure Commitments Travel With Patents – In order to provide marketplace certainty, technology companies make frequent commitments as to how they will or will not enforce their patents.  These commitments include the now infamous FRAND commitments, pledges not to “stack royalties,” pledges not to assert against open-source software, pledges to only use defensively, etc.  Companies make these pledges to induce the marketplace to adopt their technology.  If trolls acquire patents with previous commitments, and then revoke them, it amounts to an unfair method of competition (and antitrust violation if the market is “locked-in” to the technology in question).

  • Closely Monitor Patent Privateering – The relatively new phenomenon of patent privateering, where operating companies enlist trolls to attack their rivals for them, raises some potential antitrust questions.  The problems become even more acute when multiple competitors collaborate through a troll to bring lawsuits against mutual competitors.  The FTC and DOJ should closely monitor this activity and update their guidance — including the 1995 IP Licensing guidelines — with this behavior in mind.

For CCIA’s full comments click here and for a look at the entire FTC/DOJ public comments docket click here.

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Stick A Fork In That Browser-Breakup Story, It’s Done

by Rob Pegoraro on April 5, 2013

On Wednesday, Google announced it would change a part of its Chrome browser that users never touch directly, with differences that might take months or years to surface. The result was predictable: stories about Google’s “divorce” from Apple, underscored in some quarters with the claim that this is really Google sticking a shiv into Apple’s back.

Using the breakup metaphor to describe Google taking the Apple-led open-source WebKit code and using it to write its own Blink browser engine (also open-source) is tempting. But leaning too hard on it, or outright reading this switch as one company trying to sandbag another, may only show our continued fondness for soap-operatic analysis of the tech industry.

First, “forking”: It’s a normal, no-permission-required part of open-source development. Forking well-running code isn’t always advisable but sometimes is unavoidable: When developers of the OpenOffice.org productivity suite got fed up with Oracle’s stewardship of the project, they split the code into LibreOffice, and that effort has now taken a clear lead.

WebKit itself started life as a private fork of an older engine called KHTML (Apple contributed back its improvements after announcing the release of Safari in 2003). Google says it’s branching Blink off of WebKit to give itself room to write faster, cleaner, and more secure code; these improvements may be especially noticeable in mobile, and in the bargain Chrome’s development cycle should accelerate.

Google says Chrome’s openness won’t change. You may not feel inclined to trust it–why would you, when it’s only been weeks since the surprising, dismaying news of Google Reader’s impending demise?

But Google isn’t a monolithic entity, and the history of Chrome offshoots deserves consideration on its own. And with Blink using the same open-source licenses of WebKit, there should be no barrier to somebody else forking this code too.

The Blink fork matters more for how it should push back the threat of a Web monoculture–something I wrung my hands over two months ago here. A diversity of Web rendering engines (that is, the internal parts of a browser that draw pages on your screen) reduces the incentive of Web authors to support the majority platform and ignore others. For instance, Time’s Harry McCracken noted an intriguing possibility: Google’s move might make it easier for Firefox, which announced a new rendering-engine project with Samsung, to claw back some of Chrome’s smartphone market share.

And it can strengthen the Web’s collective security–see a 2010 Opera blog post pleading for Google to fork WebKit.

This change may inflict some extra work for Web authors, but there are already enough differences in WebKit implementations to require checking sites for compatibility in different browsers. As one Chrome developer opined: “If you test in Chrome but not Safari, you’re doing it wrong.”

Even if you suspect Google’s underlying goal is to subvert Web interoperability to hinder Apple’s products, an open-source project–in which the underlying code is open to everybody’s scrutiny and, if desired, forking–is one of the clumsier ways to go about that. Instead, make sure that Google’s own sites don’t lock out competing browsers. Watch out for changes to how third-party apps can connect to Google’s services–for instance, its puzzling switcheroo, since walked back a bit, about calendar-sync support.

And please remember to hold Apple, Microsoft and other major Web players to those standards too. It takes more than one company to play this game.

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Facebook Phone Essential to Its Long-term Mobile Strategy

by Ali Sternburg on April 4, 2013

As you likely already know, Facebook (NASDAQ: FB) unveiled its new mobile phone strategy today at 1pm EST.  The Verge had an excellent post previewing the launch and describing the landscape.

Facebook’s new offering is called ‘Facebook Home,’ and will be a new interface available on the Android platform, that will heavily integrate Facebook’s messaging (on the phone, it’s called ‘Chat Heads’…), social feed, and photo features.  ‘HTC First’ phones with Facebook Home will be available April 12.

Even if this initial ‘Facebook phone’ is not a hit — and many are skeptical of demand for this product — this is an important step for Facebook’s evolving mobile strategy, which is necessary for Facebook to remain a competitive player.  Regardless of the outcome of this release, the company will learn valuable lessons that make the long-term success of Facebook on the mobile platform more likely.  The rapid growth of the “mobile Internet” (smartphones and tablets), makes a company’s mobile strategy increasingly essential to its long-term prospects — and mobile presents a lot of different challenges for traditional Internet companies.

Remember Google’s first mobile offering, the Google Nexus One phone?  While that phone may have been perceived as a flop mostly due to the atypical mostly-online only sales strategy, it was also seen as a ‘successful flop’ that let Google test the Android platform, paving the way for successes with later Android phones from providers like Samsung, HTC, and Motorola.

A few months ago I wrote about Facebook’s new Graph Search offering and the landscape, where I cited an excellent Economist article on how technology companies are competing in different markets, not content with the area they currently dominate, and the piece remains ever-relevant.  Companies always face the potential of being disrupted, whether by startups or by new offerings from existing competitors, and so they have to continue to innovate in order to remain competitive in these dynamic markets.  Mobile competition may be uncharted territory in a lot of ways, but it is reminiscent of past technological ‘paradigm shifts’ that challenged incumbents, and it seems that many of today’s thriving companies have learned lessons from history, by continuing to enter new markets and offer new products — like this new release from Facebook.

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When Antitrust is Anticompetitive: TripAdvisor Seeks EU Competition Case Against Google to Protect Its Profit Margins

by Daniel O'Connor on April 3, 2013

Executives and shareholders don’t like competition.  For good reason.  It squeezes their margins, by making them compete more aggressively on price and innovation.  (Warren Buffett refers to the phenomenon of companies being shielded from competition as a “moat”, and it is one of the key criteria he looks for in his investments.)

However, for obvious reasons, society encourages competition.  Economic growth and innovation from the Roman empire through the Renaissance was impeded by rulers handing out monopolies like candy (and then taking a share of the excess profits, as selling favors was more palatable than trying to collect taxes), thus preventing competition and innovative new methods of providing the same service.

In fact, that very notion of entrenched, powerful interests harming competition, consumers and society was what motivated the United States (and then subsequent jurisdictions) to pass the first strands of modern antitrust law.  (To be fair to our northern neighbors, Canada passed its law in 1889, one year before the U.S. enacted the now famous Sherman Act.)

However, antitrust law can be subverted to prevent legitimate competition.  In that way, if used imprudently, antitrust can inflict the same harm that it was created to solve.

In discussing private antitrust lawsuits (the same is true of firms that use their legal and political resources to encourage governments to bring antitrust suits on their behalf), three notable economists pointed out:

Private firms will generally pursue antitrust actions when it is in the private firm’s interest, an interest that could easily diverge from the social interest. Firms may have incentive to use the antitrust laws strategically, which may hinder rather than promote competition.

Therefore, the job of an antitrust regulator is to sort out which antitrust complaints are legitimate (companies are victims of another’s abuse of market power to impede competition or innovation) versus illegitimate (companies are trying to get the government to slow down an aggressive competitor).

A recent series of Financial Times articles illustrates the latter case.  The first article [paywall] discusses TripAdvisor’s involvement in the campaign to get the European Union to bring a competition case against Google.  It also features the founder and CEO of TripAdvisor, Steve Kaufer, complaining about Google using its size and resources to compete with his company.  (He also curiously complains about Google “scraping” TripAdvisor’s content, which not only is perfectly legal if only snippets are displayed — in fact, this is practice makes the entire search industry possible — but also is a practice that Google has ceased for its review sites, and pledged not to do going forward in its settlement with the FTC.  This is doubly ironic seeing as TripAdvisor makes its money from aggregating and organizing other people’s content — reviews, booking info, pricing, etc. — which is the very same thing Google does, just on a smaller scale.)

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