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Europe’s Android Competition Case Could Harm Future Open Source Projects

· April 13, 2017

Readers of this blog know that we disagree with the European Commission’s Statement of Objections in its Android competition proceeding. One particular area of concern is the Commission’s framing of the Android’s anti-fragmentation agreement (AFA) as anticompetitive. In particular, the Commission contends that the AFA is anticompetitive because it disincentivizes smartphone manufacturers from selling forked (i.e. non-compatible) versions of Android’s operating system. Unfortunately, this reasoning misses the forest for the trees. Yes, Google discourages partners from forking Android, but this is procompetitive rather than anticompetitive. Android fragmentation is a serious problem that, if left unchecked, could lead to the competitive demise of Android, leaving consumers with less choice. Platform-destroying fragmentation is not without precedent. Fragmentation has led to the competitive demise of prior collaborative software projects, such as UNIX and Symbian.

Open Source Software (OSS) is particularly vulnerable to fragmentation because, unlike proprietary software like Apple’s iOS, anyone is free to use and modify the source code without permission (provided they abide by the terms of the OSS license). Without strong centralized governance mechanisms, different implementers can take the code in many different directions to the point where different versions of the software are no longer compatible. If governance mechanisms do not provide incentives for OSS collaborators to maintain compatibility (i.e. stick to standard interface specifications), then software written to run on top of an open source operating system will not work across different versions of the operating system. If Android, like Symbian or UNIX before it, splits into many different non-compatible versions, app developers will be disincentivized from writing Android applications because the time and expense of maintaining multiple different versions of the same app will become cost prohibitive. Remaining developers, facing a fragmented Android platform, may avoid incorporating new Android features present on only a fraction of Android devices. This risk will be magnified if developers start to see the underlying platform as unpredictable going forward and could lead to death spiral, where the platform becomes less useful over time, and begins to shed users, which further disincentives app developers from developing applications for the platform. Given that an operating system without software is relatively useless, a world where many different versions of non-compatible Android is available is not better for competition or consumers.

Recent developments in the marketplace have reinforced this concern. First, it was recently reported that Android fragmentation was the reason that Cisco cancelled its planned collaboration with Android. Per PC World:

Cisco Systems tried to give Android devices the same kinds of integration it later provided for iPhones and iPads but gave up because the Android ecosystem was too fragmented.

Not surprisingly, the dynamic I described above is exactly what drove Cisco to Apple. Even with the AFA in place, Google still has its hands full maintaining a stable, compatible Android ecosystem. Cisco was trying to build a wireless networking ecosystem that more seamlessly integrated with various mobile operating systems. Cisco was able to do so with Apple, which tightly controls iOS’s proprietary interfaces, but became too frustrated trying to integrate with Android — and all its different versions — and gave up. If the European Commission continues with its line of attack, and successfully challenges the AFA, Android’s fragmentation may only get worse, forcing other third-party developers to stop developing products and software that works with Android phones. And, as the Cisco case illustrates, it will make Android less competitive vis-a-vis Apple. This is not a good result for consumers nor other businesses in the mobile communications arena.

With that in mind, it is not surprising that recent news reports indicated British Telecom, a company that has sparred with Google in the past, supported Google’s position in the Android competition case. Mobile network operators benefit from device competition because it drives demand for their mobile networks by giving consumers more, and less expensive, device options. As BT noted, “we value the ongoing stability and compatibility of operating systems.”

Although the short-term ramifications of the EU’s Android proceeding could be disastrous for the Android ecosystem, the broader long-term effects can be even more profound. Because Google can’t directly control what Android implementers do with the source code, it can only offer incentives for Android implementers to follow the rules to ensure that different versions of Android are compatible. In Google’s case, it offers manufacturers that agree to the AFA certain benefits, such as advance releases of source code updates and the ability to install Google’s suite of mobile applications. If such incentives are deemed illegal, then it removes an important set of tools from the toolkit of commercial OSS implementations in the future. As Professor Christopher Yoo astutely notes:

If antitrust scrutiny restricts providers of open platforms from using less restrictive governance mechanisms to protect against fragmentation and noninteroperability, those providers may well be left to no choice but to adopt more restrictive alternatives. Specifically, adopting too restrictive a stance on the use of agreements like the AFA to limit fragmentation may force mobile operating systems seeking to avoid fragmentation either to adopt Apple style vertical integration or to require that all device manufacturers submit their phones for testing…. [which] would reduce the diversity and competitiveness of mobile operating systems and would substantially increase the barriers to entry for OEMs, developers, and other platform participants.

If competition authorities want to preserve the ability for open source software to compete with proprietary software, they should think long and hard before harming a company’s ability to discourage fragmentation of an open source project. Having a market with open source and proprietary software competing with one another is better for consumers, especially since open source software is free and drastically lowers the costs of hardware for consumers.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.