Sunday, September 16, 2012

If Google can cancel Acer's license, why should Apple have to grant one to Google?

After a post in which I explained that "if Apple patented rounded corners, Google patented linked documents", I'd now like to comment on the IP licensing and competition issues relating to Google's pressure on Acer that resulted in the cancelation of a Chinese product launch. Acer is a member of the Google-dominated "Open Handset Alliance" and was about to release a smartphone running an Android fork named Aliyun, which was created by Alibaba, a Chinese Google competitor, but Google essentially says: "you're with us or you're against us". You can be a member of the OHA and an official licensee of Android, or you want to distribute forks (derivative programs), in which case we'll throw you out of the OHA and cancel your official Android license. Google got its way.

Alibaba's key allegation, which news agencies reported and Google never denied, is that "Google, owner of the Android OS, threatened to cancel Acer's license to use Android for its other phones if the launch [of the Aliyun-based phone] went ahead".

Android's non-openness is old news, and nothing I could say would counterbalance the deafening silence and open double standards of various "free software" and "open source" luminaries and entities. The Skyhook litigation and the Korean antitrust investigation, as well as some of the material presented at the recent Oracle v. Google trial, have brought to light some of Google's bullying tactics. And I previously reported on Google's representation to a court that the Galaxy Nexus source code is closed and proprietary as well as on HTC's representation to the ITC that it doesn't have the source code Google's closed-source apps.

What I want to focus on here is what Google's behavior and its attempts to justify it reveal about Google's attitude toward its own intellectual property, and what this means in turn for Apple, which is developing all over the world an astounding record of court decisions proving theft of its intellectual property by Google and its partners. Looking at what both companies are doing, Apple's enforcement of intellectual property rights against Android is far more legitimate than Google's exclusionary strategy, as I'll explain.

So let's look at what Google is doing, then recapture what Apple is doing, and then compare the two patterns of behavior.

Whatever Alibaba's Aliyun does, there is no indidication of Android trademark infringement

Many of the people who have commented on this conflate the issues. There are different reasons for which Google doesn't like Aliyun, and for each one of them there's a different answer as to what the legitimate response (including pre-emptive measures) would be.

The very latest and most serious allegation is "piracy" of closed-source Google apps as well as third-party apps from developers who purportedly never consented to the distribution of their apps on the Aliyun app store. I can't verify this and Alibaba is innocent until proven guilty, but let's assume here, for the sake of the argument, that it is true and that Google had hard evidence in its hands. In that case, Google would have been in its right to take the appropriate measures under civil or even criminal law against Aliyun for the hypothetical infringement and against Acer to prevent its impending infringement through distribution of unlawfully-acquired software, and third-party app developers would owe it a big "thank you" for also defending their rights. I would furthermore agree that a company (in this case, Acer) may lose its license to some software (in this case, Google's proprietary apps) if it infringes it through the sale of unlicensed products, just like a shop may refuse to do business with a customer who pays for some goods but steals others. But the problem is that Google went beyond the appropriate measures to stop or prevent infringement.

It's clear from Google's (and Alibaba's) statements that Google did not merely demand the removal of copyright-infringing material. If Google's had only given a takedown notice, the launch of that Aliyun-based smartphone would have been delayed, but not canceled altogether.

Another act of piracy would have been any unlicensed use of the Android trademark. But by merely saying that it wants Aliyun to become "the Android of China", Alibaba did not infringe the Android trademark. It's a legitimate reference by one competitor to another. There isn't even a scintilla of doubt: Acer and Alibaba were not going to name their product "Android". It has a distinctive name: "Aliyun".

Now we've addressed the entirety of the intellectual property rights (copyright license to closed-source Google apps and trademark license to Android) that Google threatened to stop licensing to Acer if it had gone ahead with the launch of its Aliyun-based product. Everything else that Google licenses to Acer is formally available under open source licenses. It's the closed-source software and the trademark that you don't get if you download "stock Android" from the Internet. And we've now seen that one category of rights -- trademarks -- wasn't going to be infringed, and if there had really been a threat of an infringement of copyrights, it could have been addressed very effectively without killing the entire product, just like Google doesn't have to take down all of YouTube just because of the illegal content that gets uploaded and accessed there literally every second.

That leaves only one kind of argument, and it's the one that Google's Andy Rubin has primarily stressed in his reactions on Google+: compatibility (or, conversely, fragmentation).

Google's promotion of compatibility and its fight against fragmentation obviously don't apply to Oracle's Java. It will be up to the United States Court of Appeals for the Federal Circuit to review the finding of non-copyrightability of Oracle's Java APIs and other aspects of that case. But even if Google uses double standards in the fragmentation context, fighting fragmentation is, per se, a laudable goal. As an Android user, I consider it an important issue, but only within reason. For example, I have some special Samsung apps that wouldn't run on an HTC or Motorola phone, and I still think it's good that they are available.

The worst form of fragmentation is not at issue here. Customers were not going to be sold incompatible devices that would have been labeled as Android devices. All that would have happened is that those Acer customers who buy an Android device get apps that don't run on the devices of other Acer customers who buy an Aliyun device, and vice versa, while some apps would have run on either kind of device.

Let's face it: this is the most permissible kind of fragmentation. Nobody forced Google to release large parts of Android under an open source license. But forks are part of the open source way of life. If Google had taken Oracle's Java material that is available under the GPL (a viral, or "copyleft", license) and then released it under that license, it could also have chosen to be incompatible. It could not have used the Java trademark, but it would simply have chosen one of the two options Oracle (as Sun previously did) offers everyone: be compatible and take a commercial license, or be open source and comply with the GPL. In Android's case, the GPL may very well apply to more parts than Google admits, but Google's own code is largely available on a non-copyleft basis, allowing companies like Alibaba to take it and build their own derivative versions without having to share their code.

Applying the logic I described above, a perfectly legitimate way of preventing Alibaba's kind of fragmentation would have been for Google to develop Android as a closed-source operating system. But it can't have its cake and eat it. Alibaba does what open source rules, which neither Alibaba nor any third party imposed on Google, allow.

That's why Google does not have any leverage against Alibaba itself (apart from the alleged piracy issue I addressed further above). It also can't prevent Amazon from using Android's open source code in the Kindle Fire, in the form of a fork. If Google could, it would already have sued.

Lacking legal leverage against Alibaba, Google chose to exert pressure on Acer. The only objective difference between Amazon and Acer is that Amazon doesn't make any officially-licensed Android devices -- those with the little green robot logo. It only makes a product line running on a fork. Acer, however, is a member of the "Open" Handset Alliance and does devices with the little green robot logo. Google, however, gave it Hobson's Choice: my way or the highway. And that is not legitimate. It raises serious antitrust issues, also in light of Google's promise to the antitrust division of China's Ministry of Commerce (MOFCOM), as a precondition for clearance of its acquisition of Motorola Mobility, to keep Android an open source platform (see the first of the three remedies listed toward the end of this article on the website of a major international law firm).

Acer also builds Windows products. Google cannot claim (and fortunately doesn't claim at this stage) that customers who buy an Acer Windows device may get confused about whether they bought Android, given that the same hardware manufacturer sells devices of either kind.

Google's behavior is exclusionary and grossly anticompetitive. It's a typical case of tying (that's the antitrust term) an unreasonable condition to the availability of a license that Acer needs for commercial reasons. While Acer accepted the OHA's terms on a formally voluntary basis, it didn't have the chance at the time to negotiate a better deal. The terms, however, are designed to protect Google's strategic interests (by the way, here's a Marketing Land article on Google's self-interest in this context).

Google knows that a company like Acer can't risk losing its Android license because of the material adverse effect on its marketing efforts. It's hard enough for anyone in the Android ecosystem to compete with Samsung (which is simply a great company and also the most flexible one of all large device makers). Acer is no Samsung. If Samsung decided to sell Android forks, I'm not sure Google would even dare to threaten with canceling a license. Acer is not even an Amazon that has the power to sell Android devices without Google's closed-source apps, most notably the Google Play app store. For Acer, the only short-term opportunity to have a viable Android business is to do Google's bidding.

Alibaba has a couple of little-known hardware partners, but the clout of those partners limits its market potential. The deal with Acer would have been its potential breakthrough, just like deals with Motorola and Samsung (which did not have the Android-related market share at the time that it has today) would have been the breakthrough for Skyhook.

It all comes down to this: Google doesn't want to compete with someone like Alibaba (or Skyhook) on the merits. That's what this is all about. Piracy of copyrighted software is a matter of a takedown notice, trademark violations weren't even going to occur here, and forks are an essential element of open source software development, so you have to live with fragmentation resulting from forks if you publish your stuff on open source terms.

Andy Rubin says that "if you don't want to be compatible, then don't expect help from OHA members that are all working to support and build a unified Android ecosystem". Alibaba didn't expect any help from OHA. It merely wanted to exercise its rights under the open source licenses under which Google elected to publish Android, and its right to compete. Nor did Acer expect any help from OHA as far as its Aliyun-based device is concerned. It just wanted to hedge its bets and meet the needs of as many consumers as possible.

In its tireless efforts to avoid competition on the merits, Google leverages both its intellectual property rights and the related market power. What it does here against Acer and Alibaba is no more legitimate than if it forced Acer to quit selling Windows devices.

If Google can cancel a license, Apple can withhold one

Google and some of its partners claim that Apple doesn't want to compete on the merits and leverages its patents and other intellectual property rights to limit consumer choice. Let's look at that allegation against the background of Google's own conduct.

Just like Google doesn't want Acer to sell devices running platforms that compete with Android (within their rights under open source rules), Apple doesn't want to compete with Android-based devices that make use of some of its ideas. But at least so far, Apple's IP enforcement doesn't raise any antitrust issues. They don't sue over standard-essential patents, for example. All of the Apple patents that have been enforced so far can be worked around.

There are people who criticize Apple for enforcing patents on "little things", as Apple co-founder Steve Wozniak ("Woz") just said. One way to look at it is that if those are just little things, then Samsung and others can and will work around them anyway. And the multitouch-related inventions Apple came up with are, even if viewed in the light most unfavorable to Apple, yet more innovative than the small (but relevant) pieces of proprietary software that Google threatened to withhold from Acer: the Google Mail, Talk and Maps clients, and especially the Google Play app store client, which is technologically so trivial that Acer could get the same thing reprogrammed by someone else within a couple of weeks, but which gives Google a lot of market power since customers want apps and Acer, unlike Amazon, cannot offer a critical mass of apps if it doesn't get a license from Google.

In other words, Google uses its intellectual property in technologically very unimpressive little apps in order to prevent others from competing legitimately with Android. None of the Apple patents I saw is a patent that I would have granted personally (since I'm a critic of software patents), but none of them is even nearly as trivial as little smartphone apps are.

Acer wasn't going to defect from the OHA, but it wanted to further hedge its bets. Google, too, could have chosen to continue its partnership with Apple instead of becoming a patent-infringing competitor. Eric Schmidt was on Apple's board. Various of Google's online services had privileged positions on Apple's platform. If Google had never done Android, it's possible that Google+ would now be the primary social network on iPhones and iPads.

Google just wasn't comfortable with a world in which it thought that Apple and Microsoft would sort of own the mobile platforms market. Google's fear of Microsoft is well-documented in some of the Google-internal and Google-to-Sun communications that were shown at the Oracle v. Google trial. Microsoft has Bing. Google was afraid that at some point Apple was going to be the only platform maker without a search engine of its own, and Google didn't want to depend on Apple as a kind of gatekeeper. After all, it couldn't know whether Apple would at some point have decided to acquire some search technology and build its own engine. Also, Google is not just about search but also about mail, and Apple had MobileMe then and has the iCloud now. So Google implemented Apple's ideas in its own platform (which would otherwise have been more BlackBerry-like) and decided to compete. In 2010, Apple decided that its competition must steer clear of infringement, and sued HTC.

Apple never promised to license its platform, or any of its patented elements, to third parties. Nor did it ever suggest that it would share its development with the world on open-source terms. Apple is what it is, but it's not hypocritical.

Google doesn't want to compete with Aliyun even if it's 100% infringement-free. Why should Apple have to compete with an Android that infringes on numerous of its patents? There's no reason why Apple shouldn't continue to defend its rights, or why it would have to grant a license to Google or its partners unless it really believes that a deal makes sense to do.

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