Thursday, February 13, 2014

Google's once-secret, restrictive Android license agreements with Samsung and HTC published

Late on Wednesday, the Wall Street Journal's Rolfe Winkler reported on the publication of "[p]reviously undisclosed documents [that] show how Google has put limits on what it calls the 'open' Android ecosystem". The WSJ story contains some documents and, for further information and material, links to a blog post by Harvard (associate) professor Benjamin Edelman. Professor Edelman published Google's Mobile Application Distribution Agreement (MADA) in the versions it was signed by Samsung in 2011 and by HTC in 2010. The PDFs I just linked to even bear the signatures of Andy Rubin, on Google's behalf, and senior executives of those OEMs.

It's an interesting story all by itself how these -- normally highly confidential -- documents entered the public domain. There was no foul play involved. Both were admitted for use in open court during the first Oracle v. Google Android-Java trial in 2012 (I said "first" because there can be no reasonable doubt that, absent a settlement, there will be a second jury trial in that case, at the very least to determine damages, possibly also for "fair use"). According to Professor Edelman, "court staff confirm that both documents are available in the case records in the court clerk's office", though not available for direct download.

Antitrust authorities have presumably seen these, and similar, contracts before. Last June it became known that the European Commission is (on a preliminary basis) looking into a complaint over Google's Android business model. That complaint is apparently about the fact that Android's dominance reinforces the dominance of Google's search-centric, online advertising-based core business.

In March 2011, Bill Gurley, a partner at Benchmark Capital, one of Silicon Valley's best venture funds (I was fortunate to be a small fellow shareholder of theirs in MySQL AB), wrote a blog post entitled "The Freight Train That Is Android", describing Android as a moat around the Google castle: an additional protective element. Obviously, no competitor likes to be run over by a freight train, and while investors naturally like moats around castles, antitrust law is meant and designed to ensure that there is a healthy degree of competition in a given market. Mutually-reinforcing dominant market positions are a shareholder's dream, but a nightmare for a wide range of other stakeholders and, particularly, the concept of choice.

Google's basic approach to controlling Android was previously known (see, for example, these articles published by ArsTechnica and The Guardian), but the latest revelations provide more detail than before and confirm what a lot of people thought.

It's key to distinguish between those Android components that are available on free and open source software (FOSS) licensing terms -- such as Linux, the operating system of which Android represents a fork (derivative product) -- and those that are closed-source, commercial software: various key Android apps that users in pretty much all countries but China would typically find pre-installed on their devices. The Google Play store client app, the Google Maps/Google Navigation client, Google Mail, etc. -- even on-screen keyboards according to the ArsTechnica article I linked to in the previous paragraph.

Technically you can take the free and open parts of Android (in terms of the amount of code, that's probably the vast majority, though the share of closed, tightly-controlled components appears to be on the rise) and build a device without signing any individual license agreement with Google, and some have indeed done so. If that is so, why did Samsung and HTC sign those agreements that have now come to light? For commercial reasons.

If you want your Android device to sell, you normally want to be able to call it an Android device. To do that, you need a trademark license from Google. Open source licenses cover software copyright, they may come with patent provisions, but licenses like the GPL or ASL (Apache) don't involve trademarks.

The trademark -- the little green robot, for example -- is commercially key. In order to get it, you must meet the compatibility criteria Google defines and enforces, which are mostly about protecting Google's business interests: the apps linked to its services must be included. And those apps are subject to closed-source, commercial licensing terms. That's what the MADA, the document Samsung and HTC and many others signed, is about.

Even if you decided that the trademark isn't important to you, you would want at least some of the apps subject to the MADA. What's a mobile operating system nowadays without an app store? Or without a maps/navigation component? Google gives OEMs an all-or-nothing choice: you accept their terms all the way, or you don't get any of those commercially important components. And if you take them, then you must ensure that the users of your devices will find Google services as default choices for everything: search, mail, maps/navigation, etc.

I'm not going to discuss this in detail on this occasion, but Google+ (a service I use a lot) also plays a key role. Google is using Android and some of its online services in various ways to strengthen the Google+ social network.

In his blog post, Professor Edelman explains that people basically overrated the breadth of Google chairman Eric Schmidt's testimony in Congress that "Google does not demand that smartphone manufacturers make Google the default search engine as a condition of using the Android operating system". This referred only to the "operating system", not the trademark or the apps subject to the MADA.

There are examples of devices running Android without any of those closed-source Google components. In China, that's normal, and even there, competition enforcers are concerned. But outside of China, the only commercially successful Android fork was created by Amazon. Amazon has its own app store, and it has the power to make something like this fly. Others are not able to do that.

This month there may very well be a second major example in the Western hemisphere: Nokia is reportedly going to launch an Android phone that does not run any of Google's closed-source apps. Nokia has its Here mapping service and other technologies that enable it to do so -- even more so after being acquired by Microsoft (the deal has not yet closed formally, but it has been cleared by U.S. and EU authorities). Nokia is a special case, again.

There are also some cases in which other handset makers had a different search engine installed on certain carrier-specific versions of devices. In those cases, there were apparently some deals in place between Google competitors and carriers, and Google allowed some exceptions from its general rule at a time when it just needed to acquire market share. It's presumably much less flexible now that Android is the leading smartphone platform in the world.

Google's Android licensing practices and their effect on competition in a variety of markets and market segments are an important subject. Transparency helps, so I'm glad that Professor Edelman published the MADA documents signed by Samsung and HTC.

As an app developer I'm also a stakeholder with an interest in this. Android will be one of the first two platforms on which I'll launch my app (in early 2015 based on current plans). Up to a certain point it's definitely good for app developers if Google fights fragmentation. There's positive fragmentation (for example, the availability of different form factors, even though it requires user interface definitions and the related code to be more flexible) and there's negative fragmentation. If my app sends out an Intent (an Android message that one app sends out and that any other app(s) can follow up on), I obviously want it to have the desired effect, and I want that effect to be predictable. Anything else would be negative fragmentation. Possibly even very negative. But as an app developer I wouldn't want Google to be the one company to rule them all because, in the long run, this would also diminish my opportunities in the ecosystem, and limit my choices as an Internet user.

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