Sunday, September 4, 2022

Automakers are oblivious to their *only* chance to prevent Apple and Google from digital carjacking: proactive lobbying (such as on EU Digital Markets Act) and competition enforcement

Volkswagen's last CEO was spot-on with the warning "German MacWorld article) that Apple and Google are effectively trying to take car makers' customers away by absorbing ever more functions of connected cars, ultimately threatening to reduce car makers to what he called "sheet-metal benders."

Daimler's current CEO said something similar in an internal meeting.

But those companies--and virtually all of their peers--are still forced to support Apple Car Play and Android Auto. They've finally understood the problem, yet they don't have a strategy to prevent Apple and Google from injecting themselves into the relationships between car makers and their customers. When it comes to digital policy and strategy, the automotive industry still has a lot to learn. Unfortunately, those folks don't have a lot of time left until they will be eaten alive.

On Friday, German automotive magazine Auto Motor und Sport (English Wikipedia entry) published a German-language podcast with me on patent and antitrust issues surrounding the digital transformation of the automotive industry. You can also find it on Google Podcasts.

The first part was about patents. The interviewers started with some basic questions about the recent IP Bridge v. Ford standard-essential patent injunction, shortly after which Ford took an Avanci license. The recording took place before the recent Hyundai-KIA-Genesis announcement.

But with everyone having to pay the same SEP royalties, and the amount being tiny compared to the price of a car, patents are not an existential threat to any particular car maker. By contrast, Apple and Google are really going for the jugular.

So, after the part on patents we spent even more time discussing the regulation of digital platforms and what it means for the automotive industry.

I credited automotive leaders for finally having figured out what Apple and Google are up to, but I harshly criticized the automotive industry for its failure to take a strategic and proactive approach to the regulation of digital markets. The EU's Digital Markets Act spans almost 200 pages, and you can find traces from the lobbying efforts of various industries--but nothing in there addresses the automotive industry's valid concerns. Alas, it's not even clear whether Google Maps would be considered a digital platform service.

German car makers were apparently asleep at the steering wheel when the European Commission asked for input from stakeholders. Not only did they fail to ensure that the DMA would protect car makers from Apple and Google leveraging their market power to gain control over some of the most important automotive revenue streams but the German BDI, an association that represents all industries, even spoke out against the DMA. The VDA (German Automotive Association) alone could have vetoed that position paper within the BDI, but apparently didn't even understand the significance of this.

I said in the podcast that German car makers' lobbying departments are just defensive, not proactive. Instead of devising and implementing strategies to influence regulation in their favor and instigate antitrust actions, they're mostly just hoping that no one will go after them.

Now that the Commission is working on the details of its implementation of the DMA, and considering that the DMA will be amended sooner or later, the automotive industry must wake up, get its act together, and fight for its future. The inteviewers asked me whether car makers should ultimately make their own phones. That wouldn't be a realistic option, I replied--but what is achievable is that Apple and Google are prevented from abusing their gatekeeper power.

An industry that is even older than automotive has actually become quite proactive in that regard: publishing. They're involved with the Coalition for App Fairness, and a group of French publishers brought a very interesting class action against Apple in the Northern District of California. Car makers need to network and coordinate activities with those stakeholders. And the European Commission should encourage them to be more vocal in the context of digital market regulation.

I tried to explain to car makers that they were on the wrong track with respect to German patent reform. As I had been predicting all along, that reform had zero effect: Juve Patent confirmed last month that not a single case is known in which the new injunction statute played any role. I'm not going to reach out to the automotive industry about the Digital Markets Act and antitrust enforcement against digital platforms. But it's really urgent that they rethink their approach to lobbying in this context.

Lest they'll be reduced to sheet-metal benders.