Tuesday, September 6, 2022

Key EU politician tells FOSS Patents: maps should fall under Digital Markets Act just like other search engines, license terms must be FRAND

This is a brief (but important) follow-up to the previous post (on car makers being oblivious to the relevance of the Digital Markets Act to their industry). After my podcast with a major automotive publication I reached out to Andreas Schwab MEP, the European Parliament's rapporteur on the DMA, to find out whether digital map services would fall under the groundbreaking legislation. Mr. Schwab found the podcast interesting and is proactively seeing to it that maps will fall squarely within the scope of the DMA:

[German original] "Es ist wichtig, darauf hinzuweisen, dass auch die Kartendienste der großen Digitalfirmen auf der Basis des DMA als Suchmaschinen gelten. Damit wird Art. 6(12) und die dort niedergelegten FRAND-Prinzipien auch für Karten gelten."

[my translation] "It is key to make it clear that the map services of the major digital companies will be deemed search engines under the DMA. As a result, Art. 6(12) and the FRAND principles set forth therein will also apply to maps."

There's no need to define FRAND on this blog: the term comes up all the time, not only but also in connection with standard-essential patents. Here's the language of Art. 6(12):

The gatekeeper shall apply fair, reasonable, and non-discriminatory general conditions of access for business users to its software application stores, online search engines and online social networking services listed in the designation decision pursuant to Article 3(9).

For that purpose, the gatekeeper shall publish general conditions of access, including an alternative dispute settlement mechanism.

The Commission shall assess whether the published general conditions of access comply with this paragraph.

While no politician played a more important role in this legislative process than Mr. Schwab, even he cannot single-handedly determine how the law will be interpreted. However, with the backing of a solid majority of the Parliament he is in a strong position to discuss these matters with the European Commission as it is working on its implementation guidelines and platform designations.

I agree that digital map services are essentially online search engines. From the outset, Google Maps was positioned as a natural and seamlessly-integrated extension of Google's search engine. For searches such as "nearby restaurants" one can simply switch between traditional search engine results pages and points of interest highlighted on a map.

It also makes sense in light of the DMA's objective, which is to ensure contestable digital markets. More so than other search engines, digital maps involve network effects, particularly with respect to real-time traffic data. A new map service would not have enough users to be able to quickly identify new congestions or to say whether a store is presently busy or empty. As a result, it would be deemed much less useful and would likely never reach the point at which it could compete with a service like Google Maps. That is the opposite of contestability.

Maps are not the only aspect of the DMA that is relevant to car makers, but they are one of the most relevant parts. For instance, if Apple and Google effectively took control over connected vehicles, they would send users to gas or charging station and collect a commission on the transaction they enable. In a worst-case scenario for car makers, they wouldn't get anything--or Apple and Google would collect an unreasonably high (supra-FRAND) share of the transaction value.

The previous post has been read by many people in recent days. I can only hope that the automotive industry will take the warning seriously, given how much is at stake not only for them but also for the wider economy and for consumers. It is time for car makers to engage. If they had been more foresightful, automakers would have been one of the most vocal groups in the legislative process on the DMA. The legislative process is over, but now is the time to ensure that this historic bill will be applied effectively and forcefully. And if all else fails, it would always be possible for the EU to update it. It may very well end up a work in progress given the fast-changing environment and gatekeepers' resourceful resilience. In order to treat maps as search engines it should not be necessary to amend the statute, however.