Monday, October 10, 2022

Looking for support against Epic Games, Apple joined CCIA (the so-called Computer & Communications Industry Association--actually, just a Cash & Carry Industry Association) shortly before district court's judgment

"Drain the swamp"--in reference to Washington D.C.--is a bipartisan phrase: it has been used by Republican Presidents Reagan and Trump as well as Democratic Speaker Pelosi. The type of swamp that I am particularly concerned about is a transatlantic one: in D.C. and in Brussels, all sorts of Apple- and Google-funded entities claim to speak for entire industries or industry segments while their only objective is to advance the interests of one or both of those platform monopolists.

Bloomberg deserves credit for its contribution to draining the swamp with the (unsurprising to me, but previously unconfirmed and not obvious to everyone) revelation that ACT | The App Association is actually an Apple Association. Against that backdrop, it's just insane that a deceptive-lobbying front for the world's richest corporation benefited from the U.S. government's Paycheck Protection Program.

On an outrageousness scale from 1 to 10, ACT is clearly a 10 because it untruthfully claims to work for many of the victims of Apple's App Store monopoly abuse.

On the other end of the spectrum, there's the Fair Standards Alliance (based in Brussels, but an active filer of statements in the United States, too). Most of the most active contributors to, and investors in, digital standards would disagree with the FSA on what's really "fair." From their vantage point, the FSA is nothing but a SEP Devaluation Alliance. In internal communications that came to light as a result of its litigation with Qualcomm, Apple--the FSA's largest member--defined the devaluation of SEPs as a strategic objective and is often criticized for it. A correct and nonjudgmental name for the FSA would be Net Licensees' Alliance. Be that as it may, the FSA is clear and consistent about its agenda, and doesn't attempt to mislead anyone into thinking that it speaks for anyone but its members.

Somewhere in the middle between the FSA and ACT | The App(le) Association, there's the so-called Computer & Communications Industry Association (CCIA). That is a misnomer because the CCIA never in its 50-year history tried to build an industry-wide consensus. It was founded as an anti-IBM lobbying initiative, and while I, too, have criticized some of IBM's historical mainframe practices, there was a time when no one could claim to represent the computer industry without having IBM on board. One could even argue that this is still the case. In the late 1990s and early 2000s, CCIA took aim at Microsoft more so than IBM; then (after a settlement with Microsoft) IBM was in the cross-hairs again; subsequently CCIA worked for Google and Samsung against Apple and (former CCIA member) Oracle; and they are now lobbying for Google and Apple on issues on which the mobile platform duopolists are aligned, while simultaneously helping Amazon and Google against (former CCIA member) Microsoft, their most important competitor in the cloud services business.

The time has come to call CCIA out. It's simply a Cash & Carry Industry Association: sell it and they will come. Think of a family visit to a mall, where a given family member visits only one shop while there may be shops that are of interest to two or more family members. At least they all agree that it's convenient to have a nearby mall.

In 2010 I had a conversation with an IBM lobbyist (whose name I've forgotten) at an OpenForum Europe event where the EU's then-antitrust chief Neelie Kroes delivered a keynote address. CCIA was supporting its (temporary) member TurboHercules against IBM, and the IBMer told me this (I don't recall the exact words anymore, but it was very close):

"We don't like organizations that operate like CCIA where everyone who pays gets to use the entity for some purpose."

The man had a point. And nothing has changed about that.

Actually, since 2010 CCIA's flip-flopping has become even more apparent; the cycles have become ever shorter; and CCIA is now working against the interests of the vast majority of technology companies, including various of CCIA's members, some of whom may be too shy (or incompetent) to formally dissent from the organization's views while others may have exactly the attitude that the IBMer criticized: there's something for everyone, like a cash & carry market.

Take standard-essential patents (SEPs). In the entire history of wireless standards, there have only been two reasons for which SEP holders seek injunctions against implementers. One is because of a disagreement on royalties, whic his the normal course of business in patent licensing; the other, however, was really problematic: Google's temporary subsidiary Motorola Mobility (against Apple and Microsoft) and Google's long-standing hardware partner Samsung (only against Apple) were seeking SEP injunctions to force other parties to give up their intellectual property in the form of a zero-zero cross-license. Through Motorola, Google even wanted to put so much pressure on Apple that no Android device maker would ever have been sued again over slide to unlock, rubber-banding, and similar Apple non-SEPs.

The royalties that Motorola and Samsung demanded were prohibitive. For instance, Motorola's initial offer to Microsoft amounted to more than it gets from computer makers for a Windows license in many cases (as Motorola wanted 2.25% of the price of the actual device, which it even explained in writing). That's not the case now with Ericsson and Apple, for example.

That type of abuse was a fundamental threat to the computer and communications industry. But there was deafening silence from the Cash & Carry Industry Association: Google, which had joined in the mid-2000s, was its dominant member at the time, and Samsung joined during that period. (Despite everything else, I commend CCIA for some brilliant write-ups on the design patents damages dispute between Apple and Samsung; their author has since left.)

After the Android patent disputes had settled out for the most part, Google and Samsung were more interested in bringing down SEP royalties. That's why CCIA then, all of a sudden, described SEP abuse as one of the biggest perils of the technology sector and filed amicus curiae briefs and public interest statements in various cases, including the Qualcomm-Apple dispute, though Apple hadn't joined yet. (The fact that Qualcomm never was a CCIA member also reduces to absurdity the organization's claim to speak for the computer & communications industry.)

"Open Markets, Open Systems, Open Networks -- Full, Fair and Open Competition." But CCIA members' walled gardens are fine...

When campaigning against IBM and Microsoft and then again IBM, CCIA's mission statement was the one I just quoted. In retrospect, even if one disagreed with some of IBM's and Microsoft's terms and policies of way back when, whatever they may have done was nothing compared to what the Goopple duopoly is doing now.

IBM didn't even attempt to monopolize the PC: presumably because of its mainframe antitrust experience, it made it an open architecture--a lot more open than the Mac ever was, and the Mac is actually pretty open compared to the iPhone.

Microsoft at some point decided to settle with the European Commission and to cooperate with competition regulators in general. By contrast, Apple and Google exhaust all appeals and are not even deterred by non-compliance fines (just chump change for them).

Just like CCIA didn't speak out against SEP abuse when there really were serious issues, CCIA has now thrown its whole "Open Markets, Open Systems, Open Networks" and "Full, Fair, and Open Competition" mantra overboard. Now that advocates of open markets and fair competition are really needed, CCIA is not merely silent: it even opposes regulation and legislation that could open today's most strategically important markets.

Why? Money from Mountain View. Plain and simple.

CCIA even intervened as a supporter of Google's appeal against the European Commission's Google Android ruling. What else do I have to say? The few supporters that Google had against DG COMP were all paid by, or dependent upon, Google, such as HMD (of which Google is a major shareholder). Fortunately, the EU General Court was not going to be gaslighted: it materially affirmed the Commission decision, and perfectly understood that the two major mobile platforms don't compete with each other in the app distribution aftermarket.

Apple saw CCIA's efforts to defend Google's monopoly abuse, and apparently some people in Cupertino asked themselves: why don't we, too, put some coins into that jukebox called CCIA?

After the Epic Games v. Apple trial, no one knew for sure how the district court would rule, but one thing was a given: that the losing party would appeal. Apple knew that it would soon need allies who would file amicus curiae briefs with the United States Court of Appeals for the Ninth Circuit (yesterday I published another post on that case as the appellate hearing will be held this month).

Apple already had some entities and individuals in its pocket, but may have anticipated that Epic would (as it did) get a lot more support. In fact, Epic even has the Biden Administration and three dozen U.S. states on its side.

It was in early September 2021--roughly a week before the district court's decision--that Apple was first listed on CCIA's website as a member. Normally you would expect an "industry association" to welcome the industry's largest player with a press release (and possibly even throw a party). But that's not CCIA's modus operandi. It does frequently update its published member directory, and I save snapshots from time to time as part of my research. CCIA's members join as silently as they leave (Microsoft was the only exception because of a settlement that they just had to announce).

The first favor CCIA has done Apple since was an amicus curiae brief in the Epic case. CCIA was in bad company as ACT also made a submission. But that is nowadays pretty common. CCIA and ACT also cooperate on the alarmist "Save Our Standards" campaign, which I called out on making false claims about SEP issues allegedly facing small app developers (Despicably deceptive: Big Tech's Save Our Standards campaign presents small app developer as victim of standard-essential patent abuse though it NEVER had to license SEPs).

Of course, Apple is also aligned with CCIA on SEP devaluation. But when Apple joined CCIA, it had no shortage of lobbying fronts on SEP issues: ACT, FSA, and HTIA--to name but a few. What Apple really needed was another ally against Epic.

Interestingly, CCIA--unlike ACT--did not even file a public interest statement in response to the USITC's request for such submissions after Ericsson's three complaints against Apple earlier this year. I do, however, anticipate that CCIA will make filings at a later stage of that dispute. CCIA's three most recent submissions to the ITC supported Google against Sonos (December 2, 2021); Apple, Samsung, and other smartphone makers against Arigna (February 28, 2022); and Apple against AliveCor (July 27, 2022).

Apple doesn't really have allies in the tech industry. There are some mutual interests with Google, but even Google is campaigning (unsuccessfully) against Apple's walled garden with respect to instant messaging. CCIA will remain silent on that one for sure. Apple does have a lot of money, though, and even claims that because it's so profitable, no import ban should issue on its products even if found to infringe Ericsson's patents.