Sunday, November 27, 2022

'Autocalypse Now' or Tesla Phone: what can save the digital dilettantes at Volkswagen, Toyota, and other car makers from Apple's and Google's world domination?

The latest edition of Wirtschaftswoche (German for "business week") came out on Black Friday, and there's a great article on pages 32 and 33 (available only to subscribers, at least for the time being) that I'd like to recommend: Autokalypse now (the "k" instead of the "c" is due to the German spelling of "apocalypse"). It's about an issue that this blog has dubbed as "carjacking"--meaning that Apple and Google use their mobile operating system monopolies to take control over connected vehicles:

Another term than "carjacking" is "carmageddon" (see The Android-ification of Cars).

The Wirtschaftswoche article starts with a high-profile Mercedes customer: former EU commissioner Guenther Oettinger says he uses Google Maps for navigation because it suggests better routes and more accurately predicts the time of arrival. That's what many of us have experienced with cars of different brands. During his tenure as the EU commissioner in charge of digital industry policy, Mr. Oettinger was already--and rightly--concerned about traditional car makers' share of the future automotive value chain. That concern is shared on Capitol Hill: on November 1, Sen. Elizabeth Warren (D-Mass.) wrote a six-page letter (PDF) to U.S. antitrust enforcers about this threat.

The problem is that the C-level execs, chief lawyers, and lobbyists of automotive companies don't get it. They're sort of aware of the problem, but far from taking the measures that would be required to respond to the threat. Those execs and the "experts" they rely upon would rather downplay the issue than take decisive action outside their comfort zone. Meanwhile,

There is only one outlier: Elon Musk. While he may not have had the chance yet to develop a regulatory strategy and to figure out the full potential of the EU's Digital Markets Act, he is clearly prepared to go to bat. That's a lot more than those traditional automakers can say: it seems to me that most of the decision makers there have no strategy other than hoping that they won't have to deal with the problem before they reach the age of retirement. But that could prove a mistake not only for their companies but even for those decision makers: Wirtschaftswoche quotes a McKinsey partner who says it will be decided in a matter of three to five years who will be in control of the automotive industry (car makers or gatekeepers).

Earlier this week I outlined the three reasons Mr. Musk has to fight Apple's and Google's gatekeeper power: the third one involves Tesla and is no less important than the other two, which are about Twitter in the short term. On Black Friday, Mr. Musk said he didn't rule out making "an alternative phone" if that was the last resort to deal with the mobile gatekeeper problem:

Patently Apple reported on it. That's where I first saw the tweet.

I agree with Jim Hanson, who says Mr. Musk should "[f]irst give Apple a good taste of lawfare."

But what would an Elon Phone, Twitter Phone, or Tesla Phone (about which there have previously been rumors) mean for the automotive industry at large?

That depends on interoperability. That new phone (likely based on the open-source code base of Android, but without a Google license and, a as result, without Google Maps, the Google Play Store etc.) could give Tesla another competitive advantage. But it might also be the lesser evil than the "Goopple" duopoly for the digital dilettantes at companies like General Motors, Ford, Volkswagen, Toyota, BMW, and Mercedes. If Mr. Musk made the strategic decision to enable all car makers to provide the same level of integration, it would be an opportunity for the entire industry.

Again, I think the first step is to put pressure on Apple and Google at other levels: policy, regulation, and litigation. Whether Apple and Google will make concessions because of Mr. Musk threatening to enter the smartphone market is doubtful. So far it seems that both mobile gatekeepers only make changes to their terms and policies when they absolutely have to. But anything can happen, and a Tesla Phone is yet more of a possibility than seeing the Facebook Phone rise from the ashes...