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5/11/2012
08:32 PM
Thomas Claburn
Thomas Claburn
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10 Ways To Stifle Tech Competition

Competition happens, unless you can avoid it. From Microsoft Windows RT to Google Chrome, here's how today's giants safeguard their turf.



Google Drive: 10 Alternatives To See
Google Drive: 10 Alternatives To See
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The funny thing about the tech industry is that everyone talks about competition but no one wants to compete, at least not on a level playing field.

Today's tech giants are fine with competing on their own terms, terms that give them an advantage. They're not so keen to participate in a fair fight.

Usually, tech companies rely on the legal system to insulate themselves from competition. When Apple sued HTC two years ago, then-CEO Steve Jobs condemned HTC for infringing Apple's patents. "We think competition is healthy, but competitors should create their own original technology, not steal ours," he said.

Microsoft said as much protesting the European Commission's 2004 finding that the company had abused its PC industry dominance. As a remedy, the European Commission required that Microsoft disclose its interface documentation to allow non-Microsoft servers to work with PCs.

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Microsoft objected to this requirement. "[T]he compulsory license will allow competitors to replicate Microsoft's technologies such that their products would be indistinguishable from Microsoft's products in important respects," the company said. "This outcome will largely eliminate incentives for these companies to develop alternative or better technologies--precisely the opposite of what competition law is intended to achieve."

Occasionally, a company will acknowledge wanting to avoid competition. AT&T CEO Randall Stephenson, for example, recently suggested that Google and Mozilla object, knowing that their browsers can't compete on Windows RT devices without access to those APIs.

Harvey Anderson, general counsel for Mozilla, said Mozilla isn't presently pursuing the issue with the Federal Trade Commission or the Justice Department. "We will continue to evaluate and see if that will be the appropriate mechanism to get the resolution that we seek," he said in an emailed statement.

2. Apple's iOS
Apple has not been shy about using patents and copyrights to limit competitors. But it also relies on contracts to constrain developers and makers of peripherals that interface with Apple products. In some circumstances, Apple couples contracts with technological barriers. Apple's rules prevent the use of writable, executable memory pages, except for its own Safari browser. Apple, in other words, is imposing the same kind of restriction as Microsoft is in Windows RT to preclude the possibility of JIT compilers, which are essential for the operation of modern browsers.

Mozilla is less bothered by Apple's barriers, presumably due to its traditional focus on desktop browsing. "The similarities to iOS don't justify an outcome on Windows that deprives users of choice, reduces competition, and hurts innovation," Mozilla's counsel Anderson said. "The difference here is that Microsoft is using its Windows monopoly power in the OS market to exclude competition in the browser market. Microsoft also published commitments to users, industry, and software developers ... that in essence said Microsoft would design Windows to allow choice and provide a level playing field for third-party applications like the browser. These factors create a situation that is materially different than iOS."

Perhaps, but the situation is not so materially different that we have Firefox or Chrome for iOS.

3. Google's Chrome OS
How do you avoid competing with other browser makers? Make an operating system with a built-in browser. Chrome OS supports only Google's Chrome browser. That's the way it was made. When Microsoft tried that, the European Commission forced Microsoft to stop bundling its operating system and browser. But Google has gotten away with it, largely because so few people are using Chrome OS devices. Why worry that the playing field isn't level if Google's team is the only one that showed up for the game?

4. Facebook's Social Graph
For years, Facebook helped users import their contacts from email services like Gmail without providing a reciprocal export capability. In late 2010, Google began preventing Facebook from grabbing Gmail contacts because Facebook didn't offer an export option. Facebook last August relented, but not really: It allows users to export friends' email addresses--addresses that the user initially entered--if the friend has granted permission. And this option is unchecked by default in a menu the friend has probably never seen.

5. Google's AdWords
Google protects its crown jewels in the same way that Facebook does. But Google isn't concerned about anyone copying its Google+ social graph, at least not yet. Google is an advertising company and thus seeks to protect its ad business. That's why Google's AdWords API terms ban automated access to AdWords data.

6. Oracle's Java
Java is free for anyone to use, except when you need a license. The Java APIs are copyrighted, or so Oracle claimed when it sued Google for copying its APIs in Android. The judge hearing Oracle's claim may soon decide whether APIs can be copyrighted. While you wait, ponder the meaning of free.

7. Sony's PS3
Like many companies, Sony relies on the Digital Millennium Copyright Act to prevent people from modifying its products. The U.S. Copyright Office held a hearing Friday about whether it should continue to allow a copyright law exemption for circumventing access-control technology. Sony doesn't want the exemption to be allowed for game consoles. In comments submitted to the Copyright Office, Sony's legal representative argued, "If the exemption is granted, it is virtually certain that successful hackers, under the guise of the exemption, will create the tools that enable even novice users to make, distribute, download, and play back illegal copies of [PlayStation 3] games."

Sony argued that its restrictions help sustain PS3 game prices. "The hacking of software on the PS3 or any other video game platform will result in an increase in the number of unlawful copies, which will, in turn, decrease the sales of authorized copies, thereby stifling video game developers' and publishers' incentives to create and distribute games," Sony's legal representative argued.

In other words, too much competition is bad for business.

8. Comcast's Xfinity
Comcast plans to exempt its "Xfinity On Demand" service from broadband data caps. Senator Al Franken recently expressed concern that this appears to be a violation of the agreement Comcast made to secure approval of its NBCUniversal acquisition. Exempting your own data services from rules imposed on competitors doesn't sound very fair. But isn't that the idea?

9. Google's Android
Android is open and free. That's the party line. But really it's just less closed than the alternatives, at least until Mozilla's B2G launches. "Less closed," however, falls short of "open." Android comes with strings attached if you're a mobile carrier: anti-fragmentation clauses and default Google Apps. Android is open source of a sort. It's delayed source, released at Google's leisure. Google welcomes competition, but insists on a head start.

10. Amazon Publishing
Amazon's Kindle represents a reprise of what Apple did with its iPod and iTunes--it's a self-reinforcing software/hardware ecosystem. The Department of Justice recently went after Apple and its publishing partners for price fixing, but many in the industry believe Amazon should have been the DOJ's target. The Author's Guild claims that Amazon used its power in the print industry to gain control over the e-book market and has been selling e-books at a loss to weaken competitors.

"A truly competitive, open market has no indispensable player that can call the shots," the Author's Guild says, lamenting the threat Amazon poses to Barnes & Noble.

If you see a truly competitive, open market in the wild, take a good look. Chances are someone is already working on erecting barriers to entry.

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