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Law in the Time of Google

It’s quite amazing how people misunderstand the intersection between the Internet and the law.1 A case in point is this article from Reuters, describing the likely consequences of the €2.4B fine that the EU Commission has slapped Google with.

It starts off well enough, discussing how being under the spotlight in this way will probably limit Google’s freedom of movement and decision in the future. Arguably, one of the reasons why Microsoft missed the boat on mobile was the hangover from the EU’s sanctions against them for bundling Internet Explorer with Windows.

However, there is one quote in the article which is quite remarkably misguided:

Putting the onus on the company underlines regulators' limited knowledge of modern technologies and their complexity, said Fordham Law School Professor Mark Patterson.

"The decision shows the difficulty of regulating algorithm-based internet firms," he said. "Antitrust remedies usually direct firms that have violated antitrust laws to stop certain behaviour or, less often, to implement particular fixes.

In the past, Google has shown itself to be adept at rules-lawyering and hunting down the smallest loophole. They are of course hardly alone in this practice, with Uber being the poster-child - or the WANTED poster? - for this sort of arrogant Silicon Valley, “ask for forgiveness, not for permission", attitude.

In light of that fact, it is quite smart for the Commission to make Google responsible for working out the terms of enforcement.

Of course I fully expect Google to appeal this ruling - but I also expect them to lose. It is far too late for the various shopping comparison sites whose business was sucked dry by Google, but it does underline that regulators are far more willing to intervene in the construction of these types of "platform" businesses.

For more thoughtful and detailed commentary, I suggest Ben Thompson’s take, where he provides some useful background, as well as answers these key questions:

  • What is a digital monopoly?
  • What is the standard for determining illegal behavior?
  • What constitutes a competitive product?

I do not quite agree with his conclusions, which reflect a US-EU divide in the very conception of competition and monopoly. To generalise wildly, the EU focuses on long-term market structure, where the US focuses on short-term consumer benefit. A superior user experience is good, in the American conception, even if competitive businesses are crushed to deliver it. The European conception is that it is important to foster competitive offerings, even at the expense of the user experience.

Where I think this falls down is that, with Internet products in particular, it is relatively easy for users to create their own experience based on their particular requirements. When Google just spoon-feeds everything from the same search box, the initial baseline experience may be better, but the more specialised tools that satisfy specific requirements suffer and die, or never get developed in the first place.

Another problem is that the Internet giants who concentrate power in this way are all American companies, and often their offerings outside the US are limited or crippled in important ways. I live in Italy, and from here many of Google’s suggestions and integrations don’t work or provide a sub-standard experience.

I want a healthy market of many providers, including sub-scale regional ones, so that I can assemble my own user experience to suit my own requirements. Trusting huge organisations with their own motivations leads to weird places.

  1. I should specify at this point that I am not a lawyer (IANAL), and I don’t even play one on TV, so I won’t comment on the finer legal points of the decision or on whether it is justified according to different definitions of "competition". 


Own Your Interfaces

The greatest benefit of the Internet is the democratisation of technology. Development of customised high-tech solutions is no longer required for success, as ubiquitous commodity technology makes it easy to bring new product offerings to market.

Together with the ongoing move from one-time to recurring purchases, this process of commoditisation moves the basis of the competition to the customer experience. For most companies, the potential lifetime value of a new customer is now many times the profit from their initial purchase. This hoped-for future revenue makes it imperative to control the customer's experience at every point.

As an illustration, let us consider two scenarios involving outsourcing of products that are literally right in front of their users for substantial parts of the day.

Google Takes Its Eye Off the Watch

The first is Google and Android's answer to the Apple Watch, Android Wear. As is (usually) their way, Google have not released their own smartwatch product. Instead, they have released the Android Wear software platform, and left it to their manufacturing partners to build the actual physical products.

Results have been less than entirely positive:

If Android Wear is to be taken as seriously as the Apple Watch, we actually need an Android version of the Apple Watch. And these LG watches simply aren't up to the task.

Lacking the sort of singular focus and vertical integration between hardware and software that Apple brings to bear, these watches fail to persuade, and not by a little:

I think Google and LG missed the mark on every level with the Style, and on the basis of features alone that it is simply a bad product.

So is the answer simply to follow Apple's every move?

It is certainly true Google have shown with their Nexus and Pixel phones just how much better a first-party Android phone can be, and it is tempting to extrapolate that success to a first-party Google Watch. However, smartwatches are still very much a developing category, and it is not at all clear whether they can go beyond the current fitness-focused market. In fact, I would not be surprised to see a contraction in the size of the overall smartwatch market. Many people who bought a first-generation device out of curiosity and general technophilia may well opt not to replace that device.

Apple Displays Rare Clumsiness

In that case, let us look at an example outside the smartwatch market - and one where the fumble was Apple's.

Ever since Retina displays became standard first on MacBooks1 and then on iMacs, Mac users have clamoured for a large external display from Apple, to replace the non-Retina Apple Thundebolt Display that still graces many desks. Bandwidth constraints meant that this was not easy to do until a new generation of hardware came to market, but Apple fans were disappointed when, instead of their long-awaited Apple Retina 5K Display, they were recommended to buy a pretty generic-looking offering from LG.

Insult was added to injury when it became known that the monitor was extremely sensitive to interference, and in fact became unusable if placed anywhere near a wifi router:

the hardware can become unusable when located within 2 meters of a router.

Two metres is not actually that close; it's over six feet, if you're not comfortable with metric units. Many home office setups would struggle with that constraint - I know mine would.

Many have pointed out that one of the reasons for preferring expensive Apple solutions is that they are known to be not only beautifully designed, but obsessively over-engineered. It beggars belief that perfectionist, nit-picking Apple would have let a product to market with such a basic flaw - and yet, today, if an Apple fan spends a few thousand dollars on a new MacBook Pro and a monitor in an Apple Store, they will end up looking at a generic-looking LG monitor all day - if, that is, they can use the display at all.

Google and Apple both ceded control of a vitally important part of the customer experience to a third party, and both are now paying the price in terms of dissatisfied users. There are lessons here that also apply outside of manufacturing and product development.

Many companies, for instance, outsource functions that are seen as ancillary to third parties. A frequent candidate for these arrangements is support - but to view support this way is a mistake. It is a critical component of the user experience, and all the more so because it is typically encountered at times of difficulty. A positive support experience can turn a customer into a long-term fan, while a negative one can put them off for good.

Anecdata Time

A long time ago and far far away, I did a stint in technical support. During my time there, my employer initiated a contract with a big overseas outsourcing firm. The objective was to add a "tier zero" level of support, which could deal with routine queries - the ones where the answer was a polite invitation to Read The Fine Manual, basically - and escalate "real" issues to the in-house support team.

The performance of the outsourcer was so bad that my employer paid a termination fee to end the contract early, after less than one year. Without going into the specifics, the problem was that the support experience was so awful that it was putting off our customers. Given that we sold mainly into the large enterprise space, where there is a relatively limited number of customers in the first place, and that we aimed to cross-sell our integrated products to existing customers, a sudden increase in the number of unhappy customers was a potential disaster.

We went back to answering the RTFM queries ourselves, customer sat went back up into the green, and everyone was happy - well, except for the outsourcer, presumably. The company had taken back control of an important interface with its customers.

Interface to Differentiate

There are only a few of these interfaces and touch-points where a company has an opportunity to interact with its customers. Each interaction is an opportunity to differentiate against the competition, which is why it is so vitally important to make these interactions as streamlined and pleasant as possible.

This requirement is doubly important for companies who sell subscription offerings, as they are even more vulnerable to customer flight. In traditional software sales, the worst that can happen is that you lose the 20% (or whatever) maintenance, as well as a cross-sell or up-sell opportunity that may or may not materialise. A cancelled subscription leaves you with nothing.

A customer who buys an Android Wear smartwatch and has a bad experience will not remember that the watch was manufactured by LG; they will remember that their Android Wear device was not satisfactory. In the same way, someone who spends their day looking at an LG monitor running full-screen third-party applications - say, Microsoft Word - will be more open to considering a non-Apple laptop, or not fighting so hard to get a MacBook from work next time around. Both companies ceded control of their interface with their customers.

Usually companies are very eager to copy Apple and Google's every move. This is one situation where instead there is an opportunity to learn from their mistakes. Interfaces with customers are not costs to be trimmed; instead, they can be a point of differentiation. Treat them as such.

Image by Austin Neill via Unsplash

  1. Yes yes, except for the Air. 

Head in the Vapour

In news which should surprise absolutely nobody, Google - I mean, Alphabet - have killed their ridiculous “Project Ara" modular phone.

Here’s why this was a stupid idea from the beginning. Description from the Project ARA homepage:

The Ara frame is built with durable latches and connectors to keep modules secured. Ara modules are designed around standards, allowing them to work with new generations of frames and new form factors.

All of that means bulk - increased size and weight. Also, you’re still going to be constrained by what can fit on that chassis; there would be a spot where you could fit a camera, but if you want a bigger camera or don’t want a camera at all, this architecture doesn’t help you. It also sounds fragile, with many points of failure. These modules could easily become dislodged in your pocket, so you pull your phone out to take a picture and realise that you need to reconnect the camera module to the phone, but now the OS doesn’t recognise it, so you have to do a hard reboot - and now the sun has set or the child has run off, and you have a handful of modules and nobody to throw them at.

The real problem, though, is the goal of this project. The only attraction of modular systems is if you are going to upgrade components piecemeal: instead of buying an entire new phone every 18 months or whatever your replacement cycle is, you can judiciously upgrade just the screen or add a fingerprint reader or an NFC antenna, or so the theory goes.

In practice, nobody wants to do that. First of all, even on desktop systems where the bulk and weight are less of a factor, the market has moved decisively towards fully integrated all-in-one systems. People have voted with their pocketbooks for integrated convenience over flexible modularity. And that's in static desktop applications. When we’re talking about something people carry around all day, bulk and weight are an even bigger factor.

Secondly, most upgrades require many systems to be upgraded at once - at which point you might as well just buy a new phone anyway. This isn’t PC gaming, where you can get measurable benefits from upgrading your video card. Mobile phone hardware is still evolving far more rapidly than desktop hardware, and the benefits of full integration far outweigh the benefits of modularity.

We used to talk about the notion of a Personal Area Network, back when meaningful computing power was too heavy to hold in one hand. The idea was that you would carry a PC in a backpack, and a screen in your hand, an earpiece in your ear, maybe something like Google Glass, and so on. By the time the tech would have been there to enable that vision, it was already obsolete, because you can hold more computing power than you can use in the palm of your hand.

We may get back to that vision if wearables take off in a meaningful way, but the idea of modularising the phone itself was a pointless detour.

What it is, is typical Google - I mean Alphabet. Announce some random blue-sky project, let nerds everywhere geek out on how it could work without ever considering whether it should be done in the first place, and then kill it off once it hits the real world. The annoying thing is that Google actually gets credit for doing this over and over again, instead of ridicule for not thinking things through. Yes yes, fail fast and let a thousand flowers bloom and all that, but some adult oversight in the planning phases would not go amiss.

I forget who initially suggested the position of VP of Nope, but I think Google needs one. The idea is that this is an exec, senior enough that they have to be taken seriously, who just sits in the back of the room, and when someone proposes something obviously idiotic, they just clear their throat and say “nope". Their salary would be very well earned.

UPDATE: Just noticed that John Gruber pointed out back in 2014 that the emperor had no clothes, and before that in 2013:

you’d still be throwing out old components on a regular basis, and the march of progress is such that it won’t take long until your base board is outdated too.


Images from the Project ARA homepage while it lasts.

One more time

I have worked all my career in enterprise IT, either as a sysadmin, or for vendors of enterprise IT tools. There are many annoyances in big-company IT, but one of the most frustrating is when people miss key aspects of what makes corporate IT tick.

One area is the difference between a brand-new startup whose entire IT estate consists of a handful of bestickered MacBooks, and a decades-old corporation with the legacy IT that history brings. Case in point: Google is stealing away Microsoft’s future corporate customers.

Basically, it turns out that - to absolutely nobody's surprise - startups overwhelmingly use Google's email services. Guess what? Running your own email server for just a few users is not a highly differentiating activity, so it makes sense to hand it off to Google. Big companies on the other hand have a legacy that means it makes sense to stick with what they have and know, which generally means Microsoft Exchange.

So far, so good. The key factor that is missing in this analysis is time. What happens when those startups grow to become mid-size companies or even join the Fortune 50 themselves? Do they stick with Google's relatively simple services, or do they need to transition at some point to an "enterprise" email solution?

It is now clear that Google does deep inspection of email contents. So far, this appears to be done for good: Paedophile snared as Google scans Gmail for images of child abuse. However, if I were in a business that competes with Google - and these days, that could be anything - I would feel distinctly uncomfortable about that.

There are also problems of corporate policy and compliance that apply to proper grown-up companies. At the simplest level, people often have their own personal Gmail accounts as well, and with Google's decision to use that login for all their services, there is enormous potential for bleed-over between the two domains. At a more complex level, certain types of data may be required to be stored in such a way that no third parties (such as Google) have access to them. Gmail would not work for that requirement either.

Simply put, startups have different needs from big established corporations. The impact of full-time IT staff on small startup is huge. The alternative of doing your own support doesn't work either, because every hour spent setting up, maintaining or troubleshooting IT infrastructure is an hour that you don't spend working on your actual product. For a big corporation with thousands of employees, on the other hand, it makes a lot of sense to dedicate a few to in-house IT support, especially if the alternatives include major fines or even seeing managers go to jail. The trend Quartz identified is interesting, but it's a snapshot of a point in time. What would be more interesting would be to see the trend as those companies grow and change from one category to another.

Corollary to this is that business IT is not consumer IT. Trying to mix the two is a recipe for disaster. Big B2B vendors end up looking very silly when they try to copy Apple, and journalists look just as silly when they fail to understand key facts about the differences between B2B and consumer IT, and between small-company IT and big-company IT.

Image by Philipp Henzler via Unsplash

Protect the base

An interesting story in the news today is about Gmail adding an “unsubscribe" link to marketing e-mails. Of course this is not exactly a new feature, having first launched in 2009.

Some of the commentary about why Google is doing this seems to me a bit misguided. Someone from Slate on Monocle’s The Briefing (sorry, missed the name) characterised this move as Google trying to make Gmail more useful for users and therefore more sticky.

I think the actual reason Google is doing this is to reduce or even eliminate a channel marketers can use to connect with consumers without going through Google. Subscribing to e-mail updates is a direct connection between consumers and brands. Google would rather be the middleman in that transaction, selling AdWords to brands and collecting a toll on all the traffic.

What makes me fairly certain of this analysis is that Gmail’s unsubscribe feature relies on the sender including the list-unsubscribe header as per RFC 2369, so it won’t help with spam or with dodgy marketing e-mails in general, only with entirely legitimate and technically correct marketing communications.

I’m not on Team “Everything Google does is evil!", but that doesn’t stop me from taking a clear-eyed look at what they do.