Proximity Alert
What does it mean when Google, Microsoft or Apple turn your whole company into a feature? When do we let a tech giant build and when do we call the anti-trust lawyers? And what does that mean for Spotify, Yelp or printing in landscape?
Capital Thinking • Issue #751 • View online
In the 1980s, if you installed a word processor or spreadsheet program on your PC, they wouldn’t come with word counts, footnotes or charts.
You couldn’t put a comment in a cell. You couldn’t even print in landscape. Those were all separate products from separate companies that you’d have to go out and buy for $50 or $100 each.
A few generations earlier, in the 1950s, a new car often wouldn’t have turn signal lights. That was an after-market product that you could buy and fit yourself with a drill and a screwdriver on a Saturday morning.
Platforms, bundling and kill zones
Over time, of course, Lotus and Microsoft, and Ford and GM, integrated - ‘bundled’ - all of that.
Spreadsheets do charts, and the operating system handles printing, and no-one today argues that when you buy a car you should choose who supplies the lights. That killed a lot of third party products - it was, ipso facto, unfair competition - but we don’t argue it should be illegal.
On the other hand, in the 1960s there was a significant court case around Ford bundling a car radio and squashing competing radio suppliers. Is a radio an essential, necessary part of the product that should be integrated, or is it optional? What would that mean?
This is the centre of today’s argument about what Apple and Google include in their smartphone operating systems, and what Google includes in ‘search’, and it was the argument twenty years ago around whether and how Microsoft should include a web browser in Windows.
If a company has market dominance, and it adds a feature to its product that is someone else’s entire business, this is inherently unfair, but life is unfair - does it follow that it’s bad, and that we should we do something about it, and if so, what? People sometimes argue that this is all obvious and easy.
Some things are ‘clearly’ essential features (for example, brakes) and some are ‘clearly’ optional, or at least substitutable (a web browser). But this is a fuzzy definition, and changes over time.Turn signals were optional once, and in the mid 1990s PCs didn’t come with a TCP/IP stack, and that was a separate product you could buy.
Microsoft (and Apple) added one, and that became an anti-trust question - people proposed very seriously that this required intervention and that Microsoft should offer a choice for your network stack, and your file system, and indeed everything on top of the kernel.
There are, very obviously, some things that absolutely are illegitimate tying and bundling. But how do you capture that without capturing everything else?
There is a huge grey area between telling Microsoft it can’t force OEMs to bundle Office with Windows and telling Microsoft that it has to make consumers choose their network stack when they turn on a new PC.
Equally, we clearly don’t want to shrug, and give up, and let Google or Apple clone and squash any third party product they want to incorporate. But we also don’t want the DoJ or EU to run a monthly review of Gmail’s product roadmap.
We need some intermediate level of rules - some set of general principles. Hence, Elizabeth Warren famously proposed that ‘if you run the platform you can’t compete on it’, which sounds good, until you realise this means that you’ve just banned Google Maps on Android.
If this is your principle, a platform can’t do anything that anyone else might want to do. So your new iPhone has no calendar app, and no camera app, and no email or web browsers… and indeed no app store. Those are all things that some other company wants to do too.
This is saying that your car can’t come with headlights, or that a spreadsheet program can’t do charts.
We have to do better than that.
Benedict Evans
Photo credit: JOSHUA COLEMAN on Unsplash