Tag Archives: Internet

Technological Layers and Layer Ownership

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This ars technica article outlines in extraordinary detail what is at risk in the smart phone wars. It discusses the various different layers involved with the smart phone industry. These layers are extremely important. Control of a layer allows you to move into another layer and can help you extract monopoly rents* from those layers as well. My friend Sean was complaining about bloatware** earlier today that comes a computer supplier. They are actually attempting to get into a different layer. If a PC company is able to provide support which can allow them to get money from a customer on a returning basis, monthly or yearly, they can help ensure return purchases on more expensive purchases as well as getting a lot more money out of first sale. Additionally, the manufacturer may also be using the bloat ware they install to subsidize the cost of the product you bought. If a third party asks to have software pre-installed the manufacturer could ask for money to put it on, which may be passed to you as a consumer, so you could get a computer at a slightly lower price.

Ars Technica, isn’t the only group of people that views this phenomenon as a stack with different layers in it. This is actually an economic model as well. Which was used in the original Microsoft EU case explaining how these different layers can be leveraged to foreclose on a new market.

Another way of looking at this is in a traditional manufacturing sense. When you are making a car you have many different suppliers. You have paint, tires, batteries, steel, etc… There are several different ways to make it cheaper for you to produce a car. You can become vertically integrated, with a very high production level, where you make the steel, tires, paint and the full car. If you were extremely good at producing steel you would be able to get the steel at cost whereas traditionally you would have to pay a higher cost so the producer could earn a profit.

We can see this same sort of thing happen within IT. There is serious concern with corruption of content and content providers, like Comcast, purchasing a wide range of companies. If they control the material and access to the material they could control what people can access and impact society in a serious manner.

I don’t think that Comcast is going to be able to significantly impact the smart phone layers as they have with TV. However, a company like Google or Apple definitely could. Google is actually attempting to get into every single layer in this market. They tried to purchase wireless spectrum (they are also installing a super fast network in Kansas City), they are going to purchase Motorola, they have an OS and they are an app provider.

I think that other technology companies are aware of this. This is part of the reason why Google is being attacked on all sides. While until Google gets a hold of Motorola, they will be mostly in the top most two layers, OS and Applications. Google is clearly trying to move into every layer possible. This will allow them to have the greatest likelihood of a customer going onto a website and click an ad to give them money.

To prevent this, almost everyone is suing Google or some aspect of their technologies. Google is trying to get around this. They want the control.

I’m going to be gone for a little while. My brother is coming into town and I’ll be in Amsterdam for the next few days and then Munich this weekend. Hopefully I’ll have a post up Thursday or early next week.

Further Reading: The New ICT Ecosystem by Martin Fransman

*monopoly rents means higher prices from controlling the market. It allows a manufacturer to sell a product for a higher price than they would be able to do under a competitive market. Microsoft is able to do this with Windows. However to protect themselves from other OS providers undercutting their prices, MS sells the same OS at lower price points. They give discounts to students and charge a lower price in poor countries. This allows them to increase their monopoly to new markets.

**excess software which slows down a computer or smart phone.

Antitrust and Cell Phones

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In my last three posts (one, two and three) I have been discussing the risks of antitrust for Google. With Android Google controls what applications are installed as the base as well as the search function. In South Korea apparently this is a big deal. Which took me the points of IE and WMP in my last post. Most people use the default programs on their computer or phones unless they have some external reasoning to use a different product. In the case of iTunes and WMP it was the iPod which drove the usage away from the default. However for many people that don’t have an iPod there isn’t much point is using anything else. Especially if you only play CDs on your computer or you have a very small MP3 collection.

There are, of course, other factors which may drive users to other products, such as seeking the ability to play lossless files instead of MP3s. On computers, in my opinion, it is much easier to take control over the device and install other applications or systems to replace the default. You just need to know how to find the program you want and install it. With phones this is much more difficult. I think that the Google Search functionality is going to be the first of many of these investigations.

For other applications that serve the same function as the search, it may be difficult to acquire a different app. At the app store for whatever phone you’re using, there’s a gate keeper (is there a confused keymaster too?). In the case of Apple they reject applications that duplicate a program which comes preinstalled on the phone. I’m fully expecting that these rejections will eventually become the target of some antitrust investigation. Google is better than Apple in this regard, however there is control over what goes into the app store. Interesting note there are at least 4 Bing search apps in the Android market place.

Google does allow third party app stores on Android. I think that this is a really smart move. This will actually prevent some future antitrust investigation that I think Apple will have to face. There will be a market of app market places that cater to different kinds of needs or may be phone company specific. For instance Samsung has their own app store on my Galaxy S. I would not be surprised if Steam, EA and other digital content providers are already planning on creating app stores for the phones. While some of the major game developers aren’t creating games for phones yet, I believe that will change in the future. With Windows 8 going to be used for PCs, Tablets, and phones why wouldn’t larger game developers created stripped down versions of their games to be played on phones?

However, I’ve wandered a bit from my initial point. While phones are different than computers in some pretty significant ways, they are small computers. They are more powerful than the computers I grew up with. Google will need to be aware of this and will need to evolve how it deals with the android system. The controls put on users in phones will eventually be forced out of existence by law suits and users demanding more freedom over their phones. Eventually, phones will require as much freedom as a PC, especially as we start to bridge between the two platforms.

Google’s Anti-Trust problems III

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In my last two posts (one and two), I’ve been discussing the current problems as well as potential problems that will be facing Google in the antitrust arena. Yesterday I mentioned I was going to discuss Windows Media Player (WMP) and how this pertains to Google. However, I realized I need to go one step back first. First, we need to look at what happened with Netscape and Internet Explorer (IE). Initially Netscape was THE internet browser. It was the browser to program websites to be displayed on, IE wasn’t even really on the radar. Also, at this time with the web, these programs were being sent out by CD, it would take an extremely long time to down load this application. Why? because it was over a telephone line. A modem that was getting about a tenth or less of the download speed you have now with whatever your broadband connection is. That and your mom would probably pick up the phone to call some one while you were trying to download the software, or while playing War Craft 2 against a friend.

Since the medium of delivery for the browser was over CD it was a level playing field for both browsers to compete. You’d get one in the mail for whatever browser, Netscape, IE, AOL, etc. However, Microsoft realized the importance of this market. They figured out a way to leverage their desktop monopoly to foreclose on the browser market. They started installing IE onto all of their operating systems. Then went as far to integrate everything together to ensure market dominance. It worked because of slow connections and the fact that people are lazy. If something already works they will use it.

Flash forward about 5 years. MP3s have gotten popular through Napster and other digital Peer 2 Peer file transfer systems and the next big market is music players. Winamp was a major player at this time and WMP was not really any sort of competition for it either. In Windows XP WMP got a major over haul and was at least able to compete with Winamp. Microsoft decided to bundle the software in the same manner they had done with IE.

This is where the story changes though. The EU filed suite against this claiming this was anticompetitive. At this time the iPod had just come out and there was no reason to expect the product to come to the PC. It seemed like it was a long way from happening. Plus, even if the iPod was going to PC it was still going to be a niche market. So, the law suit. We all know now that because of the pace of technology and the fact that there were other factors involved with the selection of the music player it prevented market dominance of Microsoft. Without the requirement for iTunes with the iPod who knows what player would have won the market.

How does this relate to Google though? Well, looking at the search engine suit from Korea I mentioned yesterday, I think this has some pretty significant implications. Using a platform to control the method in which you use other functions can be shown to be anticompetitive. Google search engine is the first for mobile phones, however, I see no reason why it will be the last.

More on this topic in my next blog.

Pseudonymity and Anonymity II

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Yesterday I gave an extensive overview of the debate that is ongoing between “Real name” supporters and “Pseudonym/Anonym” supporters. If you haven’t read it I suggest you check it out. There are quiet a few different groups of people discussing it, American and International.

Why do I think it’s a big deal though? I mentioned yesterday that I made a personal choice to use my real name instead of a pseudonym. This is partially because I’m really bad at coming up with them, but also because I try to speak with my real voice as much as possible. I’m also aware that this is could have some repercussions depending on what I try to do after I graduate. I haven’t also been the most supportive of the US government. At  one point when I was debating with a hardcore conservative he pointed this out to me as well.

The problem is that we don’t know who has our information. We lose control of it as soon as it’s put on the internet. I have no idea who has access to the conversation I’m talking about. I know that Facebook and the people involved in the conversation do, but I don’t know if that information got passed onto any sort of governmental body.

This is a huge change from what has happened in the past. We had control over who we gave our information to. It was easy because it had to be face to face or perhaps through a letter. Once that conversation was finished unless notes were taken or it was recorded most of the information would only be remembered only imperfectly by the people involved. This is not the case now. it can be stored and recalled perfectly through the internet and web records.

This permanence is dangerous, as the past will haunt people for decades to come instead of only a few years and only with their friends. However, that is not all. Forcing people to use their real names in all cases causes a chilling affect on activism as governments try to stamp down on it. Twitter will be a more popular communication tool for activists than Google + or facebook because of their pseudonym policies.

Regardless of if we like it or not, Facebook, Twitter, Google + and other social networking sites have become our public forums. We don’t have a town square to meet and discuss life. We don’t have the community unity that once used to pervade life so we use the tools that we have. However, all of these new meeting places are controlled by corporations that are required to give data to the US government and other governments as well. The ability to protect your identity from the government, other organizations and from people you don’t want to have find you is important. It allows people to be honest and investigate different parts of themselves or try to fight to bring down repressive regimes.

Pseudonyms are part of the internet’s social norms, a method to protect free speech and to protect yourself. They are very important and we need to fight to keep them. The US government should be seeking to protect our ability to have pseudonyms and not fighting against them. The State Department claims they support internet freedom. Supporting pseudonyms and the ability to be anonymous on the internet is the best way to do so.

EFF’s Tor challenge and Internet Freedom

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First of all, no I didn’t participate in the Tor challenge. I don’t feel I can use my computer in this way while I’m doing a lot of work on it for school. However, I think the idea is excellent. I didn’t explain what TOR is did I? Well here’s the EFF website about Tor. TL;DR: basically it provides a way for You, to hide your actual IP address. You have to install a piece of software to access the network. Once you access the network you’re data will bounce around and come out an exit point, which is your “final” IP address. This final address will take the brunt of any legal or illegal activity being conducted on the TOR network. The EFF suggest that you do not run an exit relay out of your home and the Tor project has some recommendations on running an exit point. However, it should be safe to run a middle relay to allow traffic to flow through your home address. The data that flows between middle nodes is encrypted. See the picture below.

EFF representation of the Tor network: from Tor Project

Why is this technology important? This helps with freedom of speech. The US constitution allows free speech and this is an important tool in allowing freedom of speech. Of course like any proxy website, or VPN it can be used for other purposes, as can the ideas of free speech. We may not like what it is being used for, what is being said or why, but it’s still legal. One thing that is noted repeatedly on both the EFF and Tor page is the risk of DCMA take downs and law enforcement attention. Both of these have a chilling affect on freedom of speech.

It seems to me that copyright control and protection may seriously damage a project like this. If all the exit nodes are shut down because of copyright take down notices we lose a valuable tool in preserving our freedom of speech as well as an assumed right to use the internet in the way we feel is best.

Another concern I have about this technology is the obvious potential use by hackers. This tool is going to be used by hackers. It would be foolish for them not to. This of course puts this technology at odds with the wishes of the government to control copyright infringement and prevent hacking of businesses and government agencies. I seriously hope that the US government, and the EU, gives protection to the exit nodes from legal repercussions from hackers using these networks. Used in the right way Tor could be a modern Underground Railroad for dissenters in countries like Libya, Yemen, and Saudi Arabia.