Facebook Quietly Tests Chinese App Waters with Moments Clone (Aug 11, 2017)
Apple Removes VPN Apps from Chinese Version of App Store (Jul 31, 2017)
Apple has removed VPN apps from the Chinese version of its App Store for iOS devices, in compliance with the Chinese government’s edict that VPNs have to be licensed to be able to operate. This is yet another example of the difficult line foreign tech companies have to walk in China, complying for the most part with local regulations, even those designed to enable censorship, while preserving freedom of speech in other markets around the world. This is a gray area that Apple hasn’t had to deal with as much as content-centric companies like Facebook and Google, both of which eventually exited China (one forced out, the other choosing to leave rather than submit to censorship requirements), but that’s been starting to change. In the past year and a half, we’ve seen some of Apple’s content offerings like iBooks, individual apps like the New York Times, and now categories such as VPNs blocked, while the government has also forced cloud service providers to work through local companies for data centers. As I’ve said before, so far Apple can simply say it’s complying with local laws and regulations as it does elsewhere, and that will provide some cover, although it hasn’t insulated it entirely from criticism over this latest move. This move in particular further reduces the ability of users with Chinese App Store accounts to get access to otherwise blocked news and information, but a recent crackdown on VPN use makes that challenging anyway. But so far the Chinese government hasn’t forced Apple to break any of its own cardinal rules, including protecting user privacy and security. If and when the Chinese government ever does cross that line, that will be the real test for Apple and could end up being very bad for its business in China. So far, thankfully, it hasn’t come to that. Also worth noting in this context: Russia has just passed legislation that bans the use of VPNs in the country, and although it’s a far less important market for Apple than China, the company will have to deal with some of the same issues there once the law kicks in this November.
A little while ago, I covered the news that Jessica Rosenworcel had been nominated to fill the vacant Democratic slot at the FCC, and posited that a Republican nomination must be coming soon so as to preserve the Republican advantage on the Commission. It now seems as though Brendan Carr, currently acting as general counsel at the FCC and a key ally to Chairman Ajit Pai, will take that last slot. Given the controversy around net neutrality, that majority is critical to making the changes Pai has proposed, and on the basis that both these nominees are likely to be pushed through together, things should work out fine for the Trump administration. As I said while commenting on the Rosenworcel nomination, telecoms policy is one of the few areas where the Trump administration has been able to move quickly without either Congressional or legal barriers, so it will be keen to keep the agenda moving forward quickly. Update: the nomination was confirmed later in the day.
The US House Energy and Commerce panel held hearings today on proposed legislation to regulate the licensing of autonomous vehicles for testing on roads. There is, of course, quite a bit of that testing going on already in various states throughout the US, but the Congressional effort aims to unify regulation on the topic and create a single set of policies nationally as a result. The carmakers are, in theory, in favor of that, but only if it reflects the lighter-touch approaches currently being taken by states like California, while safety advocates are pushing for tighter regulation, more testing, and generally slowing things down. There are sensible arguments being made on both sides here – no-one, least of all the carmakers, wants high-profile accidents featuring self-driving cars putting the whole field back by years. But given the potential of autonomous driving to increase safety over time, there are also strong safety-centric arguments for allowing reasonable testing to go on without burdensome oversight. Given the current state of US politics, I’m not 100% confident that we’ll get a sensible bit of legislation out of all this, but I do think that it’s inevitable and welcome that we’ll eventually have a national framework for not just testing but ultimately selling autonomous vehicles. Testing is an area that needs to be addressed today, but commercial vehicle sales are several years away and as such there’s time to get this stuff right and no need to rush into anything today. But there are some really thorny issues here that do need to be thought through in great detail, not least questions of liability and responsibility.
The EU has three open antitrust cases against Google, and has just announced its final decision in one of those cases, which concerns Google Shopping. Very briefly, EU law doesn’t punish dominance in a market per se, but does place limits on certain behavior by dominant companies, specifically those which give their other products and services an unfair advantage. The EU has concluded firstly that Google search is dominant in the EU, and secondly that Google abused that dominance by favoring its Google Shopping feature over other “comparison shopping services”. It has therefore set a €2.4 billion ($2.7bn) fine based on revenue from Google Shopping in 13 countries where it’s available since as long ago as 2008, with a threat to levy an additional 5% of Alphabet’s total revenue going forward if Google doesn’t comply with its directives within 90 days. Other than the fine, the directive says Google has to stop favoring Google Shopping over other comparison shopping services, presumably either by eliminating the Shopping box that appears at the top and merely allowing Google Shopping results to appear with the other blue links below, or by featuring every available comparison shopping service in that box at the top and letting users choose. Predictably, Google has said it feels the decision is wrong and may appeal.
On, then, to what this all means. Firstly, this is just the first in three separate cases, and I’ve previously written in depth about the one that concerns Android here and here. In its decision, the EU explicitly says that this case sets a precedent, which certainly suggests it’s likely to find and act similarly in the other two cases. Secondly, the fine is substantial, but ultimately not the biggest punishment for Google here. Rather, the most significant outcome is restrictions on promoting other Google services in search, which applies for today onto to Shopping but by implication would also affect other linked products that get prominent promotion in search results, whether Maps, News, or potentially other categories too. Put that together with the precedent point, and we’re very likely to see similar restrictions on bundling and promoting other services in Android and possibly other areas too. Thirdly, the decision is notable for a very European approach to defining markets, which I mentioned in one of those earlier pieces on Android: the EU tends to define markets in ways normal people probably wouldn’t, because that allows it to make findings that otherwise couldn’t be made. In this case, it’s defining Google Shopping as a comparison shopping service rather than just a more useful way to present shopping-related search results and/or ads, which is how Google sees them. Once you define Google Shopping in that way, then of course Google is unfairly promoting Google Shopping over other comparison shopping services – can you even name any others? Google’s own algorithm, which benefits only from being as good as possible, rarely ranks any others above the fourth page of organic search results, suggesting their limited relevance. But as long as the EU is determined to take that approach, I see very little Google can do to fight against this decision, because it’s based on a market definition the EU gets to decide on, and which Google is essentially powerless to change. Overall, this feels like something of a watershed moment in Google’s relationship with the EU – I think any appeal is very unlikely to succeed, and at most will push back the implementation of the decision and the forced unbending of Shopping from search. But there’s lots more to come here, and Google is going to end up operating very differently in the EU from the rest of the world as a result. See a recent case in Russia for a small sense of some of the possible implications of the Android case.
One quick note: I’ve used the term “EU” throughout for simplicity’s sake, but it’s worth noting that technically it’s a specific part of the EU organization, the European Commission, which is taking this action.