If you want to make big money, offer something that people want, but no one else can offer.
The Portuguese sourced spices in the Fifteenth Century. Rockefeller locked up East Coast oil distribution in the Nineteenth Century. AT&T was once the only option for phone calls in much of the last century. They made huge profits.
The digital world can be ripe for monopoly or near monopoly, sometimes because only one company unlocked the key to a technology, and sometimes because the software or service is adopted by so many people that it creates a market all its own, like Windows or Office products. And the money-making power of market domination leads companies to boost their own advantages. For example, today’s cars are like computers on wheels, which leads the auto manufacturers to try to lock out competition from accessing the information on the vehicles to limit who else can offer lucrative repairs.
This leads us to the sandbox. The term “sandbox” has multiple used in software development, from an isolation strategy for securing production programs to testing place for developing code. But in this instance, I am using the competitive definition, where a sandbox is a fenced-in set of software that a company sells to its customers where third-party code or applications are restricted.
Over the past 30-40 years, many companies dominating a field or vertical market have developed sandbox strategies to build a system underlying their customer’s productive networks and keep other developers from building software that can run within the sandbox – hoarding all of the opportunity to meet new client needs for the sandbox company, but also limiting the options of its customers.
Many of this type of sandbox were controlled by technical limitations, including limiting access to the application protocol interfaces (“APIs”) that could allow connection into the closed environment. Most famously at the moment, Apple and Google build a sandbox around their smartphone operating systems so that application providers must pay 30% of their revenue for the privilege of being allowed to provide apps into these systems. Other companies simply kept all others out of their sandboxes.
It is in this background that we should consider the effect of yesterday’s U.S. Supreme Court decision in the Oracle v. Google case. Others will parse the copyright fair use arguments and I may do so myself in a later post. Many people are caught up in the horse-race aspects of which tech giant is beating the other, but the underlying effect on the U.S. technology industry is more important than the individual players who forced it.
Don’t be fooled by the fact that Google is elsewhere accused as a multiple monopolist (thanks, in some cases to relentless campaigns by Oracle) and that Oracle frames this case as bad behavior by a bully. Google is on the side of small developers, software consumers and industry compatibility in this case and Oracle – well known for its bullying and anti-competitive behavior long before Google existed – is on the side of the sandbox monopolies in this case. In this particular instance, Google is on the side of the angels, and Oracle has been playing its familiar mephistophelian role.
Quoted in the Washington Post talking about this case, Charles Duan, an intellectual property lawyer and think tank worker said, “The biggest consequence of the decision is that small companies and developers can feel free to build software that’s compatible with their bigger competitors, without fear that they will be sued for copyright infringement. The main effect of the decision is to lift the copyright cloud.”
Much of the software industry filed briefs supporting Google’s fair use position in this case, as the Post points out, “Google won the support of several tech companies, including Microsoft, which argued in its own brief that the appeals court ruling in Oracle’s favor “risks upsetting long-settled expectations” that have allowed the tech industry to flourish by enabling programs to interoperate.” In short, companies like Oracle have tried to build fences around their own profitable systems, counteracting the assumed interoperability that has allowed the current software ecosystem to blossom. The Supreme Court (sans Thomas and Alito) recognized this fact and ruled that interoperability and competition should be encouraged.
Big software and database companies have long bullied their smaller competitors using a threat of copyright suits, taking advantage of the legal uncertainty around what constitutes fair use of APIs in software development. Apparently it took one of the world’s largest digital companies to win the battle on behalf of the little guys.