[LINK] Moses: 'How the internet became a closed shop'

[Roger Clarke]

How the internet became a closed shop
Asher Moses
December 22, 2012
Technology Editor
Fairfax
http://www.theage.com.au/technology/technology-news/how-the-internet-became-a-closed-shop-20121221-2brcp.html

A borderless frontier has morphed into a set of gated communities, 
writes Asher Moses.

A LITTLE over a decade ago, just before the masses discovered the 
digital universe, the internet was a borderless new frontier: a terra 
nullius to be populated by individuals, groups and programmers as 
they saw fit. There were few rules and no boundaries. Freedom and 
open standards, sharing information for the greater good was the 
ethos.

Today, the open internet we once knew is fracturing into a series of 
gated communities or fiefdoms controlled by giants like Apple, 
Google, Facebook, Amazon and to a lesser extent Microsoft. A 
billion-dollar battle conducted in walled cities where companies try 
to lock our consumption into their vision of the internet. It has 
left some lamenting the ''web we lost''.

The same firm in some cases now provides not just the content we 
consume but the devices we consume it on and a plethora of other 
services to help manage our digital lives, be it email, online 
storage or e-commerce.

Increasingly, the web kings are expanding into each other's turf and 
butting heads with smaller pretenders to the throne, such as Twitter, 
locking competitors out of their ecosystems but, more importantly, 
locking us, the consumers, in.

''There's no question that we are witnessing a clash of the titans 
over 'our' data'', says Jennifer Zanich, serial Australian 
entrepreneur and now co-founder of start-up Paloma Mobile.

Data is the oil of the digital age, handed over willingly by 
consumers seduced by the latest flashy new web service. Big data is 
where the big money is made on the web today, and famous US venture 
capitalist Mary Meeker describes it as the ''Wild West'' of the 
internet.

The amount of global digital information created and shared by 
consumers has grown exponentially over the past few years to 2.8 
trillion gigabytes in 2012, according to analyst firm IDC. Each big 
tech firm wants to capture as much of that data as possible.

''It's important to remember that if you aren't paying to use a 
product, then you are the product; your data is being sold to 
advertisers who are paying,'' says Ryan Junee, technologist, investor 
and founder of fashion recommendation app Inporia.

Where once the battleground was hardware, networking and software, 
areas dominated by companies such as HP, Cisco and Microsoft, 
respectively, today the big dollars are in your bytes, says Anthony 
Goldbloom, founder of big data pioneer Kaggle.

And the tech giants are now building what Zanich calls ''moats'' 
around their platforms to lock in consumers and their data, as users 
continue to ignore the fine print. Instagram sparked an online 
backlash last week, announcing a new policy claiming the right to 
sell users' photos without payment or notification (before 
back-pedalling after users started disabling their accounts).

''It is like trusting the financial services houses in the GFC to do 
the right thing,'' Zanich said. ''We know now they were betting both 
sides of the deal, manipulating the consumers and the market to their 
own gain, but they told us it was about us, their customers.''

The impact of the platform-dominated world is most keenly felt for 
users of mobile devices like smartphones and tablets, which may soon 
be the dominant method of getting online, as they are expected to 
outnumber desktops and notebooks next year.

Apple users, for instance, are increasingly locked in. Once you've 
bought your apps, music and movies from the iTunes store and have 
your content and contacts backed up in the iCloud, you're far less 
likely to switch.

The same goes for Google's Android with its Play store and tight 
integration with Google services like Gmail, Google+ and Google 
Drive. Google is now even beginning to control the pipes the content 
is delivered on with its Google Fiber network in parts of the US.

For Google, whose long-time motto has been ''Don't be evil'',
[Utter rubbish, debunked in 2006]
anything that has the potential to get in front of its search engine 
is a risk, says Matt Farnell, co-founder of app analytics firm 
Appsperse, which is why it developed things like Android and the 
Chrome web browser and distributed them widely for free.

The strategy appears to be working. While Apple's profit margins are 
head and shoulders above anyone else, Android recently surpassed iOS 
in Australia in smartphones for the first time and globally it 
accounts for three-quarters of the market.

This maintains Google's search market share and provides loads of 
data to deliver targeted advertising. The next frontier is social 
media, which is where more and more people are turning for content 
discovery instead of search, says Farnell. But Google has yet to 
crack the mainstream in this area.

The battle over platforms has significant implications for 
programmers, designers and companies selling products that run on 
them and already there are examples of stoushes that directly impact 
on customers.

Apple, refusing to allow a competitor to control one of the key 
features on its phones, booted Google Maps from iOS and replaced it 
with its own inferior Apple Maps, only to suffer ridicule and a 
vicious backlash from users who downloaded the new Google Maps app in 
their millions when it was released earlier this month.

Apple emerged with egg on its face while Google now has access to 
even more data. While the previous Maps app for iPhone was developed 
and controlled by Apple, the new app prompts users to sign in with 
their Google accounts.

But as they battle for control of users and their data, neither 
Google nor Apple wants a third horse entering the race. Recently 
Apple blocked updates for Microsoft's cloud storage service SkyDrive, 
while Google stranded Windows Phone 8 users of Gmail by removing 
support for Microsoft's Exchange ActiveSync, used to sync email, 
calendars and contacts.

In November, Google dropped support for Internet Explorer 8 - which 
runs on 25 per cent of machines - for Google Apps, and Microsoft has 
also claimed Google has blocked its new Windows Phones from operating 
properly with YouTube.

Seek co-founder Paul Bassat, who now runs a venture capital firm 
Square Peg Ventures, said a small number of large companies were 
becoming increasingly dominant in terms of market share and 
profitability, while closed systems were prevailing over open on the 
mobile internet.

''Time spent on apps is growing faster than time spent on 
browser-based sites,'' he said. ''We are also seeing proliferation of 
devices that are primarily used within a specific ecosystem such as 
Kindle devices.''

Twitter began closing up shop last year when it blocked Google from 
accessing its ''firehose'', which allowed tweets to show up in its 
search results. In August Twitter placed onerous new restrictions on 
third-party developers looking to access its data, which effectively 
crippled many apps. It would rather build the features into its own 
product than see others make money from its platform.

The rule change snagged One.Tel founder Jodee Rich, who relies on 
access to Twitter's user-generated data stream for his social 
analytics platform PeopleBrowsr. Rich, who declined to be 
interviewed, took Twitter to court after it summarily suspended his 
access and has so far won a temporary restraining order. Others 
haven't been so lucky.

Facebook is also continuing to expand its empire, this week 
announcing its ''Nearby'' location check-in tool would offer 
Foursquare-style recommendations, while it has also introduced 
instant messaging apps, some of which do not require a Facebook 
account.

Online social games company Zynga, which grew off the back of 
Facebook, announced earlier this month that it was prematurely ending 
its exclusivity deal with Facebook in order to extend its own 
platform on Zynga.com.

Instagram, bought by Facebook for $1 billion, grew off the back of 
Twitter. But in July following the acquisition, Twitter cut off 
access to its data, preventing Instagram users from importing their 
list of friends from Twitter.

In December, Instagram suddenly disabled its integration with Twitter 
so shared photos did not display in-line, forcing users to click 
through to Instagram's site. Twitter responded with its own 
Instagram-style photo filters and editing capabilities.

Google is not above such tactics either and has been accused of 
favouring its own services in search results and its own apps like 
Snapseed in Google+.

In a piece for Wired.com earlier this month, Ryan Tate said all the 
walls popping up between rival social empires was getting absurd. 
''Imagine if Ford built a series of freeways where Chevys, Hondas, 
and other makes were banned - that's Google+,'' he wrote. ''Imagine 
if the Chevy Malibu drove at half speed on anything other than 
Chevy-owned freeways - that's Facebook's Instagram. Imagine if the 
California state freeway department Caltrans started building their 
own cars to discourage people from driving around in the half-speed 
Chevys - that's Twitter.''

In a post earlier this month, popular tech blogger Anil Dash lamented 
''the web we lost'', arguing today's social networks have ''narrowed 
the possibilities of the web for an entire generation of users who 
don't realise how much more innovative and meaningful their 
experience could be''.

Claus Mortensen, IDC's principal analyst for emerging technology and 
the digital marketplace, describes the practice of locking people in 
to ''closed firewalled gardens'' as a natural ''coming of age'' of 
the internet.

He says consumers like being able to use your Facebook or Twitter 
credentials to log in to other web pages. ''A lot of people are ready 
at the moment to let go of their privacy because of the convenience Š 
it's always been a balancing act,'' he says. Mortensen says in some 
countries like Indonesia and the Philippines, where mobiles dominate, 
Facebook has become ''a de facto internet in its own right''.

While Apple, Google, Microsoft and Facebook get the bulk of 
attention, it is Amazon that is emerging as a potential leader of the 
pack. Well on the way to becoming the biggest retailer in the world, 
it has just launched an advertising platform to follow its customers 
around the web and also controls the world's biggest cloud computing 
infrastructure, which it leases out to other companies. It is now 
moving further into devices with its Kindle tablets, which it sells 
at cost and uses them as a Trojan Horse to sell content.

Matt Barrie, the outspoken CEO of Freelancer.com, a Sydney-based site 
that allows firms to access cheap labour from overseas, sums up the 
state of play as: Apple has reduced itself to three products: the 
laptop, the phone and the tablet, Google is ''stumbling'', Twitter 
and Microsoft are ''screwed'' and Facebook ''may have peaked''.

But Amazon? He compares Amazon to Rockefeller and the oil industry. 
''They are going to rule the world.''


-- 
Roger Clarke                                 http://www.rogerclarke.com/
			            
Xamax Consultancy Pty Ltd      78 Sidaway St, Chapman ACT 2611 AUSTRALIA
                    Tel: +61 2 6288 1472, and 6288 6916
mailto:Roger.Clarke at xamax.com.au                http://www.xamax.com.au/

Visiting Professor in the Faculty of Law               University of NSW
Visiting Professor in Computer Science    Australian National University