Google and the Freedom Business
Google's stance on China has won the praise of U.S. Secretary of State Hillary Rodham Clinton, who called on other American businesses to challenge foreign governments' demands for censorship and surveillance. Other companies are beginning to find themselves embroiled in the tangle as well -- willingly or otherwise. Meanwhile, Amazon gives Kindle apps, Bing gives on privacy, and December gives gaming a gift.
We're now in week two of Google's high-profile battle with China, and the stakes have risen high enough to catch the attention of no less than the U.S. Secretary of State herself, Hillary Rodham Clinton. She cheered on Google's stance in a speech Thursday, saying, "Censorship should not be in any way accepted by any company from anywhere, and in America, American companies need to make a principled stand. This needs to be part of our national brand."
Easy enough to say, but doing that can be painful to the bottom line, right? Not necessarily -- Clinton said that customers all over the world will reward companies that follow those principles. She urged other media companies and private sector organizations to challenge foreign governments when they demand censorship and surveillance in return for being allowed to do business there.
Opinion as to the speech's effectiveness was divided. Some said it was the most important speech about Internet freedom ever delivered by a top U.S. official -- at the very least, Danny O'Brien at the EFF called it a great beginning. Others called it basically a lot of cheerleading rhetoric with no real teeth. The Hudson Institute's Miachael Horowitz said what really needs to happen is for the government to actually put to use some of the millions of dollars of funding it's earmarked for Internet freedom. For example, spending money to up the server capacity of the Globe Internet Freedom Consortium could allow millions of people living under censorship policies to get around the firewalls their governments set up. First there was Radio Free Europe, next comes Web Free World.
But even though Hillary's got Google's back on this one -- in principle, at least -- the company's food fight with China is already starting to splatter onto a lot of innocent and not-so-innocent bystanders.
Listen to the podcast (14:34 minutes).
Time to Deep-Six Six?
First to feel the fallout is Microsoft. As you may recall, the incident that set the whole tangle into motion in the first place involved hackers who were apparently working for the Chinese government. They intruded into Google's network to spy on some Gmail users who happened to be human rights advocates. Before that happened, Google didn't seem that reluctant at all to do business in a country where the government suppresses speech and search engines have to censor their results. But I guess once the powers that be in Beijing enlisted hackers to pry open Google's network in order to carry out that suppression -- well, that's where the company drew the line.
So how does Microsoft play into this? Looks like its Internet Explorer browser gave those hackers the way in. They apparently busted into Google's network by way of a zero-day vulnerability in Internet Explorer 6. Microsoft released a warning in a hurry and cobbled together a workaround and then a patch.
Now, if the point of entry was a computer hooked up to Google's network that was running IE6, it does make you wonder why ANY computer hooked up to Google's network was running IE6. First of all, Google has its own browser, Chrome. Why not use that? Where's the corporate pride? Worse yet, they were using version 6 of Internet Explorer. This is a browser that should no longer exist in nature. It's like driving a car that still runs on leaded gasoline.
OK, I guess Google needs to use all popular browsers on its network to make sure its Web apps work for everyone. And I'm sure at least a few people at Google are taking some perverse joy in the heat Microsoft's taking over this one. Some of that heat comes from Microsoft's dear friends in Europe. Following the news about Internet Explorer, the governments of France and Germany both issued warnings suggesting the browser was just too dangerous to use, at least until a patch was issued. That's one way to get diversity in browser selection, I suppose.
Are we looking at the end of IE as we know it? Probably not. All the trash talk has no doubt been embarrassing, but it was a zero-day attack, and it happened on an antiquated browser. Then again, perhaps it SHOULD be the end of IE6, especially for business users. Zscaler VP Michael Sutton told us, "What I do think should be taken away from this is that enterprises should not be using outdated browsers." He said the fact that the attacks were successful only on IE 6 illustrates the overall point that just because a browser is still supported by a vendor is not a good reason to keep using it.
You Too, Android
Also feeling the sting from Google's battle are Samsung and Motorola. Those two phone makers had new Android handsets that were scheduled to make a big entrance in China on Wednesday through the carrier China Unicom. But on Tuesday, Google pulled the plug. The Android platform may be open source, but Google clearly still plays a big enough role in the launch of certain Android phones that it has the power to nix a rollout last minute.
The move may have left Motorola and Samsung with some hurt feelings, but Google will no doubt feel the pain also. These phones represented Android's chance to compete directly with the iPhone in China -- Unicom also happens to be Apple's carrier there. The carrier has a right to be more than a little miffed over this whole thing. They were probably excited to have some Android phones on hand to go up against their larger rival, China Mobile.
Yahoo is also caught in the Google/China crossfire, though it more or less put itself there on purpose. Maybe Yahoo saw an opportunity to atone for its past sins, so it stepped up in support of Google's stance. It didn't take long for one of Yahoo's major China partners, Alibaba.com, to give it some blowback by calling that move "reckless."
The winner in all this would presumably be Baidu, China's home team search giant. There's definitely an opportunity there, but Baidu is having its own problems -- a couple of top personnel have left over the last few days, and it's having trouble getting advertisers, according to its last earnings conference. Meanwhile, smaller Chinese search engines are seeing gains, and Alibaba is getting ready to get into the search game as well.
The Enemy of My Enemy Is My Search Engine
Right now, it looks like Google needs all the friends it can get, but one former friend it can no longer count on is Apple. Funny how they used to get along so well, with all the board member sleepovers and whatnot. Remember that time Google made a special YouTube app just to keep iPhone company?
No more of that. The two have grown apart. Google started making phones and operating systems and browsers, and Apple got in with a mobile ad company. So now there's talk that Apple may just evict Google from the prime real estate it enjoys on the iPhone platform.
I'm talking about the default search engine in Safari, the one that sits up at the top next to the URL bar. Yes, it is very easy to change your go-to search engine from the default to your favorite, and it's a pretty big stretch to think that Apple would remove the number one engine from the option list entirely. What is interesting is who might get top billing next: Bing, Microsoft's search engine. That's what a source told Business Week, anyway.
The Microsoft/Apple rivalry goes all the way back to the personal computer stone age, but the two aren't always knives-out enemies. And if this Bing thing turns out to be true, it could give Microsoft a leg up in the realm of mobile search.
Bing's still far behind Google and Yahoo when it comes to regular old desktop search, but the mobile search arena is still a relatively open field, and the engine that holds the top spot on the iPhone will get a lot of momentum there. Yes, people who really don't like Bing would change the setting, and people who love it will use it regardless of the default, but never underestimate the power of complete apathy. For a lot of people, a search is a search, and whether it's Bing, Google or the reanimated corpse of Infoseek, well, whatever.
Bing also looks like it's trying to make friends in Europe. Microsoft hasn't won any popularity contests with overseas regulators in the last few years -- the most recent example being its spat with the European Commission over Web browsers. Apparently, the EC thinks Europeans need their browsers spoon-fed to them by their operating system.
With Bing, though, the focal point is privacy, something European regulators are also very stern about. The search engine has announced a new policy it will roll out in the next 12 to 18 months that will dump users' IP address data just six months after each query instead of the usual 18. In talking about the upcoming policy change, Bing's Chief Privacy Strategist Peter Cullen cited privacy standards established by the Article 29 Working Party, which is a group of over two dozen European national data protection regulators that advise the E.C.
So it's clear European regulators care about privacy, and it's clear that Microsoft cares that they care, but does anyone else give a rip? Not really, not when you're talking about the specific kind of changes Bing's making, according to Tunheim Partners' David Erickson. He told us, "I can't believe it will have that much of an impact at a competitive level. People are more concerned about the quality of data they get back and less concerned about the information being saved."
Now, if any search engine started tracking your activity individually by name, that would probably be way too creepy for the market to bear. But for now, anyway, they're just aggregating data without connecting searches to individual users. Eighteen months, six months, whatever -- the demand of the day is, just gimme the info I want, and gimme it now.
Good Riddance, '09
Sometimes even a happy ending isn't quite enough to take the sting away from an overall crappy experience. That pretty much sums up the state of the video game industry for the year 2009.
Last December, the stars aligned to bring the market its biggest month of sales ever. First, there were the holidays, that's always big. Then you had all three major consoles going for price cuts last fall, which made them even more attractive for gift shoppers. The game "Call of Duty: Modern Warfare 2" was actually released in November, but it was a huge seller that kept burning well into the next month. And that game was big despite the fact that you can't even play it on the Wii, which was December's top-selling console. But Nintendo had its own hit title, "New Super Mario Brothers." I think they're running out of names.
Even though December brought the industry more revenue than any other month since time began, 2009 was still a bust. Sales were down 8 percent from 2008's figures, according to NPD. But remember, back in 2008, we were either blissfully ignorant of the economic chaos coming our way, or we were busy calling gaming a "recession proof" industry. That was a record year for video games -- kind of a tough act to follow, all things considered.
Hard to say how 2010 will pan out. Software publisher Electronic Arts recently cut back on its future outlook, but there are at least two major releases coming up on the hardware side of things: Microsoft says its Natal motion-based controlling system will be here in time for 2010's holiday season, and even though Sony says its Arc motion controller for the PlayStation 3 will be delayed, it should still be out by next fall.
Kindle as a Platform
How did we ever live two years ago without every service, platform and device having its own application storefront? What did developers do with all the hours of the day? It must have been like life before speech or fire.
Amazon has finally climbed on board the app store idea with its Kindle e-reader. It's announced it will begin selling third-party apps at the Kindle Store, and it's put out an SDK to help devs get cracking. It's promising a 70/30 revenue split between developers and itself, and companies like EA Mobile and Handmark are already signed on.
This comes about a week before Apple's expected to unveil a tablet device, and two weeks after a ton of companies at CES showed off a whole mess of tablets, e-readers, and everything in between. Kindle has some solid momentum in the e-reader category, but the field has not yet solidified -- maybe e-ink based readers really will remain a distinct category, or maybe tablet computers that do e-books and a whole lot more will eventually overshadow them. In getting an app storefront out there, Amazon is perhaps angling to stake out its territory on this frontier, but things might not be as simple as pushing out a development kit and waiting for the magic to happen. There are some potential obstacles to the plan.
First off, Amazon's set some pretty heavy ground rules. Free apps must weigh in at under a megabyte and use less that 100 kilobytes of bandwidth per month. Paid apps face the same bandwidth restrictions and must limit themselves to a one-time fee. Subscription apps over 100 megabytes have to be downloaded to a computer first, then transferred to the Kindle over USB.
That bandwidth cap business all comes down to the fact that Kindle owners don't pay a monthly bill for service the way smartphone owners do. So, developers will have to limit their use in many cases, or pay for all that extra bandwidth themselves, which will probably have to factor into app prices.
Also, no VoIP, no advertisments, no customer info collection without express consent, and no using the Amazon or Kindle brands in any way. And they must be custom-developed for the Kindle.
Flurry Analytics Peter Farrago didn't mince words when he told us what he thought of those rules: "This set of restrictions makes it extremely unattractive for application developers to work on this platform. The cost of delivery with apps that use more than 100 KB a month of data will come out of developers' pockets; if they're not able to advertise, that takes care of anyone who wants to put out a free app that's ad-supported, and if developers can't track users, that makes it hard for them to engage in a continuous improvement process."
Youch. There are also some technological limitations to consider. Whether the Kindle really is a competitor to other handheld devices like smartphones or touchscreen media players is up for debate, but Amazon's e-reader sure doesn't look or act much like Android phones, iPhones or a lot of other devices that also occupy the app store bandwagon.
With no touchscreen and an e-ink display that doesn't do color and doesn't refresh as quickly as an LCD, there's a chance that the kinds of apps you'll be able to use on a Kindle will be rather underwhelming. That bit of the equation could change, of course -- Amazon is just now laying the groundwork for its app market, and by the time the first wares start coming up, a whole new Kindle with better specs may already be good to go.