Window into Google's Monopoly Maneuvers: More Internal Skyhook Emails

05/11/2011 09:35 am ET | Updated Jul 11, 2011

The initial set of documents from the Skyhook trial (which I analyzed here last week) gave a quick flash of Google's gamesmanship. But examining the larger set of documents from the initial phase of the Skyhook trial against Google is opening a window into Google executives' views on how they sought to reinforce Google's monopoly and collect personal information from its users.

These  other batches of documents (see these PDFs here and here from the trial) highlight how Google both recognizes the monopoly nature of location-based services on smartphones and how it can keep extracting private information from users while maintaining a figleaf of "consent."

As the New York Times noted in a story over the weekend, the emails flying back-and-forth give an almost minute-by-minute window into the workings of high-tech negotiations-- at least until some legal-aware top managers abruptly killed email exchanges with messages like "Thread-kill and talk to me off-line with any questions."  But in the meantime, we get some quite damning admissions by Google execs on their internal practices.

Fighting to Monopolize Location-Based Services: When Motorola and Samsung announced they were going to use Google-rival Skyhook for their location-based services on their Android smartphones, Google on one hand responded in these internal emails by noting the superiority of Google location information precisely because they were maintaining constant surveillance on customers and local wi-fi spots to update their location maps. "We are constantlyre-mapping through our users, which keeps the data re-refreshed," said one email (see p. 44) or, from another manager, the advantage of "the large volume of device distribution that helps the data collection. (see p. 32)

Conversely, the managers bemoan the doom if Skyhook gets the business from manufacturers like Motorola and Samsung and Google loses the ability to spy on customer locations through the smartphones. "It will cut off our ability to continue collecting data to maintain and improve our location database.  If that happens, we can easily wind up in a situation we were in before creating our own location database and that is (a) having no access at all or (b) paying exorbitant costs for access."

Google managers recognize this market as a classic winner-take-all monopoly situation where controlling more devices let's you control more data which in turn gives you such an overwhelming advantage in providing location-based services that manufacturers will have to use your service.  With Android phones beginning to take off strongly in early 2010, who controlled those location-based services would create a tipping point for control into the future.

Bundling Services to Push Skyhook Out of the Game: During the Microsoft antitrust investigations, it was that company's attempt to bundle services together that drew antitrust ire, but these emails show Google explicitly seeking to use bundling as a tactic.  Discussing Google Maps, top Google manager Steve Lee writes:

"We are in the process of trying to bundle NLP [Google's location service] with GMM [Google Maps] on Android, just like we do on other platforms...If successful, all GMM android partners will automatically get NLP, at least when GMM is used."(p. 47)

But Google had an even bigger bundling club, tying its location-based services to the Android operating system itself, much as Microsoft tried to tie installation of its Explorer browser to its Windows operating system.   By June and July, you see the evidence of Google using that club on manufacturers to knock Skyhook out of the competition.   You have the June email from Motorola to Skyhook telling the company:

"As you will see from the language in a note received from Google (relevant text is coped below), Skyhook's implementation of the XPS service on Motola's device renders the device no longer Android compatible."(p. 27)

With Google preventing Motorola from shipping Android phones until they make required changes, you see Christy Wyatt from Motorola complaining to Google, "We are now less competitive as a result of our being prevented from shipping."  They asked why Samsung was not being prevented from shipping their Skyhook-enabled device and Andy Rubin of Google wrote back that "Samsung confirmed they stopped shipping the devices with Skyhook."(p. 51)

Even as these allied manufacturers were having shipping schedules held up under threat of losing the Android operating system license, some inside Google began to worry about how this would play publicly.  Google's Katherine Chou wondered in an email about the need to "figure out how to message this"(p. 47) and Dan Morrill of Google in August noted that pretending that thethe reason for excluding Skyhook was one of  "compatibility" with the Android system was hardly a persuasive argument to allied manufacturers:

"it's not like it isn't obvious to the OEMs [manufacturers of the smartphones] that we are using compatitibility as a club to make them to things we want." (p. 116)

Note the word "club" by a Google insider for what they were using to whack their allies to stop Skyhook.

Keeping Consumers in the Dark: As for how this would impact users of the Google smartphones, at least one clear answer by Google execs was the goal of collecting MORE data to better outperform Skyhook. Wrote Google's Anrunesh Mishra:  "We not only need less error on the collection side, but also experiment with different algorithms that collect not just more data and better targeted data and when needed." (See p. 34)

As for worries about consumers not understanding what location data  being collected, Google was quite aware of the issue and a  Google exec in May wrote, "we cover the collection of location data in the terms of use; our legal feels this is satisfactory, so we are not intending to provide any other notice." (p. 85) [emphasis added]

Minimizing notice to consumers and maximizing data collection, along with using control of the Android operating system to "club" allied manufacturers, was now the strategy for Google in regaining control of the location-based services market.

More to Come: This initial set of emails was only the first step in the trial and the judge's decision last week opened the door for Skyhook to pursue much more extensive discovery of Google and its operations.   As we wait for federal officials to mount their full antitrust inquiry into Google, this trial in Massachusetts state court may actually be the venue where the public gets its first public view of Google's anti-competitive maneuvering and its indifference to consumer privacy.

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