Slate’s Manjoo on Apple iPhone Regulation

by on August 6, 2009 · 26 comments

iphoneDespite my frequent disagreements with his policy conclusions, Farhad Manjooo of Slate is one of the most gifted tech policy pundits around today and everything he writes is worth reading (and I whole-heartedly agreed with his recent article on the high-tech and antitrust).  Alas, I find myself again disagreeing with him again today.

In his latest column, “The Great iPhone Lockdown: Should the FCC force Apple to sell Google’s apps?” Manjoo responds to a recent essay by TLF contributor Ryan Radia (“Newsflash to FCC: The iPhone is a Closed Platform, and Consumers Love It“). In that essay, Ryan generally argued that: (a) a lot of people own and love the iPhone despite some silly restrictions on certain apps; and (b) if they don’t like that, there are plenty of other options from which they can choose. Consequently, regulation seems unwarranted and likely highly misguided in light of the potential unitended consequences in might yield.  It’s an argument I very much agree with, of course.  Anyway, Manjoo responds:

Radia’s argument isn’t crazy. Just the other day, I argued that the government shouldn’t go after Google for antitrust violations because the tech industry is fluid; companies that are on top today can fall tomorrow. So what if Apple rejects apps capriciously? If its actions are so terrible, consumers will eventually abandon it.

But then Manjoo counters that argument and goes completely off-the-rails with several assertions that I find quite perplexing:

Yet [Radia's] analysis misses a key point: The iPhone runs on public networks and therefore falls under government jurisdiction. At the very least, the regulators have a duty to ensure fair competition on wireless networks—and by arbitrarily blocking rivals from its device, the iPhone’s software platform simply isn’t fair. We would never accept its rules in other contexts: Imagine if Apple were building cars instead of phones and one day decided that everyone who’d bought an iCar would be banned from listening to any music not purchased from iTunes. Or say that Apple banned all Mac users from downloading Firefox because the browser duplicated the functionality of Safari. Such restrictions sound ridiculous; they wouldn’t pass the barest scrutiny of regulators or consumers. So why should we allow Apple to do the same thing with the iPhone?

Well, let’s begin with a few things he gets wrong here.  First, “The iPhone runs on public networks and therefore falls under government jurisdiction.”  Uh, no. Last time I checked, AT&T was not running a “public network” owned by the government.  It’s true that AT&T is subjected to some FCC and state rules governing the provision of service, but it isn’t a “public network” like our highway system or inter-coastal waterways.  Thus, AT&T has the right to set terms of service (along with partners like Apple) to achieve both profitability and continue to invest in innovative new networks and services.

Manjoo then asserts that: “At the very least, the regulators have a duty to ensure fair competition on wireless networks—and by arbitrarily blocking rivals from its device, the iPhone’s software platform simply isn’t fair.” It’s true that there are consumer protection laws on the books, but it’s unclear to me how the FCC has any jurisdictional authority to be regulating Apple or the iPhone.  There simply is none as I noted here in my essay, “Where is FCC Authority to Regulate in Apple-Google Spat?”

Manjoo’s next argument that “We would never accept its rules in other contexts,” uses some very rather strange examples. He asks us to consider what we (or the government, I suppose) might do “if Apple were building cars instead of phones and one day decided that everyone who’d bought an iCar would be banned from listening to any music not purchased from iTunes. Or say that Apple banned all Mac users from downloading Firefox because the browser duplicated the functionality of Safari.”

Well, I think it’s quite clear what we would do: WE WOULD STOP USING APPLE PRODUCTS!  Or at least we could if we didn’t like the terms of the deals they offered.  So, even if it is true that many of us would find such restrictions “ridiculous,” as Manjoo suggests, it certainly does not follow that “they wouldn’t pass the barest scrutiny of regulators...”  Rubbish. I’m not even sure which agency it is that Manjoo think would be in the business of regulating “iCars” or, for that matter, Firefox and Safari web browsers. (A “Federal Computer Commission?”)

Regardless, it’s a bad idea.  These are activities that are better settled by consumer responses and market backlashes. If you want more innovation and competition in response to bone-headed moves by Apple (or anyone else for that matter), the solution is most definitely NOT the sort of common carriage regulatory regime that Manjoo seems to be suggesting.  That will just lock us into plain vanilla technologies, networks, and services.  Real tech innovation happens when people and competitors get pissed and get off their duffs to do something about it, not when government attempts to micro-manage results by tinkering with yesterday’s platforms.

Again, I want to make it very clear that I am not saying there is no such thing as “market failure” or “code failure.” To the contrary, as I argued in my recent exchange with Lawrence Lessig, I see mini-market failures happening all the time in the technology world.  But:

here’s the amazing thing: I usually wake up the next day, fire up my RSS reader again, and find a world almost literally transformed overnight. I see the power of public pressure, press scrutiny, social norms, and innovation by competitors combining to correct the “bad code” or “code failures” of the previous day. OK, so sometimes it takes longer that a day, a week, or a month. And occasionally legal sanctions must enter the picture if the companies or coders did something particularly egregious. But, more often than not, markets evolve and bad code eventually gives way to better code; short-term “market failures” give rise to a world of innovative alternatives.

Thus, I went on to argue that:

“code failures” are ultimately better addressed by voluntary, spontaneous, bottom-up, marketplace responses than by coerced, top-down, governmental solutions. Moreover, the decisive advantage of the market-driven approach to correcting code failure comes down to the rapidity and nimbleness of those response(s).

Of course, this assumes we can agree on a definition of “bad code” and “code failures.” What concerns me about the way Prof. Lessig approaches these issues in Code and in his subsequent work is that he is far too quick to declare the debate over by labeling short-term code hiccups as sky-is-falling market failures. The end result of such myopic techno-pessimism is the inevitable call for governments to intervene and “do something” to correct supposed code failures. The cyber-libertarian instead counsels patience. Let’s give those other forces — alternative platforms, new innovators, social norms, public pressure, etc. — a chance to work some magic. Evolution happens, if you let it.

But, again, such evolution and innovation will most decidedly not happen if you people are always running around crying “market failure!” and calling in the code cops at every juncture, as Manjoo seems to be doing in the Apple-Google spat.  The problem with that think, as I noted in my debate with Lessig, is that it:

creates perverse marketplace incentives by discouraging efforts to innovate or “route around” bad code or code failure. We don’t want the whole world sitting around waiting for government to regulate the mousetrap to improve it or even give everyone better access to it; we should want the world to be innovating to create better mousetraps!

No one is going to build a better mousetrap to compete with Apple if regulators make it too easy for Apple to become the one preferred platform for all mobile apps developers. If Google is pissed about Apple screwing them over on their Google Voice app, that is a great thing: It will give them all the better reason to plow even more resources into Android and other platforms to compete against Apple!  And that’s exactly the sort of serious competition and innovation we should all be rooting for.

How is it that smart people like Manjoo fail to grasp this crucial point?

  • dmarti

    On Slashdot, the most common tag is “haha”. It's a disgrace that Slate doesn't allow this functionality, since I use it with packets that travel over public airwaves.

    I'm going to write the FCC, and ask them to mandate that site that any site running pieces from Apple users whining about Apple must implement tagging, so that non-Apple users can tag them “haha”.

    You're the ones who got on the Steve Jobs bus, so either sit down and shut up, or get off.

  • http://www.facebook.com/RichardBennett.Cal Richard Bennett

    Google and Apple are competitors in the cell phone market, although they have different business models. Google gives their OS and app platform – Android – to hardware manufacturers for free, while Apple give their to themselves for free. Google makes its money from Android by requiring customers to use its on-line applications, such as the contacts in Gmail, in order to use their smart phones. So obviously Apple doesn't want to help Google kill the iPhone by supporting the very applications that are meant to kill it. Is there a federal mandate for cell phone manufacturers to act as if they have a death wish?

    Manjoo has clearly lost the fox on this question, and appears to simply argue for Google uber alles instead of making a princpled argument. Where's the outrage for the tie between Android and Gmail?

  • dm

    “We'd stop using Apple products”. Or, maybe we'd violate our warranty and jailbreak them:

    http://apple.slashdot.org/story/09/08/07/133320

    Four million users of the App store for jailbroken iPhones (some of those are probably iPod Touch owners). To put that number in perspective, Apple has sold 17 million iPhones as of late March (http://www.networkworld.com/news/2009/032409-ap…).

    Having the FCC insist on a level playing field — the flip side of your “dreaded regulation” — might also benefit competition. Potential competitors for the iPhone would know that they'd have access to ATT's network, too. It would be a bit like back when the FCC forced the phone company to accept hand-sets that met the technical standards, instead of only (rented) hand sets from Western Electric.

  • http://blurringborders.com Kevin D

    Adam – do you think the onerous contract that is required for an iPhone changes anything?

  • http://www.techliberation.com Adam Thierer

    Kevin.. I suppose we'd need to agree on a definition of “onerous” before we debated when regulatory agencies should start interfering with — of nullifying — freedom of contract. That's not something we should take lightly. Business models and market certainty are built upon freedom of contract. There are far more “onerous” contracts I can think of than the one you sign to get service via your iPhone. Seriously, have you ever seen the stack of contracts they throw in front of you before you can buy a home on mortgage. My god, it's like you are signing away your life and your first born at the same time. I'm one of those dorks that actually reads the fine print and sometimes ask about obscure provisions that, at least on their face, appear “onerous” to me. But I pretty much have to sign them if I want the house. At the end of the day, however, they don't really amount to much of a burden on me. And that's pretty much the same way I feel about some of the sillier clauses I find in service contracts for mobile or broadband service. Many provisions looks silly and unnecessary on their face but don't amount to much in the long run.

    Of course, some contractual restrictions really do.. well… restrict! Sometimes we have to accept some curbs on service offerings to make sure the provided will market them at all. There has to be at least *a little* piece of mind in it for them, too. At the end of the day, many of the most restrictive things will be evaded anyway. There's just no stopping truly determined people (like me) from tinkering with devices and adding functionality. Of course, I've voided just about every warranty I've every had on my electronic devices (and my cars too!) by cracking them opening and tinkering with them from Day 1. But I understand that risk. So such the public. Because the alternative (government nullifying contracts on a whim) has horrific potential consequences for technological innovation.

  • http://www.facebook.com/people/Allen-Graetz/500690925 Allen Graetz

    Onerous? Sweet lord, did you throw a fit when you're mom told you to be home by midnight when you 8 years old?

    I'd say $200 for a $700 phone in exchange for committing to 2 years of service that I'd have more or less spent the same amount of money even if it wasn't ATT is actually a damn good deal.

  • http://blurringborders.com Kevin D

    Not sure what you're actually talking about here, Allen, but I think you're unlikely to be joined by many in your '$200 cancellation fees are a “damn good deal” camp.'

  • http://blurringborders.com Kevin D

    Adam – Sure, there are far more serious contractual obligations for other commercial relationships, but that's certainly to be expected due to the more serious nature of, say, buying a house. (Also, personal mortgages, or at least the leases I've dealt with, are far more flexible and able to be changed than a cut-and-dry contract from a large telcom.)

    And while I agree that we should approach government interference with freedom of contract with great suspicion, I'm not as dismissive of the importance of those contracts. For one, although a minority of customers (in which we are included) can certainly tinker with devices, that is (a) no substitute for the truly revolutionary differences that characterize the modern mobile phone market, and (b) not only a way to void the warranty, but also violate the legally binding contract.

  • http://blurringborders.com Kevin Donovan

    Not sure what you're actually talking about here, Allen, but I think you're unlikely to be joined by many in your '$200 cancellation fees are a “damn good deal” camp.'

  • http://blurringborders.com Kevin Donovan

    Adam – Sure, there are far more serious contractual obligations for other commercial relationships, but that's certainly to be expected due to the more serious nature of, say, buying a house. (Also, personal mortgages, or at least the leases I've dealt with, are far more flexible and able to be changed than a cut-and-dry contract from a large telcom.)

    And while I agree that we should approach government interference with freedom of contract with great suspicion, I'm not as dismissive of the importance of those contracts. For one, although a minority of customers (in which we are included) can certainly tinker with devices, that is (a) no substitute for the truly revolutionary differences that characterize the modern mobile phone market, and (b) not only a way to void the warranty, but also violate the legally binding contract.

  • http://blurringborders.com Kevin Donovan

    Not sure what you're actually talking about here, Allen, but I think you're unlikely to be joined by many in your '$200 cancellation fees are a “damn good deal” camp.'

  • http://blurringborders.com Kevin Donovan

    Adam – Sure, there are far more serious contractual obligations for other commercial relationships, but that's certainly to be expected due to the more serious nature of, say, buying a house. (Also, personal mortgages, or at least the leases I've dealt with, are far more flexible and able to be changed than a cut-and-dry contract from a large telcom.)

    And while I agree that we should approach government interference with freedom of contract with great suspicion, I'm not as dismissive of the importance of those contracts. For one, although a minority of customers (in which we are included) can certainly tinker with devices, that is (a) no substitute for the truly revolutionary differences that characterize the modern mobile phone market, and (b) not only a way to void the warranty, but also violate the legally binding contract.

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