Comments on BKA interim report on messenger and video service interoperability
I finally had time to read (a Microsoft auto-translation of) the German Federal Cartel Office (BKA) 81-page interim report from its sector inquiry into messenger and video services, Industry Overview and Sentiment on Interoperability. The BKA has been a leading competition authority in digital markets, so I was interested to see what their inquiry has found so far. (Page references here refer to the translated version linked above. Happy to add any better translations from native German speakers!)
The inquiry covers a very broad range of consumer and business-facing services (messaging but also videoconferencing, online meetings, webinars, etc.), with associated revenues ranging from free/open source to tens of millions of euros, and user bases from 50,000-25m+ (pp.28-32). Unsurprisingly, it has found a wide range of business models and opinions. This reduces the value of some of the economic analysis regarding innovation from p.49 onwards, since messaging is much more homogeneous and well-developed than videoconferencing (that said, the latter is 35+ years old, while the former is as old as the Internet). I’m not one for obsessing over narrow antitrust markets, but in this case a more differentiated approach might have been more productive.
I was also frustrated that many of the negative comments from individual providers quoted in the report stem from ideas that are not serious policy proposals, such as an interoperability requirement covering all providers (rather than just the largest “gatekeepers” in EU terms), and mandates for complete functional standardisation rather than a requirement covering only core industry-standard functionality, as suggested by the UK’s Competition and Markets Authority and adopted in the European Parliament’s version of the Digital Markets Act (see amendment 35), using extensible protocols to enable innovation.
The report cites a number of concerns about data security: “Some voices in the industry argue that the difficulties with data security and data protection could be raised on a technical level, ultimately everything is a question of willingness to invest.” However, there are some outright misleading statements, for example: “Since end-to-end encryption does not work under interoperability, according to [a respondent]” (p.66) or “The more different providers are involved in the communication, the more points of attack there are for spying on this [meta]data. Centralization is a dangerous dynamic for this, since suddenly all this data is at a single point” (p.68). One of the benefits of interoperability is a larger number of providers, and their infrastructure, make up the overall market, reducing centralisation (particularly from a jurisdictional perspective) and hence the ease of large-scale surveillance!
A wider problem with the report’s summaries is that anonymised statements from individual survey respondents often dominate the discussion of specific issues, rather than explaining the views of respondents as a whole. This is particularly problematic given the giant technology firms whose business strategies are most likely to be negatively affected by an interoperability requirement – Facebook and Apple – were included. A particularly egregious example was quoting a single Telecommunications Policy article’s sweeping conclusion on consumer policy (p.54), which I do not think is justified by that research. I wrote more about that article (on how a small number of users of existing messaging systems tend to communicate with different types of contacts) here.
I also did not recognise the summary of two recent surveys in the report: “the Bundeskartellamt continues to consider the behaviour of consumers as an important factor of influence to be a factor that is difficult to assess: it is clear from current surveys by the Federal Network Agency [BNetzA] and the Federation of German Consumer Organisations [VZBV] to user interests and willingness to change at best as open and rather as questionable” (p.VII). The VZBV has been campaigning for interoperability requirements in the interests of consumers, citing this very survey as evidence! I have some more detailed notes on the BNetzA report I hope to write up soon.
Trying to find something positive to say to finish, the BKA report’s conclusions on technical standardisation make sense. If interoperability is to be mandated, global technical standards, ideally from the IETF, should be used: “Otherwise, it would be very difficult for the industry to have to meet different requirements worldwide and offer different sets of interoperable functions. For such a global standardization process, a good 60 percent of respondents describe the Internet Engineering Task Force (IETF) as the most suitable.” Even there, I did note the IETF is the only standards body mentioned in the two most relevant survey questions (qq. 45 and 47).
The sector inquiry is continuing, and a full report is planned for the end of this year.