I’m probably not the first person to write this, and I probably won’t be the last. But leaving aside whether Android was ever truly “open,” I don’t see any way even a nominally “open” Android platform survives the war that just dramatically escalated with the launch of Facebook Home.
At this point, I figure Google is finally recognizing the inherently limited upside of a business model built upon giving everything away (to everybody), and charging for advertising against the information Google collects about the users of all that stuff it’s giving away. I figure this didn’t just happen now. It began with Amazon launching the Kindle Fire. Amazon, famously, does not care about making money off devices. All they care about is selling more content through their store. Although Amazon does not release such numbers, the consensus was that Amazon was selling its original Kindles for little to no profit. As long as it made it faster and easier for people to spend more and more money buying e-books via their Kindles, that’s where Amazon found their upside.
But the money to be made off of e-books was small compared to what could be made off the purchase and rental of other digital content, most notably movies and TV shows. The original Kindles, as effectively single-purpose devices, were not a channel for that kind of content, and with the iPad controlling the vast majority of that market from within Apple’s closed ecosystem, the only way Amazon was going to have a device that could deliver that kind of content was to have something that ran a full-blown modern mobile OS. But to do something like that well, delivering the kind of experience that users weaned on iPads have come to expect, is not easy. It’s both time consuming (many years) and expensive to do right. The great news for Amazon was that they didn’t have to do it at all. All they needed to do was take the then-current version of Android, write their own UI layer, build in some additional functionality to support their content, and they were off to the races. For what might as well have been no cost to them, they were suddenly a viable competitor in the online content space that had been almost completely controlled by Apple.
So the first salvo against Google was a content/retail company getting a free ride off Google’s IP to remain competitive in their business. What was the benefit for Google out of the whole thing? Probably just about nothing. Amazon doesn’t even use the word Android in any of their marketing materials. So there’s no brand reinforcement. And the Kindle Fire is not even a Google certified version of Android. They forked the OS completely. Thus, the Kindle Fire OS does not have any of the Google apps onboard—the apps through which Google is able to farm all of that personal data.
Next, along comes Samsung. Their story was like those of most mobile phone manufacturers who needed products that could compete in a world where it was becoming obvious that before long, all phones would be smartphones. Before iOS and Android, the reigning mobile platform champions were Microsoft Windows Mobile, Blackberry, and Symbian. With the arrival of iOS, that changed. Before long, it became obvious that these OS’s didn’t have what it took to compete. Along came Android. While initially not competitive with the iOS of the time, it was easy to see that—in general—Google “got it” and Android seemed to have the potential to compete effectively with iOS... eventually.
Mobile handset makers—including Samsung—adopted Android in droves, and soon enough, the Android OS became competitive with iOS, and for a while there, it looked to be a win for everybody. Device makers were able to sell competitive smartphones without need to build their own OS from the ground up, and Google got its data hooks into millions of mobile devices.
But then a funny thing happened. Rather than a field of handset makers roughly on par, all competing with their own phones running Android, a situation emerged where there were literally only two companies making any profit at all on smartphones: Apple and Samsung. Apple was taking some 70% of the profit in all mobile phones sold, and Samsung the remaining 30%. All well and good until you look at it from Google’s perspective. Yes, they’re getting their data. But Samsung’s mobile division alone is making more money than the entirety of Google. All because of Google’s free, open mobile OS. I can’t imagine that more than a few people at Google don’t think they’re leaving a bit of money on the table there.
That was how things stood until last week, when Facebook debuted Facebook Home. Unlike Amazon, an online retailer, and Samsung, a hardware manufacturer, Facebook is a direct competitor with Google, deriving the vast majority of its revenue from selling ads on its properties targeted according to data collected from its users. By many standards, they’re doing this far more effectively (and profitably) than Google itself. And here they are, establishing a beachhead on Google’s own platform. At this point, it’s just an app. But it’s one that already effectively stashes even Google’s own offerings—including Google+, Google’s own alternative to Facebook—on a second tier of functionality. I think it’s a stretch to think that anyone using a phone with Facebook Home is giving Google nearly as much data as they’ll now be giving straight to Facebook directly.
And this is just the start. Facebook has already announced monthly updates to Home. What will they be doing with all the development person/hours necessary for that kind of release schedule? For sure, they’ll be integrating even more deeply into the OS—getting their data tenticles into just about everything. That makes things even worse for Google. But what about doing what Amazon did with the Kindle Fire? What about appropriating their own fork of the entire OS and throwing Google out entirely? There are big costs and risks to doing this. After that break point, all subsequent development would need to be done exclusively on Facebook’s dime. But with the kind of money Facebook has, they arguably have quite a few more dimes than Google itself. It would also mean losing access to the Google Play store. On the one hand, this seems like a huge disadvantage for any phone hoping to compete with otherwise full-fledged Android devices. But it might really not be as bad as it seems. First of all, it’s likely that those for whom a full-on Facebook phone is essentially their killer app wouldn’t have so much need for the Google Play store. More likely, though, Facebook could do what Amazon did: make their own app store. Right out of the gate, it’s likely pretty much everything on the existing Google Play store would work on any Facebook phones. More importantly, though, Facebook is big enough, and there’s a possibility that their phones would be popular enough that before long, their own app store might even eclipse Google Play in terms of quality and quantity of apps. This is all highly speculative, but certainly within the realm of possibility.
Imagine this all happening while Google sits on the sidelines, continuing to give away the IP that made this all possible. At this point, I don’t think Google can continue to do this. I believe Google needs to think of a way to regain control of the OS that they created and start extracting revenue from it. And I think part of that means “closing” Android and licensing it for... well... money. Unfortunately for Google, the genie may already be out of the bottle. I’m not a lawyer, but I believe regardless of what Google decides to do next month (or even next week) if Facebook has already started modifying the existing version of Android, I don’t think there’s much Google could do about that retroactively.
Of course, Facebook Home could be a huge dud.