The United States House Judiciary Committee released a report this week, lead by House Democrats, offering a number of suggested regulatory reforms targeting Big Tech - namely Google, Apple, Facebook, and Amazon (GAFA). A majority of the recommendations focused on monopolistic practices within each company's ecosystems, including gouging developers with fees in app stores, controlling far-reaching data ecosystems, and barring competitors from consumer platforms.
There's a lot to unpack in the report. It's also important to note that this report is just the first step - it's almost impossible that the recommendations as written are enforced, and extremely unlikely that even a majority of the recommendations are implemented. A number of the recommendations face Republican opposition, and even if Democrats take control of the Senate and win the Presidential election this year, various forces will almost certainly preclude a complete re-work of the industry.
But it's not too early for automakers to start thinking about what potential changes in the dynamics of Silicon Valley could mean for their partnerships with companies under this umbrella. Below are a few ways in which a potential shake-up could affect automakers in the CASE (Connected, Autonomous, Shared mobility, Electrification) domain.
The biggest disruptor to automotive infotainment currently is Google's Android Automotive with Google services. The value proposition to consumers of combining Play Store, Google Maps, Google Assistant, and Google identities together into a single package surpasses anything that OEMs can put together otherwise. In many ways, this is a direct outcome of Google's monopoly as described in the report - because Google can correlate user data across all of these services, the sum of the experience is greater than its parts.
The most immediate outcome would be for Google to allow competing applications and services onto the platform, most notably Amazon Alexa. Google could theoretically also be forced in some cases to allow OEMs to pre-load these types of apps onto the system and select their own default apps and services, including maps & navigation, music, and other types of apps.
An even bigger potential outcome would be if Google is forced to share certain user data elements with third parties implementing services or applications within the Google ecosystem. For example, someone who wants to use Amazon Alexa on an Android Automotive platform may in the future potentially be able to allow Alexa to tap into relevant user data elements hosted within the Google ecosystem in order to provide a customer experience based on the same set of data that Google Assistant has. I doubt regulation of the industry would go this far, but it's possible.
Most major technology giants have invested heavily in autonomous vehicles and the attendant technology development. The machine learning workload and artificial intelligence required for safe, efficient operation of autonomous vehicles fits squarely into the competency of many of these companies. Google started its Waymo project all the way back in 2009, Apple started and shuttered its own internal development project ('Project Titan'), and, most recently, Amazon acquired Zoox, a self-driving platform development start-up.
While Google/Alphabet already manages Waymo as a subsidiary, it's possible we could see a "Ma Bell"-like break-up of these subsidiaries such that these businesses would need to stand on their own. The long-term implication is that the "nuclear disaster" scenario for OEMs of a Waymo-like vehicle, offering a strictly Google ecosystem product, is unlikely to come to pass without significant headwinds in Washington.
While both Apple and Facebook are targets of the report, some of the outcomes could also lay the groundwork for more serious engagements by Apple and Facebook in automotive.
Apple has yet to expand beyond CarPlay, a tacit acknowledgement that without a hardware play - and its stringent ecosystem requirements - there isn't an obvious next step for the company in the industry. Forcing Apple and its competitors to open up their ecosystems to each other subverts Apple's autonomy over its own ecosystem, and while it certainly doesn't want this outcome, it does mean that Apple would have incentive to more deeply integrate with automotive platforms.
Facebook has had almost zero automotive ambition, largely due to their business model and platform not greatly benefiting from such integration. The prospect of Facebook being able to embed its social ecosystem into other on-board infotainment ecosystems could incentivize development of a "Facebook" experience in the vehicle. Not only could Facebook be used as a potential identity provider, but the data about an individuals network and connections could be used to support mobility and car-sharing applications as well as federate into consumer applications. Facebook could even go so far as to potentially incubate its own developer ecosystem for the car to augment offerings from Google & others, as its identity capabilities could be a pull for certain consumers.
To be clear, the potential outcomes noted above are just theories, at best, based on an initial report from a House Judiciary committee report authored primarily by Democrats. Without full bipartisan support, and in the face of strong opposition from Republicans, it's impossible to tell what - if any - reforms come from the report.
In the near term, automakers should continue to assume that Google and others will retain autonomy over their ecosystems and will not be forced to either break-up their various business units or open up their data ecosystems to third parties more fairly.
In the long term for automakers and their suppliers, it may be worth thinking about where to place certain investments that could pay off in a world where technology companies no longer have hegemony over their data empires. Perhaps independent platforms and ecosystems could become more viable, as developers and consumers are no longer held hostage to mini-monopolies on consumer reach and data. Perhaps there will be even bigger implications in the race to develop viable autonomous vehicle platforms for consumer use.
At SBD Automotive, we have been tracking and forecasting how the automotive CASE ecosystem will evolve over the coming years. We partner extensively with automakers and their suppliers on market research & intelligence as well as strategic consulting and hands-on development of connected and autonomous automotive products. For more information on how we can help you refine your approach to this disrupted ecosystem, you can get in touch with us here.