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Blackberry’s Outrageous Attempt to Stifle Market Freedom

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BlackBerry CEO John Chen thinks that it is unfair that his company is unpopular with independent mobile app software developers, but Chen has a solution: He wants politicians to pass a law, to force software developers to release a Blackberry version of their mobile app, whenever the developer creates or updates a mobile app for iPhone or Android.

According to Chen, posting on the Blackberry Corporate Website –

Application/Content Neutrality. BlackBerry has been in the midst of a turnaround since I took over as Executive Chairman and CEO in November 2013. During the past 15 months the company has stabilized and introduced a variety of new products as we pivot away from our prior reliance on hardware to become a full-service, device-agnostic provider of highly secure and productive software and services. Our balance sheet is strong and our turnaround is proceeding apace.

Key to BlackBerry’s turnaround has been a strategy of application and content neutrality. For example, we opened up our proprietary BlackBerry Messenger (BBM) service in 2013, making it available for download on our competitors’ devices. Tens of millions of iPhone and Android customers around the world have since downloaded BBM and are enjoying the service free of charge. Last year we introduced our secure BES12 mobile device management software, once again designed to manage not just BlackBerry phones but also available for enterprises and government agencies whose employees use iPhone and Android devices.

Unfortunately, not all content and applications providers have embraced openness and neutrality. Unlike BlackBerry, which allows iPhone users to download and use our BBM service, Apple does not allow BlackBerry or Android users to download Apple’s iMessage messaging service. Netflix, which has forcefully advocated for carrier neutrality, has discriminated against BlackBerry customers by refusing to make its streaming movie service available to them. Many other applications providers similarly offer service only to iPhone and Android users. This dynamic has created a two-tiered wireless broadband ecosystem, in which iPhone and Android users are able to access far more content and applications than customers using devices running other operating systems. These are precisely the sort of discriminatory practices that neutrality advocates have criticized at the carrier level.

Therefore, neutrality must be mandated at the application and content layer if we truly want a free, open and non-discriminatory internet. All wireless broadband customers must have the ability to access any lawful applications and content they choose, and applications/content providers must be prohibited from discriminating based on the customer’s mobile operating system.

Chen’s position, on the surface, might seem all warm and egalitarian – Chen wants everything to be “fair”. But look beneath the surface and you will see what Chen is really attempting to do is to gain an unfair market advantage – to force other people to pay for Blackberry’s mistakes. Chen’s “App Equality” laws, if they are passed, would tilt the market in Blackberry’s favour, by forcing competitors to support the Blackberry brand.

Imagine if a similar principle were applied to a chain of supermarkets. Walmart in the USA, and Tesco in the UK, dominate their respective markets, because of their ability to source a broad, high quality range of products at a competitive price, and because of the size and professionalism of their retail network.

A small supermarket chain, Dingy Dave’s Discounts, thinks it is unfair that Walmart and Tesco attract all the business because of their superior product lines and lower prices.

Dingy Dave could make an effort to innovate – to find a way of improving his offering, to attract customers away from the big players.

But Dave has a better idea – Dave wants to convince politicians that the problem is “discrimination” – that Walmart and Tesco’s market leadership discriminates against his smaller supermarket chain.

Dave’s solution is to convince politicians to pass new laws – “product equality” laws, which force companies which supply Tesco and Walmart, to also supply his Dingy Dave’s Discounts chain, on the same terms which the suppliers offer to Tesco and Walmart – regardless of whether suppliers would make a profit supplying Dingy Dave’s much smaller chain of supermarkets.

Worse, in the name of “fairness”, Dave also wants to force Walmart and Tesco to carry Dingy Dave’s product lines – to force Tesco and Walmart to provide store shelf space for Dave’s inferior products, at no cost to Dave.

The result of this hypothetical supermarket legal fiasco would be that small suppliers would go bust, because they wouldn’t be able to absorb the loss of having to supply every supermarket chain at the same price, regardless of whether they made a profit on each supply deal. And Dingy Dave’s Discounts would receive an undeserved boost to their sales profit, at everyone elses expense.

If Chen’s push for “app equality” succeeds, small app developers will go bust because they will be forced to create Blackberry versions of their products, regardless of whether there is any opportunity for the developer to profit from a Blackberry version. Blackberry will also receive an unfair boost to their market share and profit, because Apple and Google will be forced by law to ensure Blackberry has free access to the technical advantages which Apple and Google worked so hard to provide to their consumers.

Ultimately the “App Equality” rules would stifle innovation. What is the point of investing in product improvement, if you are required by law to make that product improvement available to all of your competitors, at the same time as you release the innovation to your own product line? If a competitor demonstrated in court that some of your apps could only function if they had access to your innovative new hardware feature, they would demand the same hardware feature be licensed to their brand of phones, so apps which depended on the new hardware feature would also run on their handsets.

Chen’s Blackberry brand wasn’t always the poor cousin to iPhone and Android, which it is today. For a few years following the first Blackberry release in 1999, Blackberry was a market leader.

But Blackberry failed to innovate – they lost their crown to Apple iPhone, because Blackberry underestimated the importance of mobile apps, for enriching the user experience and attracting new customers. Apple and Google recognised the potential of mobile apps very early. They invested tremendous capital into lowering the barrier to entry for mobile developers, by providing subsidised developer services, such as free product reviews. Apple and Google recover the upfront cost of helping developers, by benefitting from increased sales.

Blackberry still has opportunities to claw back market share. The Blackberry handset has a reputation for security – in the wake of recent embarrassing security lapses and leaked celebrity photos, a clever marketing campaign might have raised consumer awareness of Blackberry’s security advantages. The fact that Chen has chosen to attack consumer choice, rather than focusing on marketing and product innovation, is deeply disappointing.

“App Equality” will be a bad precedent for market freedom and consumer choice, if Chen convinces politicians to support his campaign.

Eric Worrall is directory of Desirable Apps, a small app development business based in Australia, which specialises in iPhone and Android app development


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