Who Is to Blame for the Google Voice Apps Fiasco?

65 Comments

apps-final-2The fact that Google (s GOOG) Voice apps have been banished by Apple (s AAPL) from its App Store is a bad decision that has taken on gigantic proportions, and is drawing outrage and disgust from app developers. Many are thinking about giving up on the iPhone platform altogether. But who is to blame? AT&T, Apple or Google?

Apparently I’m in the minority, but I believe that AT&T has less to do with the decision to kick out the Google Voice-related apps (including the rejection of the official application by Google). Furthermore, I might be the only one to think that there is a corporate poker game going on between Apple and Google, with apps for Google services taking the place of poker chips. Yesterday, it was alleged that AT&T (s T) was to blame. I had a tough time buying into that line of argument, and so did John Gruber, who writes the highly regarded Daring Fireball blog. Then yesterday evening, Gruber, who in my books is one of the top bloggers on all things Mac, posted an update saying it was AT&T.

Well, so much for my speculation. A reliable little birdie has informed me that it was indeed AT&T that objected to Google Voice apps for the iPhone. It’s that simple.

was to blame They have pointed

Jason Kincaid and Mike Arrington from TechCrunch debated with me — using my own argument, no less — that Google Voice turns Google into an MVNO and that is what makes AT&T scared of it. But if that is indeed the case, then Google Voice should have been booted off BlackBerry devices running on AT&T. And that is not so.

I believe that AT&T has become a piñata in the high-stakes war being waged by Apple and Google. Why do we believe that these two companies are not in competition with each other? Is it because Eric Schmidt sits on the Google Apple board? This battle between Google and Apple is going to get very ugly — as it should. Both companies have pinned their futures on smartphones. The sad part is that as of now, Google needs access to the iPhone more badly than the iPhone needs Google or Google Voice.

My arguments aside, the blame game has spilled over from the blogs into the mainstream press.

“What it comes down to is AT&T’s turf,” said Gene Munster, a senior research analyst at the investment firm Piper Jaffray. “It shows that contractually, Apple has agreed to keep apps that would hurt AT&T’s business out of the App Store, regardless of who developed them.”

Thanks, Munster, for repeating what blogs were saying yesterday, but without a shred of additional information.

Anyway, today I decided to check with the folks at AT&T. Their response was pretty standard, though they changed their stance a little and said that all apps-related decisions are taken by Apple. Now we all know that’s not always true. After all, in the case of the SlingPlayer, Ma Bell changed its user terms of service to restrict the use of mobile video apps, and when the howls of protest reached a crescendo, AT&T backtracked, and Sling’s app came to the App Store but worked exclusively over the Wi-Fi network.

That past behavior is what makes it easy for folks to believe that AT&T is to blame for the current fiasco. As a result, AT&T’s current statement is only going to put the company deeper in the hole. I think they — and by that I mean AT&T’s senior management — have to make a stronger statement than that. They are not doing themselves any favors by being coy and cryptic. I know it’s hard for many of us (starting with me) in Silicon Valley to think logically about Ma Bell, given its history, but unlike others, I am happy to give AT&T the benefit of doubt. Are you?

65 Comments

Janko Roettgers

Om, it’s funny that Arrington used your Google voice as a phone company argument against you, but this goes both ways. Apple ‘s rev share iPhone deal with AT&T is a cash cow for Cupertino, and it’s based on the idea of having the iPhone exclusively on one carrier. Now imagine how that deal looks to AT&T if Google suddenly emerges as a second, stealth phone company on the same device …

Having the ability to block competition on its own device gives Apple much more leverage in future negotiations with phone companies. It’s not even about GV or what impact it may or may not have on SMS or voice revenues. It’s about the fact that Apple can always point to this and say: Sing up with us, give us a part of the data revenue, and you’re gonna have a true exclusive on this device.

Janko Roettgers

Wait, the rev share deal was nixed last month? Uhm, nevermind. :)

EC

What are the chances that consumer backlash will be able to turn the tide against Apple or AT&T and get them to reverse this decision?

I love Google Voice as my job requires that I use multiple phones. I see prior comments pointing out that you can’t get everything for free. I could care less that it saves me money on sending SMS messages and I would be willing to pay a reasonable amount for Google Voice simply because it makes my life so much easier.

Jay Ray

Om,
Is it possible that this is Apple’s way of making AT&T look bad enough to the point of, by legal means, getting out of the exclusivity contract early? AT&T has to be feeling the pressure of this issue and has to want to say something about it if not to simply say, “Screw it!” What do you think?

Brian

Om,
Excellent post and well reasoned arguments. Sometimes it takes a visionary to rise above the emotionally tied followers to point out the obvious to those who refuse to accept it.

From AT&T’s perspective, GVoice inserts Google (as a cloud) between other telecom clouds. AT&T still maintains a billing relationship, identity, analytics, web usage, etc over their customer even with GVoice. Their customer’s minutes continue to deduct, they continue to have Premium SMS revenue, Data revenue, etc. As G-Voice gains scale, they may lose some customer analytic capability (but they probably would have outsourced that to someone anyway). They may lose long distance global revenues, but I would argue they would regain a portion of that in their Long Distance IP network through transport. They still have branded handsets and recognition with their customer.

Therefore, the ones who have competing agendas are Apple and Google. As google’s cloud-based services offer a direct competition to Apple (and there is no replacement revenue as there is for AT&T – Apple gave up their rev share with AT&T in the second gen model), and Apple is increasing concerned over the customer experience, phone experience, analytics on the phone (for marketing purposes) and keeping that customer experience CLOSED from other third party cloud-based service providers that directly challenge Apple’s product experience and make it better. Apple is acting much like a walled garden carrier of yester-year.

I hope Apple continues this path as the history tends to repeat itself with closed architectures. Gvoice is available on Android, Blackberry and I think I saw a post where it is available in the Pre’s App Store.

Tox

Whose fault is it? Apple’s. Even if AT&T forced their hand on this particular app.

Apple made the business decision that apps must come from the app store. They’re the ones that established the gatekeeper. They’re the ones that ship firmware updates that brick jailbroken phones. They’re doing everything in their power to keep control over all third-party applications, and take a percentage of all application sales.

It’s not surprising, if you look at their most recent earnings report. The iPhone ecosystem is driving most of their profits this year. A big part of that is through app store sales. They won’t give up that monopoly lightly.

This is anticompetitive behavior, and it will inevitably lead to more fiascos like this. Until Apple lets third party developers distribute applications independently of the App store, the most useful applications will be kept off of the phone, because they don’t serve Apple’s/AT&T’s business interests (“they duplicate existing iPhone functionality”)

Hopefully developers start getting wiser. Instead of looking at the app store as being a necessary evil, the developers need to start looking at it as a barrier to free competition, and develop for other platforms instead. Let the iPhone users keep paying a dollar for iFart… but do your real coding for a platform that wants your code and embraces competition.

TimB

Om, clearly lots of considerations as the comment stream shows. You have to admit it’s….unusual… to read you being willing to side with AT&T over Apple, when your historical preferences are typically the opposite.

Jacob Varghese

Om,

I disagree with you, but I’m loving the debate!

You seem to be one of very few to offer a unique perspective on this.

Atul

Om,

My best guess is that it’s AT&T that’s behind banning the GV app no Apple.
Your point on why AT&T didn’t block it on BlackBerry is well taken.. But do note that iPhone users do tend to be heavy users of data (~20-25 Times more than average data user). Now GV does not technically use data plan as such, but given the propensity of iPhone users to use certain features to the max, I think Ma Bell fears declining / displacing voice usage if suddenly *many* users start using GV.

As an iPhone user, I don’t really care who is to blame, so long as the apps are restored back to appstore.

Ryan

Its interesting how large of an issue this is turning out to be. Applications get denied from the appstore all of the time. Its only when Google gets hit does it blow up. I would like to know how much Google is fanning the flames, and how much of this is truly grass roots driven. Om, can you offer an opinion?

Regardless, its all very simple. If you don’t like the move, don’t use an iphone! The Apple / AT&T should be able to package their product offering and the right to define the terms of service. As a consumer, you have the right to not use their offering. Fair trade.

HSK

+1

Keep trying to figure out why everyone thinks it is some sort of RIGHT to have everything free – or virtually free. Hate Apple and ATT all you want – but they exist to make money for themselves and their shareholders. If you don’t like it, go get a free Google cell phone that offers free calling and data nationwide. Oops, that does not exist……

Joe

What seems sad about this is that once again the consumer has been crapped on while the corporations arm wrestle.

I can understand AT&T not being happy about the app, but hey technology is moving forward and it will only be a matter of time when their business will be targeted once again, be it Apple or any other company. Next time they may not have any say in the matter and will actually have to do something pro-active about it.

Om Malik

Joe — I could not agree more about the “consumer” get the short end of the stick. THe issue is not that GV is a niche app for now, but on the whole, Apple needs to get its act together and be more transparent in its policies.

Ryan

But Om, I think we all know what to expect, don’t we? If you offer an application that competes with Apple’s own services, and risks diminishing the relationship with their customer, you risk being denied. Its business.

kalyan

I think this is completely to Apple for blame.. AT&T should know that they cant block the application on other devices which can installed with Java. If Apple continues to give hard time for both users and devs.. I’m gonna switch to Android/Palm. Hate you Apple.

Michael Katcher

“Why do we believe that these two companies are not in competition with each other? Is it because Eric Schmidt sits on the Google board? ”

I believe the second question should be ‘because Eric Schmidt sits on the Apple board?’

Michael Olsen

The main reason people (including me) want the GV app is for free texting, given that the GV calls are still made over the carrier networks.

It seems logical to me that it is already built into the contracts with AT&T and international carriers that Apple will block any apps that provide free texting and VOIP on cellular networks. As much as we like to bash AT&T, they are in the business of making money, and they make money by selling voice plans and texting plans.

And if Apple is really negotiating with Verizon, the last thing they want out there is an app that does free texting.

tom

i wonder how much false media depiction of google voice has to do with apple/at&t’s decision. i have seen several reports on the mass media and every single one portrayed google voice as a ‘free replace for cell phoine service’ i have had many totally non-tech customers comem into my computer shop wnated to know more about how to replace there cell phone with new completly free service from google.

Om Malik

Tom,

I was the first one to write that and yes it has the potential of being a stealth MVNO. But even most successful MVNOs don’t go past 10 million users (Virgin Mobile). Just to be clear, GV does need teh PSTN pipe to make and receive calls and SMS messages. Sure it will work over WiFi – but for now it is not going to be living without the support of phone networks.

All that said, GV is still a niche product and eventually it could cause problems, but not any time soon.

tom

for me this is the final straw. i will never agian pay for app on the ‘app store’ i may continue to download some free apps but my primary source for all app is now cydia and icy where i plan to increase my spending on paid apps to help the growth of the ‘alternatives’ to the app store. i also will be starting a free ‘jailbreak service’ in conjuction with my computer bussiness with the goal to get as everyones phone jailbroken that wants it that way.

maximizing jailbreaking is the best way to get apple to wake up. HELP ALL YOUR NON-TECHIE FRIENDS WITH IPHONE TO GET JAILBROKEN!!!

CzechM8

Om,

I firmly believe this critical maneuver is AT&T’s decision solely. Yes, Google and Apple have much to tussle over, but they have more to gain by coexistence. However, AT&T stands to LOSE OUT big if they allow an app on the one device they hang their wireless hat on that takes away from their already in-the-red iPhone revenue stream.

The iPhone is to AT&T like the XBOX360 is to Microsoft. MS is willing to take an loss on the H/W because they know the game sales and online service revenue stream will bring the desired profits. AT&T loses money with each iPhone sold. They MUST rely on their outrageous and proprietary MRC charges to help counter some of that loss. Based on what I’ve read I’m not sure AT&T even gets into the black on any iPhone acct, but with that brand in their storefront they gain the foot traffic on other devices and plans that do.

Along comes the (Google) spider and plops down beside ‘er – a big fat free calling/texting and cheap offshore calling app. Do you think for one moment AT&T is going to allow their already lossy revenue stream to get cut deeper by some FREE app? Hell no.

AT&T has the teeth with Apple to call this shot because they’re currently the only wireless carrier willing to take it in the shorts the way Steve really likes it. I totally respect the iPhone hardware and interface. It’s a thing of beauty. Unfortunately AT&T is the ugly, redheaded stepsister that has to come along on the date every time.

JR

Om,

It is AT&T. The pressure on AT&T to fund their data network buildout and losses from wireline revenue must be huge. Their service is bad and apparently getting worst. People under pressure often do dumb things and this is really dumb.

Apple has no reason to get involved except to keep AT&T in the game that they likely cannot win. I see it as a game of cat and mouse with Jobs the cat.

Watch the money flow. AT&T is investing 10s of billions a year in their wireless network and Apple is collecting 10s of billions from consumers. Only a couple of questions. When does AT&T run out of money (credit)? and what is Apple going to do with all this money?

JR

Chris

If this was about blocking apps that are competitive to AT&T, surely the Comcast app would not have been approved; they are much more a competitor than Google. Apple, on the other hand, has plenty of reasons not to assist Google (Chrome OS, Android, Web services, etc).

Paul Carey

>A reliable little birdie has informed me that it was indeed AT&T that objected to Google Voice apps for the iPhone. > It’s that simple.

If it really were that simple, the voice apps would still be available in the UK where O2 runs the data network. But they’re not.

Will Robertson

Coldbrew: That is true, but someone from another country can use it to operate a US number. For example, I am from Canada but have a US number through it.

coldbrew

Robertson: Presumably, you still have a telco issued phone number, right? I don’t have a telco issued phone number: Gizmo5+GV+Verizon 3G ($60/mo. dumb pipe). Google Voice lowers the switching costs beyond the Number Portability Act. Churn is one of the most significant metrics used on a Telco earnings call, and GV reduces the friction = greater possibility for churn.

Jason Devitt

These decisions are made country by country. In Germany, T-Mobile blocked the release of Skype for the iPhone, even though it only uses WiFi.

Google Voice is not available outside the US. This is not a temporary issue. It will be extraordinarily difficult for Google to launch Google Voice in its current form outside the US, because termination charges are so much higher. In the US, it costs Google less than 1c per minute to forward calls from a GV number to a mobile phone. In the UK, it would cost them up to 20c per minute.

So only US considerations applied, and that means only one carrier mattered. (I don’t know why Sean Kovacs released GV Mobile outside the US in the first place, but there was no point letting him keep it in those stores once it was pulled in the US.)

Will Robertson: GrandCentral let Canadians in, but Google Voice is no longer accepting signups from Canada, and – please let me know if I’m wrong – will not allow you to add a new Canadian number to your GV account.

coldbrew

Thanks to Devitt and Jaquith for bringing some logic to this topic. I won’t reiterate what they’ve said, but add a couple things:

GOOG doesn’t make consumer-focused hardware and AAPL is not eying search marketing, and those are the primary businesses of these organizations. GOOG did, however, bid in the 700 MHz spectrum auction and does provide VOIP-like services. I don’t think AAPL has any interest in that business. Does AAPL also own fiber?

I’m not sure why this is even up for debate, as it’s been obvious from the beginning. ATT says ‘it is not our discussion to have, so ask AAPL’; and APPL trots out some illogical claim that there is some unnecessary duplication of functionality. Because ATT is not involved at all with the App Store, they were not privy to GV-based applications until they gained greater distribution. This is why AAPL first approved these applications.

Om Malik

Google vs Apple:

1. Smartphone OS
2. Competing on cloud services.
3. OS.
4. Browsers.

And that is a start. Coldbrew, I understand we don’t like to see things a certain way, but there are other reasons (post coming) that Google and Apple would butt heads.

coldbrew

Separate line items for OSs? Google App Engine vs. MobileMe? Let’s do a comparison here with the other scenario (which you seem to want to ignore):

GOOG vs. AT&T
1) Back haul> Fiber backbone
2) Wireless spectrum
3) Voicemail, SMS, and call routing

These are revenue generating features. Looking through AAPL’s recent earnings neither OS X, MobileMe, nor Safari appear to be contributing directly.

This part of a contractual arrangement where AAPL is obliged to appease their product-launch, Telco partner that helped take them to market and get to a market of scale where the hardware margins would make it a viable product for AAPL.

I’m kind of insulted you seem to believe I have any emotion in this discussion, and somehow “don’t like to see things a certain way” as if I really care. I’ve never operated my iPhone on AT&T’s network, I have had GV Mobile for months, and I use WinSCP to manage my phone, not iTunes.

gp

i hope run apple’ iphone dies quick death in next few years and Andriod /moblin rules the market …..developers are sick of apple dictatorship and lockin

Erik Schwartz

Apple uses software to lock people into hardware platforms. That’s why ITMS exists.

They have been doing this for years (long before the iPhone).

If you try to compete with Apple on major strategic functionality on their own platform they will do whatever they can to squish you. On the Mac that meant copying your software and using non public hooks into the OS to compete against you. On the iPhone they just refuse to distribute your app.

Will Robertson

One more thing. Regarding AT&T, why in the world would Apple give them so much say in how the iPhone is handled? I highly doubt Apple is bending over backwards for them, everyone needs to remember that the iPhone is sold all around the world, NOT just in the US. Up here in Canada I don’t need AT&T deciding what apps I am allowed to use!

Om Malik

And that proves my point… this is an Apple and Google battle and Ma Bell has got nothing to do with it.

Karl Bode

Om, have to respectfully disagree. Google Voice erodes SMS and voice revenues, and the executives at AT&T absolutely despise Google. They spend millions just to smear the carrier (see: Scott Cleland), and disagree with them on everything from white space devices to network neutrality. They have every motive in the world to limit Google’s reach.

That said, questions remain as to why Apple doesn’t pick better sandbox friends. :)

Will Robertson

If this is a poker game between Google and Apple, Apple should fold before their hurt themselves even more.

Removing apps like Google Voice, something many people badly want, only hurts the iPhone platform. Not having a great app like that males the iPhone less attractive. Apple is hurting the iPhone, no protecting it.

As a fanatical iPhone user, if Apple continues these shenanigans, I am actually considering jumping back over to the BlackBerry world, or maybe Android. Apple can tout how many apps they have in the App Store, but of they keep on destroying developers like they did to Voice Central and GV Mobile (and many other before this) they will lose the developers that have made the App Store so great. Already my favourite iPhone developer, Polar Bear Farm, is quitting the platform because of Apple’s stupidity.

Om Malik

Will,

How many people want Google Voice. Last I checked it is not even properly available to all the people in the US. Why don’t we re-edit your comment and say: all early adopters want Google Voice app on their iPhone.

Will Robertson

Very true Om, I suppose it is not a mass market application yet since it isn’t even publicly available without an invite. I am from Canada and although I have it, can’t really use it since the random US number I have provides no benefit.

This issue is really more than Google Voice though. It is basically a warning shot to all iPhone developers saying, “We will kill you at any moment – without a proper explanation.”

Jason Devitt

Om, I was one of several people to point this out on your last post, but let me repeat: AT&T cannot ban Google Voice from the Blackberry platform. It has no mechanism for doing so.

There is no central point of distribution for Blackberry applications as there is for the iPhone. So far as I know there is no kill switch for individual applications on the Blackberry, as there is for Android and iPhone – and if there is it would shock consumers and alarm business customers to discover that AT&T could selectively disable applications that they had chosen to download and install from third parties. That would be far more serious than blocking people from downloading the app in the first place.

AT&T can certainly tell RIM not to preload Google Voice on new devices. It could ask RIM not to list Google Voice in Blackberry Appworld. But Google would still have plenty of other ways to distribute the app. (As it happens, Google Voice is not listed in Appworld yet.)

In theory AT&T could pressure RIM into refusing to ‘sign’ an application digitally, but even that process only applies to certain APIs.

Again, I am not saying that AT&T is to blame for this. I am just pointing out that the fact that you can get Google Voice on other AT&T smartphones is irrelevant. Those platforms are more open than the iPhone.
Sorry, forgot to add great post! Can’t wait to see your next post!

Mark Jaquith

The Blackberry issue is a red herring. See Jason Devitt’s comment above. AT&T can’t ban an app from Blackberry devices — at least not directly. There’s no centralized way to get apps onto Blackberry devices. It is, for the most part, an open platform. The iPhone is a 100% closed platform, which is why these types of applications can be blocked from the App Store. AT&T would have to essentially hack into your Blackberry and delete the application against your will. Imagine the backlash. Even Apple isn’t retroactively deleting Google Voice apps from iPhones. They’ll continue to work for people who already bought them. Application banning is only effective for iPhones because without Apple’s blessing, there is no way to install an application. They hold all the keys.

AT&T is being disingenuous in their responses:

AT&T does not manage the App Store – and we are not involved in the approval process for apps in the App Store.

They may not have employees babysitting the process, but they undoubtably have a legal hook in Apple that allows them to force Apple to yank apps that use excessive bandwidth or harm their business model. We’ve seen it happen with tethering apps, and apps that use a lot of bandwidth, and now telephony apps that threaten AT&T’s revenue streams.

That, plus Gruber’s willingness to put his sizable Apple-pundit reputation on the line to vouch for his source makes it almost certain that AT&T was behind this.

Om Malik

“That, plus Gruber’s willingness to put his sizable Apple-pundit reputation on the line to vouch for his source makes it almost certain that AT&T was behind this.”

Sure Mark and that is why I have been digging up information furiously. I totally respect John and I wouldn’t have otherwise followed up for more information. That said, I will stand by my opinion.

Jason Devitt

Om, I was one of several people to point this out on your last post, but let me repeat: AT&T cannot ban Google Voice from the Blackberry platform. It has no mechanism for doing so.

There is no central point of distribution for Blackberry applications as there is for the iPhone. So far as I know there is no kill switch for individual applications on the Blackberry, as there is for Android and iPhone – and if there is it would shock consumers and alarm business customers to discover that AT&T could selectively disable applications that they had chosen to download and install from third parties. That would be far more serious than blocking people from downloading the app in the first place.

AT&T can certainly tell RIM not to preload Google Voice on new devices. It could ask RIM not to list Google Voice in Blackberry Appworld. But Google would still have plenty of other ways to distribute the app. (As it happens, Google Voice is not listed in Appworld yet.)

In theory AT&T could pressure RIM into refusing to ‘sign’ an application digitally, but even that process only applies to certain APIs.

Again, I am not saying that AT&T is to blame for this. I am just pointing out that the fact that you can get Google Voice on other AT&T smartphones is irrelevant. Those platforms are more open than the iPhone.

Om Malik

Jason,

Fairpoint, but as you know Blackberry has bent over backwards to accommodate the carriers and in this case they will be happy to put the kill switch on any application using the OTA. Also, they have more control since they are a server centric product anyway.

Jason Devitt

Om,

(1) As I said, so far as we know there is no killswitch for individual applications on a Blackberry. If there is, the justification for a killswitch on all platforms is to enable operators to disable malware that threatens to take down the network. Using a killswitch to disable a legitimate application that a consumer had chosen to download would be unprecedented. (See how Jeff Bezos apologized for deleting content that wasn’t even legitimate.)

(2) “they have more control since they are a server centric product anyway”. Like 80% of Blackberry purchasers in the last quarter, I am a consumer, not a business customer deploying BES. Please explain how RIM has more control over my Blackberry than Apple does over an iPhone.

HSK

Jason,

If you are using email on a Blackberry (and not BES with a company), it is going through RIM’s servers – no matter what carrier. On the iPhone (as with all other smartphones except RIM), you are connected directly to the provider (well, directly via the carrier’s network).

Jason Devitt

HSK,

Not necessarily. I have an unlimited data plan and use a third-party email client. My email does not go through RIM’s servers.

But even if it did, how would that give RIM the power to delete Google Voice from my Blackberry?

Jason

Jordan Golson

Setting aside what AT&T can or cannot ban, the average iPhone user is much more likely to use a particular app than a comparable BlackBerry user, if only because the App Store is so much more ingrained into the iPhone ethos.

Libran Lover

Blackberry users were downloading and installing apps from all over the Internet long before iPhone was even announced to the world. The concept of a closed, tightly-controlled, single-place app store with a gatekeeper is what is so ingrained in the iPhone ethos.

Sounds like Mr Golson needs even his comments to be proof-read and fact-checked by Gigaom staff.

Om Malik

You should resist because they have a shitty network. I think that is a legit gripe. I refused to use it because of those reasons. Instead i use it over the WiFi

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