Google 2, Oracle 1: The Fast-Growing API Economy Survives a Major Scare

Summary:

• In 2010 Oracle sued Google over patent infringement regarding the use of 37 Java APIs (Application Programming Interfaces) to accelerate the development of its Android OS for smartphones and other mobile devices, and thus compete with Apple’s highly successful 2008 launch of the iPhone.

• The latest of three lawsuits – following the original 2010 case and the 2012 appeal that overturned the 2010 verdict in favor of Google’s right to make use of the APIs – just ended in favor of Google. Software developers, customers and industry participants everywhere can all breathe a sigh of relief.

• Assuming this verdict sticks it will undoubtedly reinforce current business practices around APIs and in the process enable the continuation of API-fueled growth of business and consumer applications, which is very good news for the tech industry as a whole.

As is common knowledge, Oracle just sued Google for $9.3bn. in damages, alleging that Google has made upwards of $21bn. in profits from Android as a result of “illegal” use of 37 existing APIs developed in Java. Oracle’s case was that much of these profits should revert to Oracle because of the opportunity they have (supposedly) lost in exploiting the growth of mobile smartphones and apps for their benefit. Quite apart from the fact that this six-year legal battle makes Oracle look like a lowly patent troll, there was a highly consequential issue at stake around the widespread current practice of treating APIs like open source offerings for vendors everywhere to leverage, rather than a proprietary asset for Oracle to exploit. APIs define how different types of code communicate to each other, how they inter-operate, something which is in every customer’s, vendor’s, and system integrator’s interest because they make it much easier for software developers to make their systems work with other new or legacy applications. APIs have become a vital element in facilitating the rapid growth of business applications in the past two decades, on mobile phones as well as in data centers, and Java’s APIs have had a pioneering influence on this growth.

In a sense, APIs occupy a no-man’s-land between the copyrighted private IP of different software developers on either side of a complex system. If, to borrow another military analogy, this DMZ is now to be regarded as non-existent, how on earth are developers supposed to assure customers that disparate systems will communicate without custom code having to be written by one or other party on either of the front lines?

Consider for a moment these three different points of view on the key issue at stake in the dispute – whether Google made fair use of the Java APIs when it produced the Android OS:

• Mitch Stoltz, attorney for the Electronic Frontier Foundation, in an interview before the latest verdict: “That (i.e., a potential judgment in favor of Oracle) is really going to create a radical shift in how software is developed worldwide. If it requires permission each time APIs are used and code calls other code, then you’ve upended the economics of software.”

• Google spokesperson, quoted from an email today, following the verdict: “Today’s verdict that Android makes fair use of Java APIs represents a win for the Android ecosystem, for the Java programming community, and for software developers who rely on open and free programming languages to build innovative consumer products.”

• Dorian Daley, Oracle’s general counsel, in another statement immediately following the judgment: “We strongly believe that Google developed Android by illegally copying core Java technology to rush into the mobile device market. Oracle brought this lawsuit to put a stop to Google’s illegal behavior. We believe there are numerous grounds for appeal and we plan to bring this case back to the Federal Circuit on appeal.”

Potted history of Java

Oracle did not develop Java, indeed its involvement with Java began after it acquired Sun Microsystems in 2009. Many observers believed at the time that Java was one of the main reasons for the acquisition due to the massive developer ecosystem and thought leadership halo that it had acquired since its launch in 1995. Java had been originally designed by James Gosling at Sun in the early 90s, and it evolved from a project designed originally for use with interactive television. As the Wikipedia history states, there were five primary goals in the creation of the Java language: It had to be “simple, object-oriented, and familiar”, “robust and secure”, “architecture-neutral and portable”, “high-performing”, and “interpreted, threaded, and dynamic”. The overarching goal was for developers to be able to Write Once, Run Anywhere, and by being practically the first software code to achieve this elusive goal for enabling rapid deployment of web applications, Java gained widespread adoption.

One of the reasons for Java’s prevalence today in web-based and cloud/mobile software applications everywhere is the fact that from 2006-2007 on Sun, the owner at the time, made it available to developers as an open source language and toolkit, despite identifying a small amount of Java code as proprietary. Its success as a free offering for developers to use led indirectly to the large-scale adoption of other open source technologies such as the Linux OS, Google’s Apache Hadoop project for developing and managing big-data applications, and Android itself – which is now used in 80% of the world’s smartphones, though in somewhat differing versions – as generally occurs with open-source technology. While the Java language itself is free to use, Oracle decided that Google had infringed copyrights in 37 Java APIs when building Android and had not made fair use of the language. Some Java copyrighted code does indeed exist, although – as the term Fair Use suggests – if a company is found to have made fair use of the code they may not be punished for technically infringing the copyright. Oracle’s appeal of the 2010 verdict was successful in 2012, with a judgment that Google had infringed Oracle’s copyrights. Intriguingly, however, no mention was made as to whether Google had made fair use of the copyrighted code or not, a critical missing element in the judgment. Shortly thereafter Red Hat, Yahoo, HP, and other companies joined Google in an appeal to the Supreme Court to hear the case. Yet other companies including EMC, Microsoft, and NetApp urged the Court to let the Federal Circuit ruling stand. In the end the Supreme Court decided not to hear the case. Thus the opportunity was available for Oracle to sue Google again, which resulted in this latest case.

There are technicalities surrounding the declaring code in the APIs that I won’t go into here. More importantly to my mind, the Java language itself is free to use. And, as stated in Joe Mullin’s May 8 article in Ars Technica, by building Android Google did something truly new and useful with Java – which is exactly the kind of initiative that is supposed to occur when the Fair Use test in copyright law is applied in an appropriately enlightened manner.

Why open APIs are so important to the explosion of XaaS applications

I must give credit to Matt Murphy of Menlo Ventures for his excellent May 21 article on “The Rise of APIs”. Murphy explains why APIs have become so crucial to the efforts of startups and other developers in launching products quickly while enabling more widespread inter-operability between different systems. As he points out, APIs were important even before Java, when for example companies developed applications for a specific established platform, as occurred with Microsoft Windows in the early 90s. Today, newer players such as Google, Facebook, Amazon (AWS), and Salesforce offer APIs to accelerate the launch of third-party apps on their platform, all in the enlightened self-interest of increasing the network effect that benefits the platform owner. Now we see third-party API dev specialists such Twilio (telephony), Stripe (payments), and Factual (location-based data) appearing to take advantage of the new distributed, modular infrastructure and applications that are replacing the monolithic, proprietary client-server and mainframe systems. Murphy provides an estimate that today there are more than 15,000 APIs on the market. This movement to openness and inter-connectivity is important for a number of reasons:

1. APIs basically remove the friction of different apps and systems not working together. If a developer has to build APIs for every system that they intersect with, they end up doing a lot of non-differentiating work that customers don’t want to pay for.

2. Thus API providers allow application developers to focus on their unique value-adding functionality, surrounding it with fully functional and distributed processes developed by other specialists which they access through APIs. This enables every developer to focus more of their resources on what they do best – which is a developer’s dream since they never ever feel that there are enough resources or hours in the day to complete everything they have on their plates.

3. Consequently everyone can get their offerings to market more quickly, with less risk that they’ll be bogged down in endless connectivity and “integration”.

4. Third-party APIs are likely to just be better, because they focus on just building the best possible API.

5. Existing developers can expose their unique functionality as an API, turning their application into a platform on which other companies can build products. Murphy reports that Salesforce, eBay, and Expedia generate a large percentage (i.e. in excess of 40%) of their revenues from their API businesses. Besides the revenue incentive, these companies continue to increase the power and leverage of their platforms.

Strategic Implications for Oracle and Google

What does this latest judgment mean for each of the protagonists in this case? Neither Google nor Oracle need someone like me to defend them. They are powerful and well-armed enough to defend their own interests. However, it is important to acknowledge that customers, software vendors, and other stakeholders in the industry do have a right to look out for their interests. And I would argue that the genie is out of the bottle with respect to the acceptance of open source software, especially the programming language that arguably contributed most to pioneering the move toward openness for web and mobile application development, which in turn has powered the growth of a million startups. So I would argue that it’s a bit late for a major player such as Oracle to start trying to exploit Java through legalistic means, though of course they should continue to exploit it commercially by building a Red-Hat style business around certification and support of the Java language, tools, APIs, and applications for enterprise and government customers.

Another welcome move that I believe would buy Oracle some friends in the industry – and this fading star could certainly use more friends despite Larry Ellison’s preference for regarding all outsiders as enemies – would be to open Java up unconditionally for third parties to use. In other words, treat every developer initiative using Java as Fair Use. This is what’s called a strategic act of generosity, something that can result in a company becoming more powerful even if they don’t directly profit from the gesture.

Google has a different problem, reflected in the EU’s latest lawsuit against it: its chronic secretiveness, which engenders so much mistrust of its motivations as a competitor, partner, and corporate citizen. Their former motto, Don’t Be Evil, now seems to have been a particularly disingenuous way of “protesting (their good intentions) too much”; come to think of it, why is it that Google, as well as Apple, Amazon, Uber, and now Facebook seem to espouse secrecy and opaqueness as a strategy? What are they afraid of?

Thanks to last week’s unanimous verdict, software developers are free (for the time being) to pursue their use of Java as one of their development languages, and the use of Java APIs in particular. This is definitely a Good Thing, since programmers can now focus their energies on creating differentiated products instead of having to contend with the non-differentiating drudge of building interfaces for each system they come across in the marketplace. And thanks to Google’s initiative in leveraging the Java APIs and other tools of the language to launch Android in 2009 or so, the world is a better place for having a strong competitor against Apple’s otherwise dominant presence in mobile systems. More to the point, note that the open operating system now has 80% of the market for mobile devices against Apple’s 20%.

Note: Detailed reference is made here to the May 8 article “Second Oracle v. Google trial could lead to huge headaches for developers”, by Joe Mullin, dated May 8, 2016. Also to Matt Murphy’s article on “The Rise of APIs” in the May 21, 2016 edition of Techcrunch.