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Suit Opens a Window Into Google

A stack of internal e-mail messages from Google, which a Massachusetts state court made public last week, provide a glimpse into the competitive tactics and decision-making inside a business that is crucial to the company’s growth — its Android software for smartphones.

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Android is Google’s gateway technology to a lucrative new arena for mobile advertising. Google provides the Android operating system free to handset makers, and allows them to tailor the open-source software somewhat, yet limits their freedom to tinker.

Android phones must adhere to a “compatibility” standard determined by Google. In an e-mail on Aug. 6, 2010, Dan Morrill, a manager in the Android group, noted in passing that it was obvious to the phone makers that “we are using compatibility as a club to make them do things we want.”

Whether that club is an anticompetitive weapon is an issue in the court case.

Yet industry analysts see another motivation as well. In the smartphone market, they say, Google faces the challenge of being the creator of a popular operating system that must work smoothly with hardware and software made by other companies. In broad strokes, Google’s predicament echoes the past.

“Google has the same problem today that Microsoft had 20 years ago, when Windows started to take off in the personal computer market,” said David B. Yoffie, a professor at the Harvard Business School. “It needs to maintain the integrity of its technology, and control it.”

The e-mails in the case, filed eight months ago, recalls another parallel with Microsoft. Big high-tech companies, in particular, are run and knit together with electronic communications, which can leave a minute-by-minute trail for lawyers and litigants to mine.

In the Massachusetts court, Skyhook Wireless has alleged that Google used its control over Android not to maintain the quality of its technology, but to squelch a competitor.

The Boston-based Skyhook, founded in 2003, has been a pioneer in location-based services for use in mobile phones, developing a technique for combining location data from Wi-Fi hot spots with other sensors to pinpoint a user’s location.

Last April, Motorola chose to use Skyhook’s service in its Android phones instead of the free location data service offered by Google. Motorola reversed that decision in July.

“After we announced our deal with Motorola, Google went crazy,” said Ted Morgan, Skyhook’s chief executive. “That’s when Google went looking for compatibility compliance issues.”

Fishing expedition?

Skyhook had reached a similar agreement with Samsung in April, which was also reversed in July.

Google and its lawyers declined to discuss the case or the e-mails, released along with a ruling in Massachusetts Superior Court allowing discovery of evidence to continue and witnesses to be deposed.

But in a court filing in April, Google’s lawyers called the Skyhook suit “a baseless complaint” and its requests for Google documents and e-mail a “thinly veiled fishing expedition.” In the filing, Google notes that Motorola, in terminating its agreement with Skyhook, did not mention technical compliance issues, other than Skyhook interfering with Google’s “contractual rights to collect end-user data.”

In the past, Google has portrayed the Skyhook suit as the desperate tactic of a small company trying to sell location services in a market that has changed abruptly, especially since Google offers its location services free.

The Google e-mail messages released by the court, some heavily redacted, begin on April 26, 2010, when Skyhook announced that it had reached an agreement with Motorola.

Vic Gundotra, a senior vice president, forwarded a link to a news article on the Skyhook win, to Steve Lee, an Android product manager.

“First I’d heard of it,” Mr. Lee wrote, and then suggested two possible reasons for the deal.

“Skyhook,” he wrote, “is a hungry start-up” with sales and business people “actively engaging and selling. Google hasn’t prioritized ‘selling’ it so it is easy to be outsold.” The second possible explanation, Mr. Lee wrote, was that Skyhook’s location accuracy was superior to Google’s.

Charles Mendis, a software engineer, lamented, “This feels like a disaster” and added an emoticon of a frowning face.

But by the next day, it appears, Google’s penchant for data-based decision making had swung into action. A quick test of Google’s location services in the San Francisco Bay Area was compared with Skyhook’s, and it found Google to be at least equal in accuracy to Skyhook, and perhaps better.

The results of the field testing convinced Mr. Lee that Google had a good story to tell. The danger, he noted, was that companies might flock to Skyhook after the Motorola and Samsung deals.

“That would be awful for Google,” Mr. Lee wrote, “because it will cut off our ability to continue collecting data to maintain and improve our location database.”

Location data is becoming increasingly important for smartphone applications — like meeting up with friends nearby or finding restaurants and shops in a neighborhood. And advertisements focused by location bring premium rates. An estimated 40 percent of the smartphones sold this year will run Android, more than twice the share of either Apple or BlackBerry software, according to IDC, the research firm.

Skyhook did not clear its press release with Motorola beforehand. And Google’s business and communications staff wanted to have Motorola spin a loss of business more favorably for Google. “Are there any seeds we can plant with Motorola’s P.R. team to that effect?” wrote Andy Mathis, a Google manager. “Perhaps there is language we can plant with them for a blog post?”

Later that day, Anthony House, an Android communications manager, passed along some revised language from Motorola: “Motorola’s relationship with Skyhook demonstrates one of the many benefits of working with Google in an open partnership. We remain committed to the Android platform.”

Google’s concerns about the technical compatibility surfaced the next month, in May 2010, according to e-mail made public. Google was familiar with Skyhook and its technology, said Mr. Morgan, the chief executive. The two companies, he said, had done pilot projects, but never reached a commercial agreement. By contrast, Apple does license Skyhook’s technology, Mr. Morgan said. (Skyhook’s lawsuit also alleges that Google copied its technology.)

An issue for Google was data “contamination” — that is, Skyhook’s blending of Wi-Fi and other location data, from GPS satellite signals and cellphone towers.

In an e-mail on May 25, 2010, Stephen McDonnell, a Motorola manager, wrote to his counterparts at Google, “We feel the contamination concern you have is unfounded.”

Still, the technical issues were not resolved. In an e-mail dated June 2, 2010, Tim Vangoethem, a Motorola executive, wrote to Skyhook executives that Google had informed Motorola that Skyhook’s location service on the planned smartphone “renders the device no longer Android Compatible.”

The e-mail from the court case does suggest that Google, as the company says of itself, is a relentless learning organization. At least one lesson learned apparently comes from Microsoft’s lengthy legal battles of years back, when unrestrained comments in employee e-mail often proved so troublesome for the software giant.

The final entry in one much-redacted e-mail thread came in reply to a colleague’s pledge to get back with some detail about Skyhook.

“PLEASE DO NOT! Thread-kill and talk to me off-line with any questions,” Patrick Brady, a partner manager at Google, wrote on June 25, 2010.

That kind of care never really surfaced in the vast troves of Microsoft e-mail.

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