Skyhook, Fighting for Its Life in Suit Against Google, Cries Foul: “Call in the Referees and Review the Tape”

9/16/10Follow @wroush

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those supplied by competitors like Google. “The evidence shows that we are winning,” Morgan says. “Device makers pay us rather than using the free stuff from Google, and the only reason that could be is because these device makers value the quality of our system.”

But Google “reacted very poorly” to the news about Motorola’s decision, says Morgan, who co-founded Skyhook in 2003 with Michael Shean, the company’s senior vice president of business development. The very next week, Morgan says, Google changed the standards it uses to certify that mobile phones are “Android compatible” specifically to define phones carrying XPS client software as non-compliant. Shortly thereafter, Morgan says, Motorola co-CEO Sanjay Jha got several calls from Google vice president of engineering and Android overseer Andy Rubin, informing him that Motorola couldn’t ship Android phones containing XPS.

“What they told us is that they came under a tremendous amount of pressure,” Morgan says. “The company got several high-level calls from Andy Rubin to their CEO, which resulted in what’s called a ‘stop-ship’ order. They said, ‘You can’t sell this product because it’s not certified.’ And the carriers won’t touch it if it’s not certified.”

Skyhook’s Superior Court complaint tells much the same story, but in more detail. In the end, according to the complaint, Motorola had to ship its phones in mid-July with Google Location Services installed rather than XPS. As a result of Motorola’s breach of the contract, the complaint says, Skyhook “lost millions of dollars in royalties.”

Morgan says he doesn’t blame Motorola in the matter. “They had bet the company on that platform,” Morgan says. “They had no choice. But we have a deal where our stuff is supposed to be on every Motorola phone, and that’s why we have got to call in the referees here, and have someone review the tape to see whether things are being done appropriately.”

According to the Superior Court complaint, the same events played out in the case of a second Android device manufacturer, Samsung. (Skyhook calls Samsung “Company X” in the complaint, explaining that it’s contractually prohibited from disclosing the details of its contract with the company. But it can easily be deduced from clues in the complaint that Company X is Samsung.)

The Korean firm actually started shipping XPS-equipped Android devices to retailers in Europe in early summer. But after Skyhook announced its partnership with the company on July 2, Google “issued a direct ‘stop ship’ order,” according to the complaint. Samsung was forced to drop XPS, and “continued the launch of its Android device with Google Location Service,” allegedly costing Skyhook millions more in lost royalties. The complaint also says that “Google’s interference harmed Skyhook by preventing enhancements to Skyhook’s database that would have occurred but for the deprivation of the data expected from these phones.”

Skyhook’s main allegation in the Superior Court complaint is that Google violated Massachusetts law by intentionally interfering with its contracts and “advantageous relationships” with Motorola and Samsung, in an example of what the complaint calls “unfair and deceptive trade practices.”

But in the bigger picture, the company is trying to protect its access to data: not just data about the locations of Wi-Fi access points, but data about when, where, and how people use their location-aware mobile devices. That’s information that the provider of a positioning system, by processing millions of location lookups every day, can siphon off and re-use for commercial purposes. (In demonstrations during the Boston and San Francisco marathons, for example, Skyhook has shown how its “SpotRank” service can pinpoint changing concentrations of mobile-device users over time.) When manufacturers of Android handsets choose XPS over Google Location Services, all of this location data flows to Skyhook, not to Google—which would be more than enough reason for the search giant to see Skyhook as a threat. As the Superior Court complaint puts it: “The more devices that include Google Location Service, the more data Google can collect about users’ locations. This data, in turn, is worth billions of dollars to Google.”

At the same time, Morgan says, Skyhook is trying to call attention to the gap between Google’s public stance on Android and the way it deals with makers of Android devices.

The publicly stated goal behind the Open Handset Alliance, a group of companies set up by Google to promote an open-source software stack for mobile phones, was to free handset makers from the restrictions once imposed by wireless carriers on mobile software developers. “We wanted to make sure that there would always be … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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