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When and How ICT Interoperability Drives Innovation by Urs Gasser and John Palfrey Breaking Down Digital Barriers When and How ICT Interoperability Drives Innovation

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When and How ICT Interoperability Drives Innovation by Urs Gasser and John Palfrey Breaking Down Digital Barriers When and How ICT Interoperability Drives Innovation BREAKING DOWN DIGITAL BARRIERS When and How ICT Interoperability Drives Innovation by Urs Gasser and John Palfrey BREAKING DOWN DIGITAL BARRIERS When and How ICT Interoperability Drives Innovation Urs Gasser and John Palfrey Berkman Publication Series, November 2007 http://cyber.law.harvard.edu/interop The Berkman Center for Internet & Society, Harvard University Research Center for Information Law, University of St. Gallen Sponsored by Microsoft® This work is licensed under the Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/us/ ii BREAKING DOWN DIGITAL BARRIERS EXECUTIVE SUMMARY Interoperability, like openness, is something that we generally think of as a “good thing” in the context of informa- tion and communications technologies (ICTs). One of the reasons why we tend to like interoperability is that we believe it leads to innovation, as well as other positive things like consumer choice, ease of use, and competition. In this study, we have done a deep-dive on three cases — DRM-protected music, Digital ID, and Mashups in the Web services context — as well as cursory reviews of other narratives with a goal of understanding a range of views on how interoperability comes to pass, what is optimal in terms of interoperability, how interoperability relates to innovation, and how we ought to approach achieving greater interoperability. Our research suggests that these inclinations about interoperability are on the mark in a general sense, but that the picture is filled with nuance. Interoperability does not mean the same thing in every context. Interoperability is not always good for everyone all the time. And the relationship between interoperability and innovation, while it likely exists in most cases, is extremely hard to prove. There is no one-size-fits-all way to achieve interoperability in the ICT context. There are a range of approaches that have relative merits depending upon the circumstances: efforts within a single firm to interconnect products or within firms; collaboration between or among two or more firms; standards processes, including open fora and ad hoc cooperation; and a wide range of roles for governments, most of which are ex post rather than ex ante modes of regulation. In various contexts, one or more of these approaches may be the best suited to accomplishing the goal of interoperability and the relevant subsidiary goals (Not surprisingly, European attitudes toward the mode of accom- plishing interoperability are quite different from American inclinations.). Our conclusion is that interoperability generally supports innovation in the ICT context, but that the relationship between the two is highly complex and fact-specific. We conclude also that the best path to interoperability depends greatly upon context and which subsidiary goals matter most, such as prompting further innovation, providing con- sumer choice or ease of use, and the spurring of competition in the field. We conclude further that the private sector generally ought to lead efforts in interoperability, with the public sector ready either to lend a supportive hand or to determine after the fact whether the market has failed in a way such that state action is the best means of rectifying the problem. In many instances, a blended approach — involving one or more approaches concurrently — may be optimal. We recommend a process solution for considering which approach or approaches makes the most sense in a given context. We also highlight the issue that sustaining interoperability – not just establishing it in the first instance – is a key place to focus attention. Our case study of mashups points to the concern that the most informal arrangements in the context of Web 2.0 functioning as a kind of operating system may lead to problems in the future if not stabilized in some fashion. TABLE OF CONTENTS iii TABLE OF CONTENTS Executive Summary ii Introduction 1 Interoperability Challenge 1 Objectives, scope and method of the Study 1 Objectives 1 Scope 2 Methodologies 2 1 Mapping the Interoperability Ecosystem 4 Definitions of interoperability 4 Overview of definitions 4 Definition of interoperability: stakeholders’ views 4 State of Play 5 Overview of three Case Studies 5 Case Study #1: DRM-protected Music Distribution (led by University of St. Gallen) 5 Case Study #2: Digital Identity Systems (led by Harvard Law School) 6 Case Study #3: Web services: Mashups (led by Harvard Law School) 7 Learning from Case Studies, Workshops, and Interviews 7 Forces at Play: Drivers and Inhibitors 9 Technology 9 Market incentives 9 Role of law 11 2 Assessing ICT Interoperability 12 Potential Benefits 12 Innovation 12 Competition 14 Autonomy, Flexibility, and Choice 15 Access, Diversity, and Openness 15 iv BREAKING DOWN DIGITAL BARRIERS Potential Drawbacks 15 Security 16 Privacy 16 Homogeneity 16 Reliability 17 Accountability 17 Accessibility 17 Business models 17 Conclusion: Interoperability is a Sound Policy Goal 18 3 Approaches towards ICT Interoperability 20 Basic Framework 20 Overview of Approaches 20 Mapping the Approaches 21 Benchmarks 22 Discussion of Selected Approaches based on Case Studies 23 Approaches by private actors 23 Regulation-based approaches 24 Conclusion: a process solution to interoperability 27 Acknowledgements 28 INTRODUCTION 1 INTRODUCTION Interoperability Challenge Over the past few years of working on the puzzle of interoperability in Internet-related systems, we have spoken to literally hundreds of people. Never once has someone made the case that “interoperability” is a bad thing. And each of those people, when asked, believed that interoperability generally drives innovation in this space. In a paper published in 2005 by the Berkman Center and sponsored by IBM and Oracle, our colleagues argued that interoper- ability is the first guiding principle of what it means to establish an “open ICT ecosystem.”1 Our initial bias – in favor of interoperability and its connection to innovation – was plain coming into this project, and, more or less, vindicated by what we learned. The picture that emerged from our research, though, was more colored by nuance than we anticipated going into our study. There is much in the way of insight to be gleaned from those nuances. The innovation made possible by interoperability carries broad benefits for societies that come to foster it. Consum- ers benefit, to be sure: interoperability leads to innovation that results in technology systems that work together more easily, with less hassle, and ensures that they have more choice when they are making a decision about what to buy or to use. The innovation that comes from this sort of interoperability is good in that it means jobs and higher rates of productivity in many economies around the world. And it is good because it means a more level playing field for competitors to develop yet more innovative things on top of the innovation that came before – it makes for “generative” systems, as Jonathan Zittrain has argued.2 The challenge that we take up in this paper, and the accompanying case studies, is to go much deeper into the issue of interoperability in this context and its relationship to innovation. Our goal is to push past the rhetoric about how good interoperability is as a general matter and toward specific values that interoperability brings with it, values that are themselves sound public policy goals. We ask – and seek to answer – hard questions about the kinds of interop- erability that lead to the kinds of innovation that societies ought to care about; how these kinds of desirable interop- erability is accomplished in the first place; and how it can be maintained over time once it has been achieved. These are hard questions for a variety of reasons. First, we encountered a wide range of views as to what “interoper- ability” itself means. It means something quite different to different people, in different industries but even within industries and within firms. Interoperability turns out to be a complex, dynamic concept along a spectrum. There are degrees of interoperability, complex technological issues, complicated economics with stakeholders who often do not have perfectly aligned incentive structures regarding interoperability. The law only amplifies the complexity involved. The law points in various directions and seems to have an ambiguous relation to interoperability. Objectives, scope and method of the Study Objectives We began this project with three main goals. First, we set out to gain a deeper understanding of what might be described as the ICT interoperability ecosystem. We have worked through a high-level overview of different defini- tions of interoperability in the area of information and communication technologies. We offer a working definition that might be helpful in multi-faceted and multi-stakeholder policy discussions at the intersection of technology, 2 BREAKING DOWN DIGITAL BARRIERS market dynamics, and law. We sketch the current state of play regarding interoperability based on three case studies (Digital Rights Management, Digital Identity Systems, and the subset of Web services known as mashups). From there, we extract general principles and patterns while we also acknowledge differences among them. The case studies set the stage for mapping and discussing in more general terms the basic drivers and inhibitors of ICT interoperabil- ity that we put forward in this White Paper. The second goal is to address the normative question of what the possible benefits and drawbacks of ICT interop- erability are. We place particular emphasis on the relationship between ICT interoperability and innovation, and other ancillary benefits such as competition and consumer choice, in digital environments. Insights derived from the three case studies inform and guide the discussion about the impact of different degrees of interoperability on different types of competition and innovation. We seek also to explore related societal values that may be implicated by these cases and the potential for interoperability.
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