Ineconomics,vendor lock-in, also known asproprietary lock-in orcustomer lock‑in, makes a customer dependent on avendor forproducts, unable to use another vendor without substantialswitching costs.
The use ofopen standards and alternative options makes systems tolerant of change, so that decisions can be postponed until more information is available or unforeseen events are addressed. Vendor lock-in does the opposite: it makes it difficult to move from one solution to another.
Lock-in costs that createbarriers to market entry may result inantitrust action against amonopoly.
| Monopolistic | Collective | Popular term |
|---|---|---|
| No | No | N/a |
| Yes | Technology lock-in | |
| Yes | No | Vendor lock‑in |
| Yes |
This class of lock-in is potentially technologically hard to overcome if the monopoly is held up by barriers to market that are nontrivial to circumvent, such as patents, secrecy, cryptography or other technical hindrances.
This class of lock-in is potentially inescapable to rational individuals not otherwise motivated, by creating aprisoner's dilemma—if the cost to resist is greater than the cost of joining, then the locally optimal choice is to join—a barrier that takes cooperation to overcome. The distributive property (cost to resist the locally dominant choice) alone is not anetwork effect, for lack of anypositive feedback; however, the addition ofbistability per individual, such as by a switching cost, qualifies as a network effect, by distributing this instability to the collective as a whole.
As defined byThe Independent, this is a non‑monopoly (mere technology), collective (on a society level) kind of lock-in:[1]
Technological lock-in is the idea that the more a society adopts a certain technology, the more unlikely users are to switch.
Examples:
Technology lock-in, as defined, is strictly of the collective kind. However, the personal variant is also a possiblepermutation of the variations shown in the table, but with no monopoly and no collectivity, it would be expected to be the weakest lock-in. Equivalent personal examples:
There exist lock-in situations that are both monopolistic and collective. Having the worst of two worlds, these can be very hard to escape — in many examples, the cost to resist incurs some level of isolation from the (dominating technology in) society, which can be socially costly, yet direct competition with the dominant vendor is hindered by compatibility.
As one blogger expressed:[3]
If I stopped using Skype, I'd lose contact with many people, because it's impossible to make them all change to[other] software.
WhileMP3 is patent-free as of 2017, in 2001 it was both patented and entrenched, as noted byRichard Stallman in that year (in justifying a lax license forOgg Vorbis):[4]
there is [...] the danger that people will settle on MP3 format even though it is patented, and we won't be *allowed* to write free encoders for the most popular format. [...] Ordinarily, if someone decides not to use a copylefted program because the license doesn't please him, that's his loss not ours. But if he rejects the Ogg/Vorbis code because of the license, and uses MP3 instead, then the problem rebounds on us—because his continued use of MP3 may help MP3 to become and stay entrenched.
More examples:
TheEuropean Commission, in its March 24, 2004 decision on Microsoft's business practices,[5] quotes, in paragraph 463, Microsoft general manager forC++ development Aaron Contorer as stating in a February 21, 1997 internal Microsoft memo drafted forBill Gates:
"TheWindows API is so broad, so deep, and so functional that mostISVs [independent software vendors] would be crazy not to use it. And it is so deeply embedded in the source code of many Windows apps that there is a huge switching cost to using a different operating system instead. It is this switching cost that has given customers the patience to stick with Windows through all our mistakes, our buggy drivers, our highTCO [total cost of ownership], our lack of a sexy vision at times, and many other difficulties. [...] Customers constantly evaluate other desktop platforms, [but] it would be so much work to move over that they hope we just improve Windows rather than force them to move. In short, without this exclusive franchise called the Windows API, we would have been dead a long time ago. The Windows franchise is fueled by application development which is focused on our core APIs."
Microsoft's application software also exhibits lock-in through the use of proprietaryfile formats.Microsoft Outlook uses a proprietary, publicly undocumented datastore format. In 2007 Microsoft introduced a new formatMS-OOXML for their office suite; However Microsoft do not claim to support this as their default file format, instead stating that the default is an "XML-based" file format.[6] Additionally, Microsoft introduced a new undocumented line break algorithm for Microsoft Word 2013 onwards, this was after ODF and OOXML standardization. The secret algorithm/s were reverse engineered 13 years later with financial support from the European Commission, benefiting competing office suitesLibreOffice,Collabora Online, and others.[7][8]
Prior to March 2009, digital music files withdigital rights management (DRM) were available for purchase from theiTunes Store, encoded in a proprietary derivative of theAAC format that used Apple'sFairPlay DRM system. These files are compatible only with Apple'siTunes media player software onMacs andWindows, theiriPod portable digital music players,iPhonesmartphones,iPadtablet computers, and theMotorolaROKR E1 andSLVR mobile phones. As a result, that music was locked into this ecosystem and available for portable use only through the purchase of one of the above devices,[9] or by burning toCD and optionally re-ripping to a DRM-free format such asMP3 orWAV.
In January 2005, aniPod purchaser named Thomas Slattery filed a suit against Apple for the "unlawful bundling" of theiriTunes Music Store and iPod device. He stated in his brief:
"Apple has turned an open and interactive standard into an artifice that prevents consumers from using the portable hard drive digital music player of their choice."
At the time, Apple was stated to have an 80% market share of digital music sales and a 90% share of sales of new music players, which he claimed allowed Apple to horizontally leverage its dominant positions in both markets to lock consumers into its complementary offerings.[10] In September 2005, U.S. District JudgeJames Ware approvedSlattery v. Apple Computer Inc. to proceed with monopoly charges against Apple in violation of theSherman Antitrust Act.[11]
On June 7, 2006, theNorwegian Consumer Council stated that Apple'siTunes Music Store violates Norwegian law. The contract conditions were vague and "clearly unbalanced to disfavor the customer".[12] The retroactive changes to the DRM conditions and the incompatibility with other music players are the major points of concern. In an earlier letter to Apple, consumer ombudsmanBjørn Erik Thon complained that iTunes' DRM mechanism was a lock-in to Apple's music players, and argued that this was a conflict with consumer rights that he doubted would be defendable by Norwegian copyright law.[13]
As of 29 May 2007[update], tracks on theEMI label became available in a DRM-free format callediTunes Plus. These files are unprotected and are encoded in the AAC format at 256 kilobits per second, twice the bitrate of standard tracks bought through the service. iTunes accounts can be set to display either standard or iTunes Plus formats for tracks where both formats exist.[14] These files can be used with any player that supports the AAC file format and are not locked to Apple hardware. They can be converted to MP format if desired.[clarification needed]
As of January 6, 2009, all four big music studios (Warner Bros.,Sony BMG,Universal, andEMI) have signed up to remove the DRM from their tracks, at no extra cost. However, Apple charges consumers to have previously purchased DRM music restrictions removed.[15]
AlthoughGoogle has stated its position in favor of interoperability,[16] the company has taken steps away from open protocols replacing open standard Google Talk by proprietary protocol Google Hangouts.[17][18] Also, Google'sData Liberation Front has been inactive on Twitter since 2013[19] and its official website, www.dataliberation.org, now redirects to a page on Google's FAQs, leading users to believe the project has been closed.[20][21] Google's mobile operating systemAndroid is open source; however, the operating system that comes with the phones that most people actually purchase in a store is more often than not shipped with many of Google's proprietary applications thatpromote users to use only Google services.
Because cloud computing is still relatively new, standards are still being developed.[22] Many cloud platforms and services are proprietary, meaning that they are built on the specific standards, tools and protocols developed by a particular vendor for its particular cloud offering.[22] This can make migrating off a proprietary cloud platform prohibitively complicated and expensive.[22]
Three types of vendor lock-in can occur with cloud computing:[23]
Heterogeneous cloud computing is described as a type of cloud environment that prevents vendor lock-in, and aligns with enterprise data centers that are operating hybrid cloud models.[24] The absence of vendor lock-in lets cloud administrators select their choice of hypervisors for specific tasks, or to deploy virtualized infrastructures to other enterprises without the need to consider the flavor of hypervisor in the other enterprise.[25]
A heterogeneous cloud is considered one that includes on-premises private clouds, public clouds and software-as-a-service clouds. Heterogeneous clouds can work with environments that are not virtualized, such as traditional data centers.[26] Heterogeneous clouds also allow for the use of piece parts, such as hypervisors, servers, and storage, from multiple vendors.[27]
Cloud piece parts, such as cloud storage systems, offer APIs but they are often incompatible with each other.[28] The result is complicated migration between backends, and makes it difficult to integrate data spread across various locations.[28] This has been described as a problem of vendor lock-in.[28]The solution to this is for clouds to adopt common standards.[28]
Heterogeneous cloud computing differs from homogeneous clouds, which have been described as those using consistent building blocks supplied by a single vendor.[29] Intel General Manager of high-density computing, Jason Waxman, is quoted as saying that a homogeneous system of 15,000 servers would cost $6 million more in capital expenditure and use 1 megawatt of power.[29]
Oracle Corporation executives in 2007 told of howBoeing got into an argument withLarry Ellison at a contract meeting, after the latter acknowledged thatOracle Database version 7 had 11,000 bugs and insulted theBoeing 777. Boeing refused to sign the contract, and was also anIBM customer so had an alternative. The company was so dependent on Oracle, however, that it resumed negotiations and signed the contract.[30]
In general I would rather see software copylefted, which is one way of defending users' freedom against one particular danger. In the case of Ogg/Vorbis, there is a bigger danger from another direction: the danger that people will settle on MP3 format even though it is patented, and we won't be *allowed* to write free encoders for the most popular format. To overcome the inertia that supports MP3 format will require strenuous effort. Even if we do our utmost to encourage everyone to replace MP3 format with Ogg/Vorbis format, it is not certain they will do so. Consider how long we have been trying to replace GIF with PNG. Ordinarily, if someone decides not to use a copylefted program because the license doesn't please him, that's his loss not ours. But if he rejects the Ogg/Vorbis code because of the license, and uses MP3 instead, then the problem rebounds on us—because his continued use of MP3 may help MP3 to become and stay entrenched.
English transcribed:The Consumer Council reacts to the observation that iTunes' DRM entails that the files can only be played on a few players, mainly Apple's own players. They furthermore believe that the terms of service's point 9b, where the customer among other things must agree not to circumvent or change such technical hindrances, is in conflict with the copyright law §53a(3). [...] Copyright holders are by the copyright law entitled to decide if the work is to be made available, and in principle also how it is made available. [...] Copyright can in my opinion not give the copyright holder right to demand all kinds of conditions when sold to consumers in generality. Norwegian original:Forbrukerrådet reagerer på at iTunes Music Stores DRM medfører at filene kun kan spilles på et fåtall spillere, hovedsakelig Apples egne spillere. De mener videre at tjenestevilkårenes punkt 9b, hvor kunden blant annet må samtykke til ikke å omgå eller endre slike tekniske sperrer, er i strid med åndsverksloven §53a(3). [...] Rettighetshaverens enerett etter åndsverksloven gir anledning til å bestemme om verket skal gjøres tilgjengelig, og rettighetshaveren kan også i utgangspunktet bestemme måten dette skal skje på. [...] Opphavsretten kan etter min mening ikke gi rettighetshaveren rett til å stille enhver form for betingelser ved salg til forbrukere i alminnelighet.
