4.4.7 Threats to business models Higher levels of interop can have many benefits, but those benefits may be distributed unequally across a market. Indeed, some businesses may have a vested interest in maintaining lower levels of interop, allowing them to benefit from locking-in customers. For example, in 2012, Amazon sold its Kindle e-reader devices at cost, profiting solely from the sale of content to customers who were locked in to the Amazon ecosystem.38 Amazon achieved this customer lock-in by limiting both technological and other forms of interop. At the technological layer, the company did not allow its e-books to be read through non-Amazon software or e-readers (although Amazon did enable the Kindle to interoperate in limited ways with the services of other firms, such as a daily download of the New York Times or reading e-books on a Kindle iPhone, iPad, or Android app). Similarly, the Kindle did not support common open formats such as EPUB. This lack of technical interop helped ensure that customers would rely on Amazon’s marketplace for content.Amazon has also tried to reduce interop at the data and human layers, by limiting publishers’ alternatives to Amazon. As part of its business strategy, Amazon has priced e-books at prices lower than competitors’ (sometimes at a loss) in order to encourage lock-in. Several book publishers began to fear that this customer lock-in would kill competitors and enable Amazon to demand monopoly pricing from publishers. Some of these publishers challenged Amazon’s strategy, asserting that they wanted to set prices equally across all e-book stores. In other words, the publishers wanted to increase the interoperability of their content across platforms. This conflict between publishers and Amazon became a public dispute when Amazon pulled most Hachette books from its store in retaliation. After a protracted battle, the publishers won temporary control over the prices for their books.39 The fact that higher levels of interop may pose a threat to certain business models is not a downside of interop per se, nor is it a reason to avoid policies and strategies that promise higher levels of interop. In some circumstances, disrupting these kinds of business models may be a real benefit.40 That said, it is important to acknowledge that not everyone views higher levels of interop with favour, and those whose business models are threatened may actively undermine interoperability. Taken together, the risks and drawbacks of interop can paint a challenging picture. But the potential negative aspects of a highly interoperable future are not inevitable. The risks or benefits largely stem from how interoperability is implemented and regulated. As individuals, businesses, and regulators build an increasingly interconnected world at the technology and data layers, care must be taken to ensure that they avoid costs in areas like privacy and security that society is unwilling to pay. A theory of “interoperability by design” that builds in privacy and security protections from the start can help enormously in this respect.4.5 Approaches As shown by several examples in this chapter, there are varieties of approaches to interop. It is useful to think about these approaches along a spectrum from unilateral to collaborative. In other words, there are many ways to incorporate varying levels of interop, ranging from providing an open API (a more unilateral approach) to working with competitors and other stakeholders to create open standards (a more collaborative approach). Moreover, this same spectrum -- from unilateral to collaborative -- is apparent across both private-sector and government actors, including national and transnational regulatory bodies. This spectrum of approaches is depicted in Figure 4.5 and described in the following sub-sections. 4.5.1 Non-regulatory approaches (private actors)Many interoperability strategies rest on access to technology or technical specifications and involve licensing intellectual property (IP) rights or other contractual agreements. However, the degree of cooperation among different players and the corresponding licensing terms may vary considerably from case to case. The following sections sketch three clusters of approaches to interoperability that range from unilateral to highly collaborative. 110 Trends in Telecommunication Reform 2016