This CL fixes the reported issue: https://codereview.chromium.org/2512263002 and is consistent with current treatment of other encodings, but needs additional discussion for the future direction.

This is a bug. We should fail this case.
Cronet iOS should disallow adding accept encoding header.

There's some ambiguity in my last comment. Returning ERR_CONTENT_DECODING_INIT_FAILED is working as intended. Cronet should add handling to prevent API client from adding accept encoding header.

Does it apply only to SDCH or to any custom accept-encoding? 

Currently Cronet allows to explicitly set Accept-Encoding header, and passes-through raw response data for encodings which it does not recognize, but errors out specifically for SDCH.

Should Cronet differ from Chrome in this regard to allow apps to use their own content decoders?

Apps and net embedders should not be able to use their own content decoders (as per our offline conversation).  We don't currently enforce that, but we should, and I'd like to move in the direction of enforcing it if possible.

Have you explored if the consumer can encapsulate their compression so we don't have to deal with these issues in Cronet?
  

a side note:

Cronet Android currently strips Content-Encodings. To be consistent, Cronet iOS could do something similar.

https://cs.chromium.org/chromium/src/components/cronet/android/java/src/org/chromium/net/impl/UrlRequestBuilderImpl.java?rcl=0&l=100
    @Override
    public UrlRequestBuilderImpl addHeader(String header, String value) {
        if (header == null) {
            throw new NullPointerException("Invalid header name.");
        }
        if (value == null) {
            throw new NullPointerException("Invalid header value.");
        }
        if (ACCEPT_ENCODING.equalsIgnoreCase(header)) {
            Log.w(TAG, "It's not necessary to set Accept-Encoding on requests - cronet will do"
                            + " this automatically for you, and setting it yourself has no "
                            + "effect. See  https://crbug.com/581399  for details.",
                    new Exception());
            return this;
        }
        mRequestHeaders.add(Pair.create(header, value));
        return this;
    }

The following revision refers to this bug:
  https://chromium.googlesource.com/chromium/src.git/+/8c7da89358dd21e60be2725220696f29ef94c234

commit 8c7da89358dd21e60be2725220696f29ef94c234
Author: mef <mef@chromium.org>
Date: Wed Nov 30 16:58:23 2016

Pass raw response with Context-Encoding sdch if support is not configured.

BUG= 666936 

Review-Url: https://codereview.chromium.org/2512263002
Cr-Commit-Position: refs/heads/master@{#435295}

[modify] https://crrev.com/8c7da89358dd21e60be2725220696f29ef94c234/components/cronet/ios/test/cronet_http_test.mm
[modify] https://crrev.com/8c7da89358dd21e60be2725220696f29ef94c234/net/url_request/url_request_http_job.cc
[modify] https://crrev.com/8c7da89358dd21e60be2725220696f29ef94c234/net/url_request/url_request_http_job_unittest.cc