Thursday, July 20, 2006

The Principles of Monopoly

I saw that Microsoft have published a self-imposed set of "Windows principles". No, there is no mention of security, performance, or other irrelevancies. But the language is a little foggy at times, so I've taken the liberty of translating it...

Microsoft Corp. recognizes the important role its Windows® desktop operating system products play in the information economy and the responsibilities that come with that role.

Translation: We are being unfairly attacked in the EU and US for abusing our monopolistic position. The confusing part to us is why we'd invest so much money and effort in becoming a monopoly if people won't let us abuse that afterwards. What's this world coming to?

To promote competitive opportunities and otherwise enhance the appeal of Windows to developers and users, Microsoft is committed to running its Windows business in accordance with the following principles that address computer manufacturer and user choice, opportunities for developers, and interoperability for users.

Translation: We believe in promoting our opportunities to compete with the few firms that still dare to tread in our space. Google and Blackberry, be warned!

These principles will apply to Windows desktop development projects going forward.

Translation: If you think we're going to make a single concession to those lousy Linux free software hippy freaks, think again.

Principle I: Choice for Computer Manufacturers and Customers

Microsoft is committed to designing Windows and licensing it on contractual terms so as to make it easy to install non-Microsoft® programs and to configure Windows-based PCs to use non-Microsoft programs instead of or in addition to Windows features.

Translation: In case there's any doubt here: Microsoft is going to make and sell Windows. Yes, we had to state this because our shareholders keep asking, "is Microsoft actually writing software with all that money, or is Vista simply the Orwellian endless war translated into software management theory?"

What this means:

1. Installation of any software. Computer manufacturers and customers are free to add any software to PCs that run Windows. More broadly, every computer manufacturer and customer is free to install and promote any operating system, any application, and any Web service on PCs that run Windows. Ultimately, end users are free to choose which software they prefer to use.

Translation: "Prefer" is such a nice word. Ultimately, our job is to convince users that they prefer our software and to be honest, we'll ensure they have the right to run it, despite those antitrust rulings. People *like* media player! Removing it would go against our own self-defined principles.

2. Easy access. Computer manufacturers are free to add icons, shortcuts and the like to the Windows Start menu and other places used to access software programs so that customers can easily find them.

Translation: Computer manufacturers who do this will of course lose their preferential licensing terms, but we're sure they'll easily make up the lost revenue by promoting Firefox! Lol. We *own* the computer manufacturers, fools!

3. Defaults. Microsoft will design Windows so as to enable computer manufacturers and users to set non-Microsoft programs to operate by default in key categories, such as Web browsing and media playback, in lieu of corresponding end-user functionality in Windows. Computer manufacturers are free to set these defaults as they please when building new PCs.

Translation: Computer manufacturers need the freedom to set these defaults as they please. Commissioner, are you listening? It's all about freedom! And, of course, our ability to tell computer manufacturers exactly what pleases them most.

4. Exclusive promotion of non-Microsoft programs. In order to provide competitors with the opportunity to attain essentially exclusive end-user promotion on new PCs, computer manufacturers will have the right to remove the means by which end users access key Windows features, such as Internet Explorer and Windows Media® Player. The Set Program Access and Defaults utility developed as part of the U.S. antitrust ruling makes it easy for users and computer manufacturers to exercise these options.

Translation: Yes, we're going to make it even more complex to remove unwanted junk from your system, but it's all part of giving you more choice. Don't complain if you have to bend over backwards to remove Media Player, it's the fault of those antitrust people.

5. Business terms. Microsoft will not retaliate against any computer manufacturer that supports non-Microsoft software. To provide transparency on this point, Microsoft will post a standard volume-based price list to a Web site that is accessible to computer manufacturers, as it has under the U.S. antitrust ruling. Windows royalties will be determined based on that price list, without regard to any decisions the computer manufacturer makes concerning the promotion of non-Microsoft software. More broadly, Microsoft will offer Windows for license on standard terms and conditions so that a computer manufacturer knows that it will be offered the same licensing terms regardless of its decision to promote or not promote software from competitors. Microsoft will consider modifications to the standard license terms to reasonably accommodate computer manufacturers with individual business-model or operational requests, but these variances will never be based on the extent to which the computer manufacturer promotes non-Microsoft software.

Translation: Wow, that was a mouthful. Sounds good, doesn't it? Did you catch the part where we in fact commit to nothing at all, and leave all our options open to modify pricing as we like? Like the part where we're not committed to publishing the actual license terms we apply to, for example, Dell or HP?

Principle II: Opportunities for Developers

Microsoft is committed to designing and licensing Windows (and all the parts of the Windows platform) on terms that create and preserve opportunities for application developers and Web site creators to build innovative products on the Windows platform — including products that directly compete with Microsoft’s own products.

Translation: We love products that compete with us, so long as they run on Windows, because it just means you're doing the R&D work for us. Hey, that's how we got to be so large, by taking ideas from other people, so why stop now?

What this means:

6. APIs. Microsoft provides the developer community with a broad range of innovative operating system services, via documented application programming interfaces (APIs), for use in developing state-of-the-art applications. The U.S. antitrust ruling requires that Microsoft disclose all of the interfaces internal to Windows called by “middleware” within the operating system, such as the browser, the media player and so forth. In this way, competitors in these categories will know that they can plug into Windows to get services in the same way that these built-in Windows features do. This has worked well, and we will continue to disclose these interfaces even after the U.S. antitrust ruling expires. In fact, we will go further, extending our API commitment to the benefit of all software developers. Going forward, Microsoft will ensure that all the interfaces within Windows called by any other Microsoft product, such as the Microsoft Office system or Windows Live™, will be disclosed for use by the developer community generally. That means that anything that Microsoft’s products can do in terms of how they plug into Windows, competing products will be able to do as well.

Translation: Despite our tendency to using secret APIs, we've discovered how much more profitable documented APIs can be for everyone, not to mention that we just *love* competitors who use our technology. We'd like to thank the Dept. of Justice for teaching us good software design. Maybe some of you Justice Dept. folks want a job at Microsoft?

7. Internet services. Microsoft is contributing to innovation in the area of Internet services with services that we call Windows Live. Microsoft will design Windows Live as a product that is separate from Windows. Customers will be free to choose Windows with or without Windows Live.

Translation: Now available for the low, low price of just $19.95 per month. What, you thought Windows Live would be part of the core package? Lol, we're not giving you anything for free. Hey, don't cry on our shoulders, go see the Dept. of Justice, it was their brilliant idea!

8. Open Internet access. Microsoft will design and license Windows so that it does not block access to any lawful Web site or impose any fee for reaching any non-Microsoft Web site or using any non-Microsoft Web service.

Translation: Another Microsoft innovation. No, not the "open internet access" part, but the part where we plan to charge for Microsoft web services by embedding payment systems directly in the operating system! Yes, it's a brilliant idea because if you try to use Linux or Firefox or Mac to access our online service, well, dude, you're baked. The cool part is that thanks to our policy of "open internet access", we will actually make it impossible for our payments system to work with non-Microsoft web sites and non-Microsoft web services. It's for your own good.

9. No exclusivity. The U.S. antitrust ruling generally provides that Microsoft may not enter into contracts that require any third party to promote Windows or any “middleware” in Windows on an exclusive basis. We will maintain this practice going forward, and in fact broaden it to apply to Windows or any part of Windows, whether or not it would qualify as “middleware” under the U.S. antitrust ruling. We will apply the concept of “exclusivity” broadly too, so that our contracts ensure that a third party can use non-Microsoft software in amounts equal to or greater than its use of Windows. More generally, we want the developer community to know that it is free to develop, support and promote products that compete with any part of Windows. Consistent with the U.S. antitrust ruling, Microsoft will not retaliate against any third party for exercising this freedom.

Translation: Did you like the way we repeated point 6 using a completely different language? Our lawyers are the bestest. Look, here's our problem: despite owning huge numbers of the smartest software people on the planet, we can't produce software any more. I mean, it's a joke, right? So we need you to go out and write software for us. If it's any good, we'll buy you out just before you start to get market traction. Cheap and effective, our shareholders will love us!

Principle III: Interoperability for Users

Microsoft is committed to meeting customer interoperability needs and will do so in ways that enable customers to control their data and exchange information securely and reliably across diverse computer systems and applications.

Translation: We know what 'interoperability' means, here at Microsoft. The other day we saw a Windows XP box talking to a Vista box. I kid you not! We're committed to making this kind of miracle happening more and more often in the future. Seriously.

What this means:

10. Communications protocols. Microsoft will make available, on commercially reasonable terms, all of the communications protocols that it has built into Windows and that are used to facilitate communication with server versions of Windows. To facilitate this, Microsoft will document protocols supported in Windows as part of the product design process. We will also work closely with firms with particular needs to address interoperability scenarios that may require licensing of other protocols.

Translation: Protocols are cool. They're like APIs except we can own them, using copyrights and patents. That means we can get you to write software for us, and at the same time pay us good money for the privilege!! It's so sweet we're almost in a faint. Oh, sure, we're write some docs if you really insist.

11. Availability of Microsoft patents. Microsoft will generally license patents on its operating system inventions (other than those that differentiate the appearance of Microsoft’s products) on fair and reasonable terms so long as licensees respect Microsoft’s intellectual property rights.

Translation: We think "an arm and a leg" is very reasonable. Alternatively, 10% of your gross revenue. Look, let's be honest. We've spent years trying to collect patents and make some kind of business based on that. It's time you try to help us. Sure, our patents are usually frivolous, and there's no guarantee that someone else won't sue you, but Microsoft needs your cash now. Please, think of the Children!

12. Standards. Microsoft is committed to supporting a wide range of industry standards in Windows that developers can use to build interoperable products. Microsoft is committed to contributing to industry standard bodies as well as working to establish standards via ad hoc relationships with others in the industry.

Translation: The best way, in our experience, to corrupt a dangerous standard is through ad-hoc relationships. It's so nice because we can get our "patented technology" into standards (what a laugh, I mean we can start to file patents on key technologies in standards) without signing anything that would compromise our position. But aside from that, we love interoperability, for sure.

Microsoft will post these principles to its Web site so that they will be readily accessible to the computer industry and customers. We will review these principles from time to time, and at least once every three years, to determine whether we should adopt additional principles or modify existing principles to reflect technological, business or legal developments.

Translation: Note, however, that we have signed nothing, and if you would decide to take us to court because we flagrantly violated any of these principles, despite our elegant use of teflon language, you would rapidly find yourself the object of such mockery that you would creep back into the hole from whence you came. This is not a contract. It's not even a click-through license. This document is 100% marketing and if you can't understand that, then I have a lovely Vista system for you, right here...

Microsoft Corporation

"Setting the Standard For Monopoly for Over 20 Years" (tm)

Tuesday, July 04, 2006

The Digital Majority

There are two kinds of people. Those who get it, and those who don't.

Until recently I thought the term "digital divide" meant that some people could afford ADSL while others could not. But that's bogus. Somalia, one of the poorest countries on the planet, also has the lowest mobile phone costs anywhere on the planet. With no monopolies to fight, no governments to pay off, no trades unions to placate, Somali mobile phone operators buy the cheapest Chinese equipment, set-up networks, pay local war lords for security, and connect people up to the global GSM network at prices that would make a European telco manager faint.

I'm not suggesting we hand over security to war lords. I am pointing out that the digital world is within reach of the world's poorest people, and they are rapid and ambitious technology adopters.

There is a digital divide, but it separates those who get it from those who do not. That Somalian, paying a cent a minute for a mobile phone call to his cousin in Atlanta, gets it. The IP lawyer, advising his client that the best protection against a patent suit is more patents, does not.

Well, one could argue that the IP lawyer travels business class and stays in hotels that cost $1000 a night, while the Somali is very lucky if he earns that much in a year. So perhaps from the point of view of working the system and getting the most into one's own pocket, the lawyer definitely does get it.

But I'm talking about something other than raw egotism translated into greed for money and power. I'm talking about the new digital age.

The most noticeable thing about the people who get it is that they have a hard time thinking of this as a "new age" of any kind. They either never experienced, or have happily forgotten, the pain of 56k modems, of telex, of three-month waiting times for new phones and fifty-dollar phone calls. They use IRC and wiki, not teleconferences, and they swim in a sea of digital information as if they were born to it.

Those who don't get it, on the other hand, are constantly challenged by this new world. They spend their lives thinking, "how can we make money when everything is free?" And usually their best answer is, "stop things being free, lock them down, and charge for them." Those who get it have exactly the opposite response: "do it better, charge for the added value." And doing it better is a smarter, more sustainable strategy than creating lock-in. This is why Google, who get it, are implacably grinding down Microsoft, who do not.

The digital age is an equaliser. It's a meritocracy in which the best minds win. A single person can, with the right words, challenge an empire. This has often happened in history but today it happens daily, hundreds and thousands of times. The digital age creates level playing fields, a grand game in which anyone can compete, but only the best win.

Someone complained to me the other day that her son was spending all his time in online games. I told her, "in ten years time, by the time he graduates, online games will be where many people do their business". Well, perhaps twenty years. But if you want a glimpse of the electronic business world a generation from now, you could do worse than look at online games.

And there are two kinds of people, those who get this, and those who do not.

As far as I can tell, almost every institution, every company and every professional that started before the digital age hit us (around five pm on Wednesday, 1995) does not get it, and almost every institution, company, and professional that started thereafter does get it.

Take any IT firm, and look at their policy on (for example) software patents. Remove the cultural layer... in the states, software patents are a fact of life, like cancer, and people have learnt to live with them. What remains is a clear pro or con attitude. The firms that predate that fateful Wednesday tend to see patents as a great way to own the software landscape. The firms that are fully digital understand that any friction costs, from patents to random legislative red tape, is a problem.

So it goes for professionals and institutions.

There is one flaw in my argument, which is that software patents create a huge amount of money, for those who deal in them. The software patent trade has been compared to a massive scam, worth hundreds of billions of Euros, perpetuated on the IT industry by a group of patent specialists, first in the USA, and now in Europe.

And surely there are many of these scam artists, who call themselves "IP specialists", who definitely do get it and simply don't care. Raw egotism translated into greed for money and power can take even the best morals and turn them into road meat.

Sometimes I wonder how such people can wake up in the morning and look in the mirror. Perhaps at some point they just don't identify with ordinary people any longer. Perhaps they really believe they are special and gifted and have the moral right to manipulate legal and political systems, whatever the cost to the common people. I wonder how they feel when they realise that no amount of money can buy immortality, friends, love, or even health.

Anyhow, I'll assume that the directors of large IT firms, their lobbyists, the bureaucrats at the Commission, and the many honest and hard-working IP lawyers that want software patents are not like this. I'll assume they are honest and really believe what they are saying, and they still want to introduce a system that ultimately makes it impossible to write, distribute, sell, or use software without paying an unpredictable friction cost to unknown parties, for an undefined period.

The only excuse I can find for these people is that they don't get it.

To anyone who gets it, software patents are an insane concept. There are many other insane concepts in this new digital world. For example, the idea that copyright ownership can last forever. Or the idea that we can no longer buy music, only rent it. Or the idea that a firm can pay to get laws that forbid people making interoperable products. In fact, anything that unbalances the playing fields is, from a purely economical point of view, pathological. The more level the playing field, the more wealth for all.

I think the number of people who get it exceeds the number of people who do not.

Certainly in IT, it's a minority of firms that want software patents. 80% of the IT market consists of small to medium-sized firms (SMEs), and except for the flock of firms sponsored by Microsoft to speak for software patents, and the patent-holding specialists that produce nothing except lawsuits, IT SMEs come down solidly against such ideas, mainly because insanity is a bad business strategy when you're small. For large firms, insanity sometimes seems to work, at least for a while.

So I come to the point of my story, which is this. People often ask, "what defines the FFII?" The answers one hears are many. We stand for freedoms of certain types, but also rules. We stand for copyright, definitely, unless it's the Disneyesque copyright that lasts five hundred years. We stand against software patents, unconditionally, but we have nothing against patents in other domains. We support open standards but we don't actually define them. We represent open source developers and we also represent closed-source developers. We're agnostic as to how people turn bits into cents so long as they don't cheat.

So here's my answer. The FFII represents those who get it. We are the unseen future, the generation of programmers, engineers, businessmen, writers, artists, journalists, lawyers, politicians, and the other individuals and firms who have staked their future in a fair digital playing field. We are the Digital Majority.

Compromise is not an option. There is no acceptable level of friction any more than there is an acceptable level of cancer. We spend our lives removing friction, eliminating transaction costs, competing ruthlessly to be better, faster, more efficient. When someone comes along and tells us, "this new law is going to turn you all into my serfs", and gets a massive, concerted, and well-organised hostile reaction, they should not be surprised. I mean, how stupid do you have to be?

We are the Digital Majority. Time is on our side. The ones that don't get it will grow old and die. Every baby born today is a natural FFII supporter, except for the 1% sociopathic parasites that we will always have to fight into a corner. We are the Digital Majority and we will continue to fight to shape this world into what we consider right and proper, based on our solid and honest understanding of economic efficiency and value, our inbuilt sense of fair play, and using our talents for communication, for organisation, and for collaboration.

EU Commission vs. Software, part II

On July the 12th, the EU Commission will unveil the next stage in its plan to kill software, called EPLA.

My agent at the Commission, whose codename is Baron von Münchhausen, tells me:

"The Commission has looked carefully at the global economy and decided that in a modern world, Europe simply cannot compete. We don't have the massive labour and capital markets of America, China or India. We're too expensive, lazy, and greedy to compete with anyone in a fair game. Technology only makes it worse, and frankly this free software stuff just makes us angry. How is Europe supposed to produce its own Microsoft when our best minds can't even charge for the stuff they make?

"The Commission", continues the Baron, "has decided that the only way to save Europe is to destroy this virus called software. We have studied the whole world and chosen the American IP model as our basis. We will take it to such an extreme level that the global software industry will stumble and fall, and we will return to the blissful age of carbon and steel, in which Europe's great Empires were born."

The Baron points out that "the fall of Europe's last empires coincides dramatically with the rise in information technology. Is it a coincidence that in the same year that Intel invented the microprocessor, the British Empire granted independence to many of its African colonies?

"Many dramatic moments in IT history can be tied directly to traumatic collapses of the European colonial period. Europe's leaders are thus convinced that only the final and total destruction of the IT industry will let them restore their former glory", finishes the Baron's report.

I have studied the Commission's long battle for software patents, and while I don't agree with the logic, I believe this is a plausible explanation for what otherwise appears to be a form of clinical mass insanity.

I asked a professional opinion from the Baron's half-cousin, Doctor Karl Fredrich. Dr Fredrich says, "the Commission's attempts to make it impossible for ordinary people to write, distribute, sell, or use software without paying unknown fees to unknown persons for unknown periods of time have only one logical foundation. They are completely and utterly mad. Mad, I tell you, mad!!"

I'll let you decide whether the Baron or the Doctor is right.

EPLA, incidentally, means "European Patent Litigation Agreement", not "Europe Pays the Lawyers Again", as some unkind people have suggested.