Internet and Society 1999
The Technologies and Politics of Control
Scribes Notes -- Lecture 6: Open vs. Closed Code
A. Request:
1. Gina Paik ICANN Workshop please come down to the front after class today to speak to Lean Koay.
B. Friday Afternoons will be proposed makeup classes. Review tomorrow at 2:00? NO. Some would come for beer. How about next Friday? Let’s do it – 2:00. Will be recorded for later recreational listening.
C. Moot Court
1. Mcall is coordinating the competition. Will take place on November 30th @ 7:00 p.m. in the Ames Courtroom. Will center on Neuremberg files website (tech presentation first, then argument of legal issues). Panel will consist of techno people and lawyers and judges. Reception after.
D. Welcome Professor Hal Ableson (from MIT). Rabid FBI agent to follow later. Might be tight lipped.
E. Threaded messaging area:
1. We don’t really have one other than the listserv. Chairman of ICANN has joined and listserv is making headlines. Hal will create a new joint discussion group that we can join with the MIT students. MIT students keeping own special listserv for posting secrets.
F. Paper – abstracts due – but don’t panic.
G. Remote participation: http://cyber.law.harvard.edu/is99/ask
H. Crimson called Hal re: laptops in class. HLS students more advanced than MIT students.
II. Antitrust
A. In a nutshell:
1. The Sherman Act is short and vague. Has two basic sections. One prohibits conspiracies that restrain trade (e.g. price fixing). Past abuses include milk prices and garbage hauling. The other has to do with monopolization, or the abuse of monopoly power. Having a monopoly isn’t the problem. It’s using that monopoly power to maintain or enhance your monopoly.
2. What is a monopoly? Undue market power (shown by massive market share). Test is slippery. Is the market share contestable? Could a competitor with a better product enter the market and compete with the monopolist?
3. Why are monopolies bad?
· Monopolists are lazy. Products they produce aren’t as innovative. Surley service, poor products, high price, etc. result from lack of competition in the area (Hark).
· Price gouging. You can overcharge without fear of losing market share. You are likely to get close to the maximum people are willing to pay.
· Abusive business practices to maintain monopoly. Monopolist could use power to get exclusive contracts with retailers in order to keep competitors out of the market.
· Even if you don’t have a monopoly, you could unlawfully try to obtain one. For example, you could use predatory pricing (charging a really low price until competitors go out of business or lose market share – then you raise your prices big time once you’re the only game in town).
· Microsoft issues are undue monopolization issues, not conspiracy issues.
III. Microsoft Case Role Plays.
A. Ben will attack MS
B. Hal will defend MS
C. Debate:
1. Ben: Why is Microsoft a threat? Many of us have computers. No doubt they are mostly running MS windows. MS has major market power. We are all dependent on MS to some extent. If they refuse to sell Windows tomorrow, everyone would be SOL. They could add troublesome wizard characters to torment us when we tried to copy existing copies of Windows. This shows market power and shows that it can do what it wants.
2. Ben: First witness is from Dell – he decides what software to install on new machines. Alex chosen. What do most customers want? Most customers want Windows. Alex says Dell would recommend Windows since they have tech support for it already in place and since they can sell other programs that will work with Windows. This shows supply side network effects. Once consumers are used to Windows, that’s what they want. In addition, compatibility with others is a huge issue. Dell wants to sell a Windows machine because that’s what people want and that’s what they’re used to .
· Alex as independent software developer: He makes something MS doesn’t make. Before the internet, I wrote operating system specific software (MS Windows compatible software).
· JZ: Dell is an OEM. Dell does not ship “blank” computers. Every computer they ship has to have Windows on it or else MS will not allow them to ship any machines with Window s on it. MS licenses (in the past) included a term like the one above – no machines could be shipped with MS unless Dell at least paid as if all the machines they shipped had Windows on them. This was the first issue that was challenged in the courts. This one was settled by consent decree. Judge “Sporky” refused to rubber stamp the first settlement. This was appealed by both MS and the government. D.C. Circuit overruled him and said he should’ve approved the settlement. Remanded to Jackson (who has current MS case).
3. Contempt Proceeding:
· MS agreed to stop licenses like the one above – couldn’t condition licensing on product on the purchase or installation of another. The contempt proceeding was brought when it was discovered that MS was requiring that Internet Explorer be installed if Windows was to be installed. This was thought of as inappropriate tying (tying new product to monopoly product in order to gain monopoly in new product market). This looked like it was going to go against MS. Lessig was tossed midway through.
4. Netscape – Ben: Why was MS so concerned about Netscape? Alex is now from Sun. By version 2.0 of Navigator, Netscape had standard rendering technologies, but had added a feature from Sun – Java support. Alex: Java is a platform for which you can write programs. It is transparent as far as the user is concerned – for the programmer, it is a layer between the OS or the browser and the user allowing any software to be run on the machine. The idea was that Java would hook up with the OS or the browser it was running with. That way, programmers could just write for Java since Java programs would work on any computer regardless of OS or browser. Would also remove stigma of loser OS platforms. Java is different from other threats MS killed over the years. It threatened direct competition with traditional operating systems.
· This is why DOJ got worried when it saw tying contracts. MS made it so OEM’s had to install Internet Explorer. Dell doesn’t want to install lots of different programs since it increases its support obligations. Plus, IE had to be on the desktop. This had a serious impact on Netscape’s ability to do business – had to give away Navigator for free. Ben says it destroyed the company.
· JZ says this is beyond a monopoly in a single market. A monopoly in the browser market meant control of the Java market. That enabled MS to lessen its threat.
D. Hal in Defense of MS:
1. MS is one of the most successful companies in history because it is managed to latch on to the information revolution (indeed, it has largely created it). Before MS became big, computer use was fragmented and non-compatible. MS had provided uniform standards and rapid development – this has greatly benefited computer users. MS has a clear technical vision and is able to compete and move quickly with new trends.
2. When loser companies with unsound business plans fail, they can always blame MS because they are not as good and it helps them feel better about themselves. The antitrust laws aren’t about being nice to your competitors or even playing fair in every situation. MS has been a fierce competitor, but that isn’t necessarily illegal. MIT supplied expert witnesses for MS and did a $25 million deal with MS. Stop by the Gates bldg on campus!
3. First Witness is Jeff Shelton. Jeff: Runs Windows NT on his computer. Can use non MS applications with NT because lots of other companies develop for NT. Is also able to use Linux without leaving Windows NT. Favorite word processor is Word Perfect (not an MS product). Windows doesn’t force Jeff to use Word. You don’t have to be a genius to use non MS applications in Windows – anyone can do it. Fair number of MIT students use Word. Why? Laziness – it’s already there. Compatibility with other MS products – integrated with other MS apps. Piracy access to Word (for the record, I like Word better than Word Perfect).
4. MS makes platforms. People want the platform to include a word processor and a browser (and Solitaire). The DOJ thinks this is evil tying, but it’s really the only way to make these platforms competitive.
5. Next Witness is from Sun (Josh): Sun just bought company that makes star office, a competitor of MS Office. It’s a suite of office apps that is implemented entirely in Java. You download the program and use it inside your Java platform. You can access your documents from any workstation (so long as platform is installed with your ISP – it can also be installed locally on your hard drive). Star Office is free, but you pay for the use of the remote access model. This is predatory pricing is it not? Star office is a clone of Windows that is free. Is this just tough competition?
· Student: probably not since star office doesn’t enjoy a dominant position in the market.
6. Browser Thing (Alex): Netscape’s complaint is that it failed because MS distributed a browser for free, forcing Netscape to do the same. What was Netscape’s plan? To give away browser for free and then charging for the use of the Netscape server. They changed their mind and decided to charge. This was very profitable. MS forced them to return to the free distribution model which everyone in the browser market follows today.
7. Witness for 3Com: The Palm Pilot stores phone numbers, other info – has some internet connectivity. You can connect Palms together to swap info. The post PC era refers to ubiquitous computing where people can interact with a network wherever they are. The Palm looks to capitalize on this shift. Ten years from now, people will still use word processors and will still browse the web. The Palm has a custom OS (Palm OS). Lots of companies are developing software for that platform (Nokia for example). There are a lot of companies trying to compete in this space (including MS). MS is being locked out of this space since Palm invented the palmtop computing field. Palms are great because they are interconnectable. They can’t connect to Windows CE devices.
· Hal: the law moves much more slowly than does technology. DOJ is fixated in the current (or past) image of what the software industry looks like. In the time this case has been litigated, the software market has changed greatly and the opportunities to innovate have increased greatly. To tell MS it is a monopoly and then prohibiting it from competing in new areas is bad. DOJ argues that there is no room for people to enter the field. That isn’t true anymore.
E. Ben’s Response:
1. The DOJ can have a case without the market being completely closed (which it isn’t). The DOJ seeks to establish that there are serious problems that should be investigated despite the fact that new areas have developed in the meantime. Competition in Palm area doesn’t mean that there aren’t problems in the OS market.
F. Questions:
1. I use MS word because it is a pain to convert files from others. Why does MS make it so hard to convert from other programs if it is so interested in connectivity and compatibility?
· MS response: in order to innovate quickly, it has to have control of the interfaces. Making it so conversion was flawless or unnecessary would take too much time for MS. Star office can write formats that Word can’t read.
· Imagine the thing that distributes gas to your engine. If systems in your car are connected with other systems, things work better. So if your cooling system is connected to other systems, your heating will work better, etc. To software programmers, it is hard work to convert things from other formats. It just doesn’t work as well as having everything from the same platform or program.
2. Is it better to argue that there is choice than it is to say that there will always be other options developing?
· We must ask if this really is an entrenched monopoly? If you define the market as operating systems and productivity software, MS has a monopoly. But, the new architecture of the industry in general will overthrow MS’s position in the market. That’s why MS wants to be left alone to compete in all of these new areas.
3. Why does MS force OEMs to install Internet Explorer rather than distributing it to consumers for free. Do I get more functionality by having Dell put IE on rather than doing it myself?
· If OEMs don’t install IE, integrated functionality will suffer and consumers will blame MS, not the OEMs. MS wants to put out the whole platform in all of its working glory.
· MS says they have OEMs install IE as a matter of convenience. If they don’t and allow individual users to put it on themselves, Dell will be overwhelmed by cretins calling tech support for problems because they installed it incorrectly.
· JZ says this argument has been somewhat mooted by the intertwining of IE code and Windows code to the point that they are practically the same product.
4. When I buy MS products, I agree to a license that says that I buy only the use of the software, but not the software (the code). So I can’t alter it or fix it like I can my car.
· JZ: true. You don’t get a fee simple title to the software. The license for NT used to make consumers agree not to publish benchmarking results (limited negative feedback). Other terms can govern your use of the software beyond the copyright. It can be argued that the license can be used to maintain power.
5. MS is offering convenience. The average computer user does not know anything about browsers and all the pros and cons. They don’t want to research these issues, they just want a browser that works well. MS provides this by requiring OEMs to put it on.
6. JZ: there is a great power in the default settings of each computer. This often determines which software will be used widely.
7. In this area you have the dynamic of network effects. Intercompatibility drives this market in many ways. Uniformity is efficient, but it may stifle innovation. MS is saying that they are the innovator. Is their innovation the only innovation that we want.
8. Antitrust law may be an antiquated way to deal with this kind of problem. Bill Gates’ intuition that ubiquity rather than quality will make the billions. He’s found a way around the free market (assumes that MS products aren’t the best products – problem is that the best products aren’t the ones that succeed like they are supposed to, but rather the most common products are the leading products even though they aren’t the best).
· This is an unfair characterization. There really is great power in this integrated Windows Suite. To say that they haven’t innovated anything is unfair.
9. Past example of punchcards – the DOJ was still prosecuting IBM over cornering the punchcard market long after the last punchcard was punched.
10. The whole issue here is about software installation. Without the requirement of installation, the best software will survive (people will just use what they like). MS has been successful because of the bundle – it is a challenge for many people to install software. Eliminating this requirement will allow the market to take care of MS
· JZ: the problem is that the browser that you use as a launch point may be an MS browser. MS may recognize that Windows and traditional software apps are dead and simply transition, through the distribution of the browser, into the new market.
IV. Open and Closed Code
A. We now have a world where some software consists of open code (like internet protocols and Linux).
B. Will open source software provide the final threat to closed source software? Which is more efficient?
1. Crypto software: you’d be insane to put trust in a crypto program that didn’t have open code. Without open code, you’d never know if it were working. Netscape wanted to export its browser to France. France said fine, so long as they put in a back door for the authorities. Netscape thought that would be dumb since the code was open source. It gives you a built in protection from government regulation because you open up what you’re doing for the inspection of all.
2. Poll from last week: would it be a better thing to make it so your identity were discoverable (with regard to your internet speech)? Half the HLS students thought that sounded great. MIT students say no way.
3. JZ: If I’m in the crypto market, I’ll just buy open source crypto software. Recent event: someone found an NSA key in the code of MS Windows. Everyone freaked because they thought the NSA could access any Windows activity. Not so in reality, but it was embarrassing.
C. MIT has agreed with MS to do stuff for education (including developing educational software). Development at MIT is different – it’s open. Then don’t make everyone working on it sign a non-disclosure agreement. Thus, it is hard to develop in the university environment without the code essentially being open since so many people are familiar with it. MIT has no claim on software created by students (so long as student wasn’t funded by the school). Harvard says that if you do it for a class, it’s ours (characteristic of them). Why, Harvard and other universities are starting to think of themselves as profit centers in the intellectual property area. At MIT, RA’s have to sign over their ownership interests in intellectual property developed at the university. Does the university develop it (as a community)? Or is the university a group of smart people who are all working on their own individual projects which they arguably own?
D. Are there any other reasons for us to care whether tomorrow’s world is mostly open source or closed source (apart from crypto example).
1. If you believe that code imposes real constraints like law imposes constraints, you probably think it should be published. Laws are published so people understand the restraints they impose. Code should be open so users know what the rules are. If you don’t know how software works, MS will send you an error message, crash your system, force you to restart and then gouge you on the help line, all without you knowing what went wrong.
2. Think about a world where every town was a company town and you could choose where to live. Everything in the town would be privatized. Towns where you were pulled over arbitrarily without knowing why would not be popular and people would gravitate towards others. The same argument applies to code. Most code today is private code and most law is public law.
3. A great IETF case study just came out. They’re considering a CALEA type request from the FBI so that internet packets can be plugged into in much the same way the FBI can plug into phone lines. The IETF is trying to figure out how to respond to the request.
4. If you can’t look at the code or hire someone to do so, you can have problems. If you type in the address for amnesty international at AOL, it’s a decoy site.
5. What allows someone to close their code completely is intellectual property law. You can copyright your intellectual property. Thus the government allows you to proprietize and close your code to others. Copyright protection for code lasts for 95 years!
6. The MP3 standard is challenging these ideas. Some are trying to outlaw devices that allow the downloading or copying of music. If they succeed, it may be time to be afraid. Could send us down the slippery slope.
7. Back in the old days, you could copy a cassette once (for your own use), but you couldn’t copy a copy. If the audio industry uses closed code, which it does, hacking around it or finding out how it works or how it is protected, you’ve violated the law.
8.