I confess feeling a bit of smug satisfaction when I say I Told You So. Microsoft’s drive to secure the co-called China market at any cost demonstrates perfectly the complete imbalance in power that most businesses face when attempting to gain a foothold in China.

Back in 2007, when reviewing the purported victory, I wrote:

With trademark deftness, China has largely de-fanged one of the most effective and brutal corporate negotiating teams in the world. This is the corporation that managed to buy off the US government and avoid any real punishment following its conviction for abuse of monopoly powers. It’s the company that has consistently and rather successfully thumbed its nose at the European Union, the largest economic entity in the world today. It has controlled standards processes, locked in countless corporations and ruthlessly dominated the supply chain world-wide.

Yet Chinese negotiators got everything they asked for. Price reductions? They pay about 10% of what other governments do per seat. Control? They not only have access to the source code, they have to right to alter it to suit their purposes.

Think about what that means to the Chinese. In economic, political and strategic terms, they’ve negotiated unprecedented access to an invaluable resource, and they’ve done it in a way that costs them next to nothing. Truth be told, Microsoft got almost nothing out of this deal. China still uses Linux whenever and wherever it wants.

It still astounds me that anyone thinks that the so-called China Market is anything other than what the Chinese regime decides it is at any given moment.

Sure, there’s a lot to be said for the beneficial effects of market forces. I won’t dispute that. The one thing people tend to forget is that, if push comes to shove -and it has in the past- the Chinese are capable of enduring unimaginable suffering to achieve a strategic goal. (Well, capable of allowing their citizens to endure unimaginable suffering, at any rate.) That willingness gives them the capability to impose any number of arbitrary conditions onto the economic environment.

Western governments don’t think of themselves as the owners of their respective economies. The Chinese do.

So when the likes of Cisco, Yahoo! and Microsoft betray every iota of principle (and expose a callously cavalier attitude toward strategic security issues) in pursuit of economic gain in China, I can only caution them that things only look manageable now because they’re not happening to you.

Yet.

Say what you like about wikileaks and their recent dump of over 250,000 US diplomatic cables, but there is probably not a single researcher in International Relations, History or Political Science without a tingle in their pants today. Never in modern history has so much information been made available in such a readily accessible format. This is, for researchers, a gift that will keep on giving for decades to come.

The thing that impressed me most from my brief perusal of the 200-odd documents released on the first day was not so much the content as the quality of the analysis. The cables were well-written and obviously well-researched. I suspect that there’s more than one junior foreign officer out there with a quiet smile on their face today, because finally the world will see just how good they are.

Yes, I’m ignoring completely the ethics and morality of the situation. That horse is out of the barn, and incidentally, what a barn it is….

These cables will provide more insight and understanding into American diplomacy than anything else ever has. Just as access to hitherto proprietary source code sometimes unearths dirty secrets of which even its author is ashamed, there is likely to be a lot of unpleasantness to be found in the cables.

I think the longer term result, however, will be that much of what’s good about the US diplomatic corps (and there’s a lot of that) will assist countless others to improve their own work. In fact I think it’s likely there might be more than one diplomat that might actually be relieved to see the unspeakable spoken aloud. This torrent of data just might break more logjams than it creates.

The rise of the Free Software movement in the 1990s increased access to the source code that runs our computers and caused fundamental changes in software development. Their echoes are still quite strong today. Code that was once hidden behind thick corporate walls was now being handed about in a vast open source bazaar. This discomfited many vendors who were dismayed to discover that their crown jewels could become valueless overnight as software became commoditised.

A lot of dirty laundry got aired in the process. Bug-reports, software update schedules, coding practices all became subjects of open discussion and, yes, dispute. Tolerance for second-rate code dwindled significantly. Emphasis began to fall more and more on results. As one acerbic commenter wrote: “A single line of running code trumps a thousand lines of argument.”

Companies who attempted to retain their secretive ways were simply bypassed and their flaws exposed for all to see. Sound familiar?

In the late 1990s, Microsoft identified Linux specifically and Free Software generally as the greatest strategic threat to their organisation. They were right. Microsoft’s stagnation is partly attributable to the advantage that FOSS has given several of its competitors. IBM, Apple and Google have all leveraged open source software to jump-start various endeavours that compete directly with Microsoft. Likewise, Microsoft’s need to increase the pace of development resulted directly in their death-march to Windows Vista.

Just as Microsoft was able to drive Netscape Communications out of the market by commoditising the web browser, others are commoditising vast swathes of the computing industry by leveraging FOSS.

The commoditisation of information proceeds apace, and although the stakes are perceived to be higher in this case, the effects will probably be similar in nature. A fractious dialectic is already emerging between those who truly believe in the benefits of information resources like those circulated to millions of US military and government staffers on SIPRNET, and those who seek to leverage proprietary knowledge for their country’s -and sometimes their own- gain.

All secrets are like kindling. Used at the right time, gossip can provide warmth, build allegiance and influence. Used rashly, well… you know where this is heading. In that sense, wikileaks may seem like a 10 year old boy with a stolen box of matches. But applied judiciously and with a sober sense of timing, the same principles of openness as a default stance and and a predilection toward sharing that are at the heart of free software development (and the Internet itself) could usefully animate international diplomacy.

To be perfectly clear: I’m not suggesting that there is no need for secrecy whatsoever in diplomacy. I’m suggest that, as we’ve discovered with programming processes, secrecy might prove to be less necessary -and effective- to security than it appears to be.

Sunnyvale, California

Yahoo! CEO Jerry Yang told reporters today that the board of directors of Yahoo! Inc. had met earlier that morning and agreed to the sale of the company at a price of USD 66.6 Billion. Yang took the opportunity to defuse speculation about what this move means for the company.

Said Yang, “Honestly, it’s not that big a deal. The truth is that we used to show up at the company HQ every day, see that Yahoo! sign up there and get excited. But recently that just hasn’t been the case. I must be getting old or something. Anyway, I figured, ‘they want it? They can have it. I’m stinking rich anyway, why should I have to work?’”

One of the conditions of sale was that the Yahoo! name be changed.

“Let’s just admit it,” explained Yang. “It’s a stupid name. It was fun for, like, 20 minutes. Then we all sobered up and realised we felt like dorks whenever we told someone where we worked.”

Yang then took the opportunity to unveil Yahoo!’s new name: Meh… Its logo, Yang said, will be a giant emoticon consisting of the ’8′, ‘-’ and ‘/’ characters. When pressed by reporters, he admitted that it would not be easier to spell, and would still cause problems with grammar checkers.

“On the bright side,” he added, “we might finally be able to fix this, now that we’re part of… Meh… Microsoft.”

Microsoft’s CEO, Steve Ballmer, was not present at the press conference, due to a ‘minor’ chair-related injury. He instead released a taped message stating his satisfaction with the negotiations, which ended with a cryptic reminder to Yahoo! employees that their families would be safe, now that they’d shown some sense. Yang would not speculate about the comment’s meaning.

Microsoft’s behaviour in this context has bred more than a healthy amount of distrust. Take away the shiny Gates Foundation work – it’s really nothing to do with Microsoft, anyway – and what you see is a consistent, concerted effort to protect the MS hegemony, with little or no regard to actual benefit to the user.

Now, let’s be clear about one thing. I’m no fan of Microsoft. I was once, but I haven’t been since about 1998, when the integration of ActiveX into network-enabled apps made possible such travesties as Outlook’s use of Word as an email editor. Their utter disregard for the longer-term costs to consumers was willful and determined. It came amid an outcry among geeks, who rightly pointed out that the depth of insecurity was positively sinful. When the ILOVEYOU worm came and went and still there was no attempt by Microsoft to mitigate their vulnerabilities, I made the decision never again to support their software in any mission-critical role. To this day, I treat Windows workstations as disposable, and use Linux as a bulwark against attack. (The truly security-conscious will no doubt relish the irony of that statement.)

Microsoft Windows is, in my considered, professional opinion, one of the single greatest liabilities facing businesses today. Hyperbole? Not a bit of it. It may be that your Windows PC has never been infected (neither has mine), it may be that in hypothetical cases, Linux and Apple machines are just as vulnerable as the average PC. But measured in terms of actual, right-now liability, there is no more significant vector for attack on our information systems than the typical Windows workstation. Seriously: The single most effective step you can take to reduce malware is to stop using Windows.

Microsoft – not stupid users, not lazy admins, not naive developers, nor any other red herring that’s been trotted out in the past – Microsoft has already cost businesses more in terms of time lost, resources wasted, information stolen than any other software maker. It’s an obvious, inarguable metric, and it amazes me that it’s not mentioned more often.

So how should I feel when Microsoft announces that they’ve seen the light and that they plan to support the XO laptop? Honestly, I don’t like it. I’m not going to practice Fox-style balance in this assessment, because frankly I don’t think MS has earned that right. In order to merit the benefit of the doubt, they would need to demonstrate that:

• Their software will run reliably in locations where technical support is days away. They have trouble operating in places that have instant help-desk support.
• Their software will not be subject to trivial exploit. Even in a flashed, read-only environment like that of the XO, I find it hard to believe that they will be immune to drive-by malware.
• They will not charge money for the right to install it on the XO. Asking even a few dollars per copy is literally stealing from the very children they claim to be helping. Every dollar that a government gives to MS is a dollar less spent on its people. You see, the laptop is already there, already has a custom-designed free operating system and application suite on it. So MS needs to demonstrate why Windows XP improves on this offering, and why it’s worth any money at all.
• Their software is more suited to exploration and learning than the custom-built Sugar interface, especially with regards to localisation and literacy. I would be especially interested in seeing how the collaborative application-sharing capabilities of the laptop would be expressed using the old-fashioned desktop metaphor.

I could go on, but really it all comes down to this: Microsoft once again finds itself caught by surprise by an idea that should be obvious to anyone: There are 4 billion people in the world not using Windows. With characteristically loutish clumsiness, they will elbow their way into the dialogue, and to my continuing sorrow, I and others will find ourselves once again explaining to people who should know better why using Windows in the islands might not work as well as the MS rep suggests.

And I will be the bad guy. I will be the one who lacks balance, pragmatism, understanding. I will be the one blinded by ideology and partisanship. Again.

Update: What right have I to get so snitty about this, some have asked? Why does any of this matter? Because even the most trivial problem in the islands can become insurmountable. And when someone is denied access to information for any reason, the opportunity cost is immeasurable. We really are playing with people’s futures here. The bottom line is what is best for the children using these computers, and I have seen no evidence that Microsoft is giving more than lip-service to this fundamental issue.

Microsoft is not the only company to come to the sudden realisation that there are about 5 billion people out there who don’t buy their product. Many major IT corporations have taken a look at the mature European and North American markets and decided to begin developing markets elsewhere in the world.

It’s a great opportunity for them. Junior and intermediate managers trying to make a name for themselves are leading the exploration. Rather than navigate the shark-infested waters of corporate HQ, they’re establishing new territories, trying out new tactics and creating new opportunities for themselves and their customers.

This is not a bad thing in and of itself. But it does need to be understood.

The world of IT is undergoing the same shift in emphasis and momentum as industrialism underwent in the late 19th Century. Having reached critical mass in the developed world, technology was exported to the developing world, most notably into India, Japan and, to a lesser degree, China. They profited immensely, but the social cost was high.

It was largely due to technological mastery that the great colonial powers managed to control huge parts of the globe. Their communications and logistical capabilities were well beyond anything their opponents could muster, and their industrialised military ensured that they dominated wherever they set foot.

In fairness, this latest excursion into the ‘wilds’ of the developing world is much more benign than the conquests of the 19th century. Nonetheless, the goals are the same: expansion of business opportunities and profits through the creation of new products and markets.

It’s not necessary – or possible – to pass judgement on the process as a whole. Regardless of how we might feel about it, it’s happening now, and no one can stop it. This strategic change in approach offers Vanuatu a valuable opportunity and at one and the same time creates challenges that need to be understood and addressed.

Let’s unwrap the Microsoft offer then, and try to tease out the implications….

Low-Cost Software Licenses

Affordable software licenses are a very good thing. Something that many people don’t realise is that breaking a license agreement by installing pirate software is just as illegal in Vanuatu as it is anywhere else in the world. You can get away with it for now, but that will change. Besides, it’s only right that people should receive payment for their work.

But what software would Education be getting? The official answer is that it would be for cut-down versions of Windows and Office, which would be missing some features that people have come to rely on. As for server licenses, which are many times more expensive than client software, the only thing the Microsoft would say was that they would ‘look into it.’

A particularly sticky issue is scope: How long will Microsoft continue to offer these cheap licenses? Would Education end up paying tomorrow for something that is free today? The issue of perpetual licensing was discussed, without any commitment from Microsoft.
These licenses would be available to schools and other educational facilities, but not to the Ministry itself, nor any related administrative offices. The cost of integrating central systems with these new PCs and servers was not discussed.

Free Hardware

The Microsoft representative spoke of a remarkably ambitious plan to purchase ‘hundreds’ of new PCs and servers for Malapoa College, VIT and other institutions, to install Microsoft software on them, to provide training and support for years. There was limited discussion, however, about support issues, technical capacity of existing staff and the carrying capacity of Vanuatu’s ICT capacity as a whole.

Other unanswered questions included our rural schools’ ability to run PCs at all, issues of Internet access or any kind of communications, for that matter. There was no detail available concerning the actual use of these computers. How would they be integrated into the existing curriculum? And what about service and repair?

The issue of exclusivity was also not discussed in detail. If Microsoft provides the hardware, will there be any limitations on what gets installed? What if we decide to use Firefox and not Internet Explorer? What if we want to integrate the OLPC laptop in with these systems? Contracts with other countries have required the exclusive use of Microsoft products, a condition that would certainly prove far too restrictive for Vanuatu’s unique requirements.

A New Colonialism

Most significantly of all, the issues of freedom, self-determination and appropriate technologies were not on the table at all. Global corporatism is very much the ‘New World Order’ described by George Bush senior in the late 1980s. It’s not necessary to like it or hate it, but it is both healthy and wise for people in Vanuatu to consider what this new colonialism means.

People today are wiser in the ways of the world than they were. They are better positioned to determine their own fate, and they are better equipped to achieve it. A more positive, less overtly dominating global environment also means that we have a great deal more leverage than we did before. We can effectively pick and choose which elements of this new world order we want, or where the choice is compulsory, we can at least have some say in how things get done in our corner of the world.

This offer from Microsoft is generous, and Vanuatu would do well to consider it carefully. But there’s no need for us to accept it whole hog and without first making sure that every aspect of it will work well for us today and continue to work well for us in the future.

But what kind of a victory are we talking about here? Well, they gave away access to their crown jewels, the source code:

“In 2003, Microsoft began a program that allowed select partners to view the source code of Windows, and even make some modifications. China was one of 60 countries invited to join the program.”

They cut prices drastically:

“Microsoft got serious about competing on price by offering the Chinese government its Windows and Office software for an estimated $7-$10 per seat (in comparison to $100-$200 per seat in the U.S., Europe, and other countries).”

And they caved completely on piracy and so-called Intellectual Property enforcement:

“Microsoft’s initial strategy was to work to get intellectual property laws enforced in China, but that was an unmitigated disaster. Microsoft realized that it was powerless to stop widespread piracy in China, so it simply threw up the white flag.”

So what exactly did Microsoft win, again? This article is rife with untested assumptions. Let’s establish a bit of context here before going too far.

Microsoft beat Linux? That most certainly is how Microsoft sees the situation. But their entire ethos is of conquest, control and coercion. None of these apply to Linux. While it’s true that some have used Linux as a tool to gain leverage with Microsoft, Linux as an operating system has no goal, except to be good at what it does. Unlike Microsoft, Linux is not controlled by any single actor, or even by a like-minded group of actors.

Linux doesn’t fight Microsoft (though MS does fight Linux and FOSS in general). It just keeps improving for its own sake and for the sake of its users. If that has detrimental effects on Microsoft’s control of the operating systems market – and it does – well, that is nothing more than a collateral benefit.

So, from Microsoft’s perspective, maybe they did ‘beat’ Linux, but even that defeat isn’t complete or permanent. When China donates PCs to its development partners, what OS does it ship? Linux. Is Red Flag dead and buried? No. Is China dependant on Microsoft for its IT infrastructure? Hardly.

What price victory? A more honest evaluation of the circumstances of China’s decision to accept Microsoft at all shows that Microsoft’s ‘victory’ may be more pyrrhic than anything. With trademark deftness, China has largely de-fanged one of the most effective and brutal corporate negotiating teams in the world. This is the corporation that managed to buy off the US government and avoid any real punishment following its conviction for abuse of monopoly powers. It’s the company that has consistently and rather successfully thumbed its nose at the European Union, the largest economic entity in the world today. It has controlled standards processes, locked in countless corporations and ruthlessly dominated the supply chain world-wide.

Yet Chinese negotiators got everything they asked for. Price reductions? They pay about 10% of what other governments do per seat. Control? They not only have access to the source code, they have to right to alter it to suit their purposes.

Think about what that means to the Chinese. In economic, political and strategic terms, they’ve negotiated unprecedented access to an invaluable resource, and they’ve done it in a way that costs them next to nothing. Truth be told, Microsoft got almost nothing out of this deal. China still uses Linux whenever and wherever it wants.

A deal that would make Stallman laugh. If we think about the Four Freedoms that underlie the GPL, the same four freedoms for which Richard Stallman and the FSF have fought so desperately to support and preserve, the same freedoms that are so perfectly antithetical to everything that Microsoft stands for… these are exactly the freedoms that China has preserved in its deal with Microsoft.

Let’s be honest here: Microsoft may have won the battle, but only by utterly compromising itself and its future in China. They have placed themselves in a virtually abject position vis à vis China. Happily, the Chinese know enough about loss of face to ensure that they never rub this in Gates’.

Bottom line: This is not a Linux/Microsoft story. Linux is a bit player in this story, a Rosencrantz to Microsoft’s Hamlet. The real story is how China managed to pull a classic con on one of the toughest negotiating teams in the corporate world, and how they did it so well that Microsoft keeps coming back for more.