The China Market

On Saturday, the Guardian revealed fears by US officials that China was using its privileged access to the Microsoft Windows source code in order to prepare and launch attacks against certain targets. This fear appears to be justified, in light of the tactics used in the highly publicised attacks that led to Google’s withdrawal from China. The attacks, we are told, were initiated by the Chinese Politburo when one of its senior members googled himself (naughty!) and found material that was critical of him.

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.


Open Source Diplomacy

[This column appeared in the Vanuatu Daily Post.]

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.

Yahoo! Confirms MS Merger, Name Change

April 1, 2008

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.

Software and the New Colonialism

A colleague of mine recently attended a meeting between the Ministry of Education and representatives for a new initiative sponsored by Microsoft. On the face of it, the offer on the table was compelling: Microsoft Windows and Office licenses for sale at about 700 vatu each for educational institutions. Huge investment in flagship schools in Vanuatu, with hundreds of new PCs in total running all the latest software at prices never seen before. How could anyone refuse?

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.

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Reality Check

Jason Hiner at Tech Republic has written an article entitled “How Microsoft beat Linux in China and what it means for freedom, justice, and the price of software.” He contends that Microsoft’s ‘victory’ over Linux in China is total.

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.

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