Hance Haney

Trade War

Picking up on Braden’s recent post, “Abuse of Power? Competition Commissioner that Pushes ‘Smart Business Decisions,’” it’s no secret that Europe’s software industry is years behind Microsoft, and not surprising the industry is seeking help from politicians in Brussels.

When Kroes, a politician, talks about open standards one must assume she is referring to the European software industry, not to the open source movement generally. Of course, for the moment “the enemy of my enemy [may be] my friend,” as they say.

In her remarks last week Kroes said,

“I know a smart business decision when I see one — choosing open standards is a very smart business decision indeed,” Ms. Kroes told a conference in Brussels. “No citizen or company should be forced or encouraged to choose a closed technology over an open one.”

This statement could be read either as an innocent statement of personal opinion, or more like an informal, unofficial statement of official policy with plausible deniability. I suspect it is the latter, and that if you are a European bureaucrat or business leader you now understand what is expected of you as far as your future software procurement is concerned.

Why would Kroes need to be opaque? Because there are both structural (e.g., excessive tariffs, unreasonable licensing terms, etc.) and nonstructural trade violations (e.g., certain winks and nods) which are actionable. And because two or more can play this game.

A good reason for governments to not encourage boycotts of foreign goods is because foreign governments can do the same thing. That can lead to trade war, in which your efforts to protect one of your small, insignificant struggling industries may result in foreign retaliation against your most successful exporters.

Trade wars don’t always have serious repercussions, but they have sparked global recessions and many think a trade war sparked the Great Depression.

That’s another good reason why maybe politicians on both sides of the Atlantic ought to leave software procurement decisions up to the marketplace.

June 16, 2008 | Comments |

Viewing 7 Comments

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    Especially since Mrs. Kroes said that she thinks picking open standards is a smart business solution. I tend to agree with her, but if that's true, the marketplace should fix that pretty quickly.

    Maybe, just maybe, the truth is that software procurement is a bit more complex than that.
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    The EC has a policy of tech neutrality in their IT procurements; Ms. Kroes' statement does not properly reflect that policy. Aside from the underlying trade implications, her "endorsement" looks less like an official statement and more like a shot across the bow of MSoft as it pertains to the looming (and highly specious) ECIS complaint.
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    Don't you need to disclose the relevant business relationship here?
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    Don-The Gates Foundation funds a project at Discovery which I have nothing to do with. If you read the article you cite carefully, it says:

    Greg Shaw, Pacific Northwest director [of the Gates Foundation], explains that the grant to Discovery underwrites the institute's "Cascadia Project," which strictly focuses on transportation in the Northwest. The Discovery Web site lists several program goals, including financing of high-speed passenger rail systems and reduction of automobile congestion in the Cascadia region, which encompasses Oregon, Washington and British Columbia. (The Gates Foundation, which is based in Seattle, gives a small slice of its money -- about $40 million in 2004 -- to groups that aim to improve life in the Pacific Northwest.) Poor transportation is a key problem for low-income families, Shaw says, and "when Cascadia came to the Foundation, there was a sense that there had not been a regional approach to studying transportation. Cascadia's plan to solve the transportation problem "was very much a bipartisan state, local and regional approach with a variety of states and counties and mayors."


    My views on government interference in the market are pretty consistent across the board. Check out, for example, what I recently said on this site about the Google/Yahoo! arrangement.

    If you want to discuss my post on a substantive level, be my guest.
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    A typical IT analyst firm trick is to issue a "non-commissioned" report advocating a client for which the company also does billable work. So it's important to disclose the whole business relationship with the client--is example.com keeping the lights on even though a particular project isn't billed to them?

    If a European politician comes out for fuel-efficient cars, does that mean we get to hear from GM-backed policy groups?
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    Hance:

    Making full disclosure of related interests can be substantive, so the requirement of disclosure shouldn't be a surprise, and goes a long way to explaining the sometimes twisted reasoning in some of the TLF posts.

    But I don't want to comment any more about that, but concentrate on your statement: "it’s no secret that Europe’s software industry is years behind Microsoft,"

    I find it interesting that you use a reference to a specific firm, rather than "U.S. software industry" or less precisely "American software industry", which would also include Red Hat, Novell, Oracle and IBM. Of course, those companies are all free software users and supporters (admittedly to varying extents) This would, of course, undercut the unstated agenda that I believe is part of this post: to frame Nellie Kroes as anti-American, rather than as anti-monopoly, and anti-Microsoft, by equating Microsoft with the U.S. software industry.

    In any case you should be explicit about what metrics you use, and since you have chosen Microsoft, I would comment that the quality of the Linux kernel (a multi nation effort, but including many Europeans, including Linus Torvalds) compares very favorably to the quality of the Microsoft Windows operating system.
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    Well, here I am referring to the comment by Volker Lendecke of the Samba Users Group (“We are, in many fields, ten years behind Microsoft. And the lag is growing with every new step Microsoft takes.”).

    I am not at all hostile to the open source movement as long as it seeks to compete on the merits and not in the halls of government. Politicians are fine people, but I used to be a lobbyist and I will assert that most politicians have zero understanding of software and are the last people we should entrust with the responsibility of handicapping software products.

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