Celebrate Free Software, Boo the Government Preferences & Regulatory Intervention Favoring It

by on June 26, 2007 · 10 comments

Tim’s latest TechKnowledge article explains why why libertarians should celebrate free software, and cautions that we shouldn’t let lefty-sounding ideals about “community” negatively cloud our perception of the GPL and free and open source software. He’s right, even if knee-jerk reactions may be otherwise – but allow me to expand the discussion. What happens when government celebrates free software, such that voluntary cooperation becomes co-opted by public policy?

Libertarians who embrace free software will (or should!) be against government programs favoring it. However, when some free software proponents adopt rhetoric calling government to their cause, it’s not enough (unfortunately) to just make the libertarian case against regulatory intervention. We must also make the deep-dive into analyzing the merits of pro-intervention platitudes.

A discussion on the merits may well require determining whether free software really does offer certain advantages, or if the new version of the dominant license governing free and open source software — the GPL — may have legal or administerability problems with its upcoming version 3.

Analyzing free software in order to debunk advocacy in favor of government preferences for free software could be seen as being against free software itself. But it’s not necessarily so, and it wasn’t meant to be the case when my colleagues at ACT and I took a deep-dive analysis into a report chock full o’ interventionist advocacy.

A European Commission report calls for a new industrial policy to ignite report advocated government programs (a la Airbus) based on free and open source software. ACT analyzed the report with a series of blog posts reviewing each section. We found that the report’s analysis favoring Free/Libre/Open Source Software (FLOSS) wasn’t adequately supported by the data. Moreover, by advocating interventionist public policies the report’s recommendations may harm, not help, Europe’s overall ICT sector. We did this not to attack FLOSS per se, but to oppose interventionist policies on behalf of FLOSS.

The report makes no attempt to disguise its purpose: convince European policymakers to favor FLOSS in their procurement decisions and other programs. Section 9 of the study—Trends, Scenarios and Public Policy Strategies—suggests a number of public policy programs to promote FLOSS, some interesting but all interventionist:

  • All ICT-related research using public funds should generate software that’s openly and freely licensed under FLOSS licenses.
  • Treat FLOSS as a charity donation. Companies and individuals should be allowed to take a tax deduction for the value of any software released under a FLOSS license.
  • Educate students about FLOSS. Fund and facilitate measures that reward and facilitate FLOSS use by schools, teachers and students.
  • Force unbundling of hardware and software. Use European competition laws to stop firms from bundling software features and linking software with specific devices. This is no idle threat, as seen by previous European competition actions: Several European nations are saying that it’s illegal for Apple to restrict some iTunes content to be played only on Apple’s iPod device. And the EC ordered Microsoft to sell a version of Windows in Europe with Windows Media Player software code stripped out.
  • Governments should fund “non-commercial information exchanges” to create FLOSS-licensed open technology infrastructures that cater to perceived “prosumer” needs and without the immediate requirement of economic sustainability. Translation: Government-funded groups should decide what kind of ICT products consumers need, and these needs should be met by FLOSS producers.

These programs amount to industrial policy—along the lines of the Airbus program—for favoring FLOSS in the ICT sector. Although this strategy relies heavily on government procurement preferences, the above wish-list shows that it also includes direct subsidies and antitrust intervention.

The FLOSS authors anticipated criticism for advocating government preferences, and attempted to answer with this:

A criticism might be that “if FLOSS is indeed better and cheaper, no active policy in favor of FLOSS would be necessary.” In fact, this criticism is quite wrong, in that it naively supposes there are no network externalities and installed base effects.

But is FLOSS so disadvantaged that it requires government regulatory intervention and preferences? Not if you believe Section 6 of the report, which showed that FLOSS is widely adopted by business and wildly popular with programmers. Even if there were network externalities, recall that personal computers managed to overcome a firmly installed base of minicomputer and mainframes in the 1980s—without government assistance or intervention.

Furthermore, a policy favoring preferences presumes that any industrial policy will make a difference in the unpredictable and fast-changing world of information technology. But as we’ve said before, while markets are sometimes messy, it’s a far bigger mess when governments manipulate supply and demand to achieve a predetermined result. Moreover, the ICT industry has been a remarkable success in its own right and has boosted productivity in nearly all sectors, without the guiding hand of industrial policy like that being called for in the FLOSS study.

The FLOSS plan calls for more than just government and institutional preferences, going so far as to invoke antitrust law to stop bundling and product integration. But this strategy ignores the efficiencies and pro-consumer benefits of bundling and integration.

Web2.0, for instance, changes all the rules for software competition and network effects. A centralized service like Google’s on-demand desktop can instantly and continually deploy new features, easily integrate these features on the server side, and enable unprecedented collaboration among connected users. Indeed, Google seems to pursuing competitive differentiation through integration-based innovation. That makes sense because integration innovation reduces the customer’s cost of complexity by integrating disparate elements into a single easily manageable system. So it doesn’t make sense for Europe to wage war on firms who innovate by integrating.

As much as we think the FLOSS report is based on incoherent analysis of incomplete data, we readily acknowledge that there are many useful and truly innovative FLOSS projects. But we just can’t agree that governments should implement FLOSS preference policies, or use antitrust law as an industrial policy weapon against firms who innovate by integrating (see ACT’s paper on software feature integration & innovation). And we’d take the same stance if someone proposed an industrial policy to favor proprietary software over FLOSS.

Simply put, the marketplace—not governments—should pick winners and losers, especially in a dynamic and global market like information technology.

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