[ox-en] Why is Microsoft Attacking the GPL?
- From: Stefan Meretz <stefan.meretz hbv.org>
- Date: Tue, 03 Jul 2001 08:55:52 +0200
http://www2.linuxjournal.com/articles/currents/0032.html
Why is Microsoft Attacking the GPL?
by Bryan Pfaffenberger <bp virginia.edu>
27-June-2001
Microsoft sees a threat to its underlying business model, which explains
the virulence of this particular round of FUD.
First it was "un-American"; now it's a "virus", a "cancer" and--are you
ready for this--"Pac-Man". Microsoft's high-profile, expensive and
carefully planned attack on open-source software is swinging into high
gear; so is speculation about exactly what the company hopes to achieve.
Typical is the conclusion of an analyst quoted by CNET News.com: Linux
has emerged as a "spoiler that will prevent Microsoft from achieving a
dominant position" in the server operating system market. By means of an
especially virulent FUD (fear, uncertainty, doubt) campaign, Microsoft
hopes to scare companies away from Linux and toward Microsoft's newest
offering, Windows XP.
So far as it goes, this analysis is surely correct. Viewed from the
perspective of business history, however, this FUD campaign seems
mysteriously out of proportion with the threat actually posed by its
supposed object, Linux. Sure, Linux is a threat, and that's especially
true now that Linux is being so strongly backed by Microsoft's remaining
market opponents, including IBM. But the FUD campaign isn't directed
against Linux. Aside from occasional digs at Linux, the campaign is
directed against the licensing scheme, called the General Public License
(GPL), that Linux uses. To be sure, the analysts have an explanation for
this, too. The GPL is controversial even within the Open Source
community, so you attack Linux by attacking the GPL. But I think there's
more to it.
Here's my argument, in a nutshell:
Business history teaches the following lesson: When a market-dominating
firm engages in a FUD campaign of this magnitude, it's not merely
because they're scared of competition from a new market entrant. Often,
it's because the new market entrant is seen to challenge the business
model that has enabled the market-dominant firm to make huge gobs of
money. I believe the GPL does pose a threat to Microsoft's business
model, and that's why the free software licensing scheme is under such
concerted attack. Specifically, the GPL threatens Microsoft's ability to
preserve what economists and legal scholars (as well as the judge in the
Microsoft antitrust case) call the "application barrier to entry"--the
primary means by which Microsoft has been able to establish and preserve
commanding dominance in its core markets.
I'll make this argument by recounting the story of the archetypical FUD
campaign, IBM's 1970s-era effort to discredit the upstart Amdahl
Corporation. I'll also examine some of the evidence that's come to
light--some of it from the lips of none other than Gates himself--since
Microsoft's FUD campaign started. Let me apologize in advance for the
length of this essay; the issues are too important to be glossed over.
But I've included lots of subheadings so you can skim around, if you
like. To skip the historical stuff entirely, click here to jump to the
section titled "Why the GPL Terrifies Microsoft".
Classical FUD: IBM vs. Amdahl
When ex-IBM executive Gene Amdahl founded Amdahl Corporation in 1970, he
reflected gloomily that the new company would soon become the target of
an aggressive IBM marketing strategy, which Amdahl termed "fear,
uncertainty, and doubt" (FUD). As subsequent events affirmed, Amdahl's
prediction was right on the money, and IBM's FUD campaign nearly put
Amdahl out of business.
IBM in the 1970s was huge profits with little incentive to innovate.
Here's the background. IBM's mid-century executives, like those of other
manufacturing firms, knew perfectly well that maximum profits follow
from a "leasing-only, no-sales" policy; as economists have since
theoretically demonstrated, such a policy maximizes revenues because it
keeps secondary goods off the market. But US antitrust prosecution,
culminating in a 1956 consent decree, forced IBM to sell as well as
lease its computers.
For federal regulators, the consent decree was a hollow victory. IBM
neatly side-stepped the regulatory framework by means of measures such
as net pricing, in which the cost of IBM installation labor was bundled
into the price of IBM computer systems; customers who wished to purchase
non-IBM, third-party peripherals were thus forced to pay two
installation fees--which meant that most of them chose to stay with
IBM's equipment. And when IBM installed new equipment, the company
generally required its customers to surrender the old equipment for
"rehabilitation".
Measures such as net pricing were combined with a quiet, low-level FUD
campaign, which was carried out by the firm's salespeople while they
were in the field. IT managers were told, "Sure, you can switch to the
competitor's product, but we can't guarantee your system any more,
you'll have to pay the highest per-incident charges for repairs, and we
can't guarantee that our components will function correctly in the
future." In other words, you're taking a dive off a cliff into the
unknown, and it's going to cost your company money, and later it may
cost you your job. These well-honed tactics led more than a few
computing managers to agree with the famous dictum, "You'll never lose
your job by choosing IBM."
By means of net pricing and FUD, IBM managed to side-step antitrust
regulation and retained control of the secondary market. With almost
obscene profits and rapid growth, all was well at IBM, except there was
little incentive to innovate.
Amdahl Forms his own Company
As Amdahl watched IBM's processors fall behind the technical curve, he
grew increasingly concerned. At the same time that IBM was encouraging
companies to move more of their business operations to IBM mainframes,
the company was failing to deliver the processing horsepower that would
be needed to meet customer's needs. Amdahl proposed a series of new,
higher performance processors, but failed to win approval from IBM
executives to develop them. Intimately familiar with IBM's processor
design, Amdahl knew that it was possible to create a new generation of
processors that beat IBM's products in price as well as performance. So
the young engineer quit IBM and started his own company--which still
exists, incidentally, even though Amdahl is no longer associated with
it.
Amdahl's plans must have terrified IBM executives. Unlike IBM's
ineffective and increasingly marginalized competitors, Amdahl was
intimately familiar with IBM technology and proposed to manufacture
IBM-compatible CPUs. If Amdahl succeeded, IBM would be transformed, in
effect, into a peripheral manufacturer -- and with the loss of its
control over the central processing unit would come a concomitant
destruction of its highly profitable business model.
The Microcode Factor
What was wrong with IBM's processors? In case it has been a while since
your last electrical engineering class, here's the background. A
computer's central processing unit (CPU) is designed to perform a fixed
number of computational operations; the list of such operations is
called the CPU's instruction set. At the time, the fastest processors
implemented their instruction sets by means of "hard-wired" circuits,
that is, circuits built into the physical structure of the processor.
When IBM designed the new series of System/360 computers, the first
product line to include a range of compatible machines, the decision was
made to implement the instruction set by means of microcode.
In brief, microcode uses software, typically encoded in a bank of
read-only memory, to implement the lion's share of the CPU's instruction
set. The use of microcode enabled IBM engineers to design a single
processor that could be used in all the System/360 products, from small
to large. The marketing potential was enormous. For example, one of the
earliest System/360 computers was offered with a microcode adjustment
that enabled the computer to emulate an earlier IBM machine, the 1401.
However, the use of microcode came at a price: diminished processor
efficiency. Amdahl knew that he could easily beat IBM's processor
performance by creating processors hard-wired with the System/360's
instruction set. Amdahl Corporation's processors, accordingly, did not
use IBM's microcode architecture; instead, the firm created less
expensive and more powerful processors that gained economy and
efficiency from hard-wiring the instruction set into the CPU.
Employing an efficient, low-cost implementation of IBM's System/360
instruction set, Amdahl's first processors appeared in 1975; they
undercut IBM's price-performance points yet they were fully compatible
with IBM software, in which the firm's customers had made significant
investments. The result was tremendous enthusiasm among Amdahl's
potential customers who were quite ready to break with IBM--even to the
extent of paying IBM for components and services that weren't actually
received--if the result meant they had the processing power they needed.
In 1976, Amdahl released the V/6 processor, which offered three times
the performance of IBM's most powerful CPU.
FUD Kicks into High Gear
Faced with a threat to its underlying business model, IBM took its FUD
campaign to an unprecedented level, one that involved public statements,
a host of new product announcements and technological changes that seem
to have been aimed squarely at Amdahl's upstart processors.
In 1977, just as Amdahl Corporation seemed poised to take over a
significant percentage of the processor market, IBM announced the 3033,
a processor that--IBM claimed-- would go head-to-head with the best
Amdahl could offer. But IBM did not merely announce a new processor. The
firm also announced revisions to the System/360 instruction set. In
attempting to address the Amdahl factor, IBM scientists discovered they
could improve processor efficiency by adding fourteen instructions to
the System/360 instruction set. (This is quite an interesting
"discovery," since it has been proven time and again since then that
reducing the instruction set, not expanding it, is the best way to
improve processor performance.)
IBM executives and engineers vehemently denied that the microcode
changes originated with Amdahl in mind, but the changes certainly had an
anti-Amdahl effect. The planned changes meant that Amdahl's hard-wired
processors would not continue to be compatible until Amdahl discovered
the changes that IBM actually made and figured out a way to implement
them. At the worst, Amdahl would have to go through the very expensive
and time-consuming process of redesigning his processors. For its part,
IBM made it abundantly clear to all concerned that the firm had no
intention of disclosing the technical specifications of the fourteen new
instructions. Amdahl would have to wait until the 3033 appeared, when he
could legally obtain one of the processors and discover the nature of
the new instructions through reverse engineering. From that point, it
could be months or years before Amdahl would be able to release a new
processor that would be compatible with the 3033. As if to pour salt in
the wounds, IBM warned darkly, and publicly, that the firm felt quite
free to implement additional microcode changes whenever doing so made
sense for its customers. The 3033's preannouncement took the wind out
of Amdahl's sails. Orders plummeted, and the few remaining customers
demanded contractual guarantees that Amdahl's processors would remain
compatible with IBM's. Most customers decided to sit tight until the
3033 hit the market, one year later.
When the 3033 was released in 1978, the processor turned out to be
inferior to Amdahl's V/6, but it did offer better performance than
previous IBM processors, and it was an IBM processor. The pent-up demand
for high-performance processors unleashed a deluge of orders, to the
tune of $6 billion, and IBM was forced for the first time to develop a
lottery program so that it could parcel out the scarce processors
fairly. Although the new processor turned out to be technically inferior
to Amdahl's products--in fact, IBM's processors did not equal Amdahl's
price/performance points until five years later--Amdahl's sales declined
sharply. By 1979, Amdahl was but a niche player in the mainframe
industry, surviving only by means of a capital infusion from Fujitsu,
Inc. Meanwhile IBM's System/370 mainframes had captured 97 percent of
the market.
Why the GPL Terrifies Microsoft
My analysis of the 1970s IBM campaign against Amdahl suggests the
following: FUD campaigns step up in virulence when the FUD-perpetrating
firm sees a threat to its core business model.
What's Microsoft's core business model, and how could the GPL, a mere
licensing scheme, pose a meaningful threat to such a gigantic, powerful
corporation?
My take on Microsoft's business model is, in brief:
* Microsoft's core business model relies on an at-all-costs defense of
its overwhelming market dominance in end-user operating systems, because
this dominance is the lever by which the company hopes to achieve all of
its myriad other ambitions, including its ambitions in the server
market.
* To defend its overwhelming market dominance in end-user operating
systems, Microsoft must discourage or prevent the formation of a
critical-mass pool of non-Microsoft end-user applications. People don't
switch to a different end-user operating system until there's a
sufficiently large pool of applications from which to draw.
* To prevent pools of non-Microsoft applications from forming, Microsoft
likes to appropriate what it calls "commodity protocols" (off-the-shelf,
public protocols such as HTML, JavaScript, CSS and many more), and add
proprietary extensions that prevent the formation of competing
application pools.
To grasp this model's implications firmly, consider Judge Jackson's
findings in the Microsoft antitrust case. Jackson did not rule against
Microsoft--as so many people unfortunately think--because Microsoft made
a better browser, gave it away for free and trounced Netscape in the
marketplace. Sure, Microsoft wants the browser platform, for all kinds
of reasons. But what really terrified Microsoft executives, I believe,
were the all-but-forgotten, pie-in-the-sky plans that Andreesen & Co.
once made to use Netscape as the foundation for a new, network-savvy,
non-Microsoft operating system and application pool. (I'll bet you
didn't know this, but Netscape came up with what amounts to the .NET
idea long before it ever occurred to those master innovators in
Redmond.) Equally terrifying to Microsoft executives was Java, and for
the same reason--it could be used to create a non-Microsoft application
pool. In both cases, noted Judge Jackson, Microsoft used "embrace and
extend" not only to discourage a competitor but, more importantly, to
prevent the formation of a competing application pool.
Why the GPL Threatens Microsoft's Core Business Model
Still with me? Here's why Microsoft is attacking the GPL:
* Microsoft can't play its "embrace and extend" game with GPL-licensed
software because the company can't appropriate and modify the code. If
Linux had been released under the BSD license, Microsoft would have
probably already released a version of Linux, Linux++ or Linux# or
L-Nux, with a variety of maddeningly incompatible oddities that taken
together would make it even more difficult to develop applications for
Linux.
* A GPL-licensed application pool is indeed forming around Linux, and
Microsoft can't figure out how to attack it. You can't attack the
companies, because--as Eazel recently proved--the software's still
around, even if the company shuts down or gives up on the product.
From the Microsoft perspective, GPL-licensed software is like those
monsters from "The Night of the Living Dead": they just keep coming back
at you.
Doubtful? Read this:
Mr. Gates made the following statement last week to a CNET News.com
reporter: "The ecosystem where you have free software and commercial
software--and customers always get to decide which they use--that's a
very important and healthy ecosystem", Gates told the interviewer. But
the GPL, Gates says, "breaks that cycle--that is, it makes it impossible
for a commercial company to use any of that work or build on any of that
work. So what you saw with TCP/IP or Sendmail or the browser could never
happen. We believe there should be free software and commercial
software; there should be a rich ecosystem that works around that."
If Mr. Gates can forgive me for putting words in his mouth, here's my
translation: "There should be free software that we can appropriate and
modify--we just love BSD stuff--as well as Microsoft software. That's
very healthy (for us), because we can use this system and our embrace
and extend tricks to keep competing application pools from forming. But
we can't do that with GPL-licensed software. GPL-licensed software is
not enriching for Microsoft; it scares the living daylights out of us,
in fact."
In the coming weeks, you're likely to see Microsoft pressure to force
the U.S. government to disallow the use of the GPL as a license for
software created with public funds. If my analysis is correct, the
decision should go the other way -- the government should require anyone
developing software with government funds to release the software under
the GPL. It's the only way to ensure there's a meaningful public commons
of freely available software that can't be manipulated for predatory
purposes.
Bryan Pfaffenberger is Associate Professor of Technology, Culture and
Communication at the University of Virginia, in Charlottesville, VA
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