Marcus Cake

Related: Information can now be free to make humanity wealthier ; The next four stages of online networks ; The transition to online networks may take six months or 50 years

The next phase of economic development will be driven by the freedom of information and innovation generated by enthusiastic open source communities. Microsoft is asserting its patent portfolio is being violated by open source community software. It seems determined to strike at the heart that may drive the next phase of economic development. That heart is information freedom and enthusiasm of open source communities.

We empower government with the responsibility of providing the framework to promote economic development. Proprietary ownership of knowledge is no longer necessary to encourage innovation, but it still form a key part of our economic system. Open source communities are being unleashed on a global stage. Our community has a choice - enforcement of the current system of private ownership of knowledge, or allow information to be free to make humanity wealthier. Microsoft probably can’t kill humanity’s opportunity to become wealthier, but the broader battle may. The key threat to open source and online networks is the government regulatory response to the battle between community knowledge and intellectual property.

The article below provides some information on Microsoft’s threat to open source.

Three Scenarios for how Microsoft’s open source threat could end, Information Week, 19 May 2007

Extract:

• Microsoft executives are escalating their open source rhetoric, asserting that 235 company patents are being infringed by the Linux operating system, OpenOffice desktop applications, and other open source code.
• Where does Microsoft take this saga next? Critics note that the company won’t say which of its patents are being violated. “The whole, ‘We have a list and we’re not telling you’ itself should tell you something,” says Linus Torvalds, Linux’s lead developer. Microsoft’s ambiguity, Torvalds argues, prevents Linux developers from writing around a violation or disproving a bad claim. In an interview with InformationWeek, Gutierrez contends Microsoft has, in fact, shared details about offending code with some competitors, including Red Hat.
• Microsoft’s not eager to head to court. Company officials say they aren’t planning to sue open source customers, who almost certainly would also be its own, though they’re not ruling it out. What Microsoft really wants, they say, are cross-licensing agreements with other technology companies of the kind Microsoft struck with Novell. They’re using the uncertainty they’ve created to push negotiations in that direction.
• Microsoft, however, must proceed with caution. Implicit in its deal with Novell is the subtlety that Microsoft products may be violating the patents of other technology companies. Says Jim Zemlin, executive director of the Linux Foundation: “Microsoft has to be careful about what it starts because it doesn’t know where it will end.”

I recommend you read the article about the three possible outcomes.

We still live in a world which is based upon proprietary information. Microsoft may have legitimate rights. There does appear to be a lack of certainty. There are suggestions that Microsoft may not provide details of the patents that have been infringed. They may not litigate, or seek clarification from the court. They may exploit the uncertainty and seek licensing agreements with customers. If they do litigate, they may simply outspend the defendents and force settlements. Microsoft is a corporation and is simply maximising shareholders funds. The long term consequences are significant. Open source software is the most prominant example of collective innovation and large scale engineering to drive economic development. Without the example of open source software, the conventional arguments that private ownership of information is needed to encourage innovation could receive support.

Microsoft has made a significant contribution to global economic development. It may not have been a source of the best innovation, but its marketing machine delivered cheaper software worldwide. The economic advantage of the global community using software based on a single standard allowed efficient global communication. As we move into the next phase of economic development, the relevance of Microsoft declines and it struggles to adapt to the future.

Linux Foundation fires back at Microsoft, BusinessWeek, 25 May 2007 

Extract:

While some of the mainstream press reported Microsoft’s statements as news, many journalists and bloggers keenly identified the most intriguing aspect of this aggressive maneuver: a glimpse of a threatened giant struggling to keep a grasp on its empire. What most people don’t realize is that the story really isn’t about patents at all—it’s about a rational actor trying to protect its privileged position.

Given the high stakes involved, it’s not surprising that Microsoft would take steps to protect its turf. In fact, it makes perfect sense. Let’s face it: If you were making $1 billion a month, what would you do? Perhaps engage in rhetoric and hyperbole to generate some old-fashioned FUD (fear, uncertainty, and doubt)? Just looking at the numbers, it’s easy to see that even if the scare campaign merely delays a customer’s migration from Windows to Linux by a single day, Microsoft is $34 million dollars better off.

But as we said before, Microsoft is, above all, a rational actor. The software maker is hesitant to instigate a patent war, as it has too much experience with the downside of such litigation. Just ask Microsoft about its MP3 patent dispute, in which a jury recently ordered the software maker to pay $1.5 billion to Alcatel-Lucent.

The Linux Foundation does believe the current software patent system is problematic. The superpowers have their stockpiles. The trolls have their stashes. Rather than spurring innovation, which is of course the raison d’être of the patent system, today’s patent games will divert dollars away from research and development in the U.S. Instead, those dollars will fund innovative activities in countries that have better things to do with their time and money than litigate. 

The theory of creative destruction states that old companies that don’t innovate die, and are replaced by those than can innovate. A recent article by Paul Graham Microsoft is Dead and Microsoft is Dead: The Cliffs Notes outline the reasons why Microsoft is more likely to die. Creative destruction should simply replace them with a better company or new economic structure. An open source approach to innovation delivers greater quantity and better quality innovation. However, the current Microsoft strategy could strike at the heart of the next phase of economic development and stop humanity becoming wealthier. If successful, we could be condemned to private ownership of innovation, and the enthusiastic contribution of open source communities may never be reignited. We may never advance to the next stage of economic development.

Microsoft is representative of the threat to open source and economic development. There are many fronts on which the battle between community knowledge and intellectual property is being fought. The Electronic Frontiers Foundation provides further examples. These battles delay economic development. Companies that should die or adapt can defer the need to evolve by playing games.
EDIT: I recommend you also read Mark Shuttleworth’s article “Microsoft is not the real threat“.