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FSFE Writes Letter to EU Commission, Objecting to FairSearch's Claims Against Google of 'Predatory Pricing' ~pj Update |
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Monday, July 29 2013 @ 09:12 AM EDT
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Free Software Foundation Europe has just announced it has written a letter to the European Commission, objecting to FairSearch's claim that free distribution of Android software by Google is "predatory pricing":
The so-called "FairSearch" coalition is essentially asking the European Commission to favour a restrictive business model over a liberal one. This is exactly the opposite of what competition regulators should do in order to achieve a fair and open market.
"Free Software is not about price, it's about liberty, a guarantee of competition and vendor independence. Asking to cripple Free Software in order to allow proprietary vendors to sell their locked-down systems is just absurd" says Carlo Piana, FSFE's General Counsel. "The most substantial threat to competition in the mobile space today are software patents, and we have repeatedly urged antitrust authorities to address this problem," he adds.
FSFE asks the European Commission to dismiss the "FairSearch" coalition's unfounded claims regarding predatory pricing, and not make them part of whatever steps it decides to take in response to the group's filing.
They tell the Commission that they are writing to "explain how the distribution of Free Software, whether gratis or for a fee, promotes competition, rather than damaging it." For example, it's not true that Google compels Android-based phones to exclusively use its own app store, and by releasing the code for free, Google is actually enabling others to easily compete with Google:Google's competitive advantage is essentially ephemeral: the only way to stay ahead of the competition in Free Software is to provide better products or services, and to win users' trust. Barriers to entry for competitors are extremely low. An example is that the platform allows installing alternative marketplace (or "app stores"). The Free Software Foundations promote a "Free Your Android" campaign where they solicit adoption of an alternative marketplace called F-Droid where only Free Software applications are provided. The letter points out that most of the innovation going on in mobiles is in Free Software:In a powerful illustration of how the Free Software model enables competition, we note that all recent additions to the list of mobile operating systems are largely Free Software. Though Android devices currently make up around 70% of mobile phones and tablets sold, several other Free Software mobile operating systems based on the Linux kernel are setting out to to compete with Android. Examples include Firefox OS (backed by the Mozilla Foundation), Jolla (from the ashes of Maemo, a Nokia project terminated after the company's strategic alignment with Microsoft), Tizen (backed by Samsung, Intel and various telecom providers such as Vodafone and NTT Docomo), and UbuntuMobile (backed by Canonical). You can write your own letter to the EU Commission, whether you are a company, a FOSS project, or an individual. I hope you will. I know some of you have already, because you've been nice enough to let me know, and so I know some beautiful letters have already been sent. But numbers matter. Write to: comp-greffe-antitrust at ec.europa.eu
The FairSearch claim, they write, is illogical:
The predatory pricing theory proposed by FairSearch is plainly
unsuitable to describe a market where there is no price, and a product
that, being Free Software, can literally be taken by anybody and
"forked", a practice that the Commission has already discussed in past
activities. There is no "below cost" distribution in Free Software,
because the price which market participants set for copies of mobile
operating systems in these circumstances is precisely zero.
Here's the announcement in their press release:
In a recent antitrust submission to the European Commission, a Microsoft-led coalition falsely claimed that the distribution of Free Software free of charge hurts competition. FSFE has written a letter to the European Commission's competition authorities to refute this claim, and make it clear that Free Software is critical for an open, competitive IT market.
In its letter, FSFE urges the Commission to consider the facts properly before accepting these allegations at face value. "Free Software is a boon for humankind. The only thing that it is dangerous to is Microsoft's hopelessly outdated, restrictive business model," says Karsten Gerloff, FSFE's president.
The so-called "FairSearch" coalition is essentially asking the European Commission to favour a restrictive business model over a liberal one. This is exactly the opposite of what competition regulators should do in order to achieve a fair and open market.
"Free Software is not about price, it's about liberty, a guarantee of competition and vendor independence. Asking to cripple Free Software in order to allow proprietary vendors to sell their locked-down systems is just absurd" says Carlo Piana, FSFE's General Counsel. "The most substantial threat to competition in the mobile space today are software patents, and we have repeatedly urged antitrust authorities to address this problem," he adds.
FSFE asks the European Commission to dismiss the "FairSearch" coalition's unfounded claims regarding predatory pricing, and not make them part of whatever steps it decides to take in response to the group's filing.
I'd suggest they toss the whole thing also. There is no bundling issue. Partners can work together with Google, to achieve the best possible result, if they want to, kind of like Oracle, a FairSearch member, has requirements if you want to call your product Java; but if a company prefers to just do its own thing, without any Google input or requirements, they can, as Amazon has so clearly demonstrated with its Kindle product. The FSFE letter highlights the same thing, but better:
According to publicly available sources, the substance of FairSearch's claim is that by "giving away Android for free" Google undercuts the ability of its competitors in the mobile operating system to recoup investments in competing with "Google's dominant mobile platform."
FSFE strongly objects to this characterization: Free Software is a highly efficient way of producing and distributing software, and selling licenses is just one among many possible ways to monetise software.
Android is a software platform built around the Linux kernel and Java, forked into Dalvik, thanks to the fact that both Java and the kernel are available under Free Software licenses. Anybody can take Android and turn it into a better and freer distribution with few or no ties to Google, as long as the source code is made available, as it is. Replicant and CyanogenMod are just two notable examples, both of which are currently installed in millions of devices. Facebook's adoption of Android for its own purposes shows how the platform is actually open, so much that a competitor can ship an alternative GUI which is basically oriented to serving a competitor's purposes.
The Commission, with regard to Java, has already found the value of a non fragmented platform to be high, and recognizes strong incentives to prevent its fragmentation. If anything, Android has attracted criticism because its licensing conditions and openness favour fragmentation, against Google's own interests.
Here's the entire FSFE letter, and it shows how to write politely but also clearly about a matter, in a way that should be received well. But use your own words, by all means, using it as a tone model, a topical outline, so to speak, if you wish, but not as a form letter, please:
FSFE objects to claims of 'predatory pricing' in Free Software
To:
European Commission
DG Competition
B-1049 Brussels
Belgium
According to reports in specialist online media, the so-called
"FairSearch" coalition - comprised of Microsoft, Nokia, Oracle, and a
number of online service providers - argues, in its latest submission
to the European Commission, that the free-of-charge distribution of
Android, a Free Software1 mobile operating
system developed by Google, constitutes predatory pricing. Suggesting
that the distribution of Free Software free of charge is harmful to
competition is both wrong in substance, and dangerous to competition
and innovation.
We urge the Commission to consider the facts properly before accepting
FairSearch's allegations at face value. We are writing to you today to
explain how the distribution of Free Software, whether gratis or for a
fee, promotes competition, rather than damaging it.
Free Software Foundation Europe (FSFE) is an independent, charitable
non-profit organisation dedicated to the promotion of Free
Software. FSFE maintains that the freedoms to use, study, share and
improve software are critical to ensure equal participation in the
information age. We work to create general understanding and support
for software freedom in politics, law and society-at-large. We also
promote the development of technologies, such as the GNU/Linux
operating system, that deliver these freedoms to all participants in
digital society. In pursuit of these goals, we have a long history of
active involvement in competition proceedings that affect Free
Software.
Free Software is about freedom, not price
The "Free" in Free Software refers to freedom, not
price. Specifically, Free Software offers users the following freedoms:
- to use the program without restrictions;
- to study the program's source code, and understand how it works;
- to share the program with others, either gratis or for a
fee;
- to improve the program, and share the improvements.
Taken together, these four freedoms turn the Free Software model into
a powerful and disruptive force for competition. Free Software has
considerably contributed breaking up the long-standing monopolies
built up by makers of non-free software such as Microsoft.
In many sectors, Free Software programs have long been either the
leading applications, or the most powerful competitors. This includes
web servers 2 web browsing (Firefox),
office productivity (LibreOffice, OpenOffice), and server operating
systems. 93% of the 500 super computers worldwide run on Free Software
operating systems.
Free Software is the norm for makers of embedded devices, such as
"smart" TVs, DSL routers, and cars' on-board computers, to name just a
few. Today's leading web companies, such as Facebook, Amazon and
Google, rely heavily on Free Software to build their offerings. Free
Software also powers a plethora of startups and competitors with
architectures and service models which offer alternatives to the
established providers.
Trend in mobile and elsewhere is irreversibly towards Free
Software
According to publicly available sources, the substance of FairSearch's
claim is that by "giving away Android for free" Google undercuts the
ability of its competitors in the mobile operating system to recoup
investments in competing with "Google's dominant mobile platform."
FSFE strongly objects to this characterization: Free Software is a
highly efficient way of producing and distributing software, and
selling licenses is just one among many possible ways to monetise
software.
Android is a software platform built around the Linux kernel and Java,
forked into Dalvik, thanks to the fact that both Java and the kernel
are available under Free Software licenses. Anybody can take Android
and turn it into a better and freer distribution with few or no ties
to Google, as long as the source code is made available, as it is. Replicant and CyanogenMod are just two
notable examples, both of which are currently installed in millions of
devices. Facebook's adoption of Android for its own purposes shows how
the platform is actually open, so much that a competitor can ship an
alternative GUI which is basically oriented to serving a competitor's
purposes.
The Commission, with regard to Java, has already found the value of a
non fragmented platform to be high, and recognizes strong incentives
to prevent its fragmentation. 3 If anything, Android has attracted
criticism because its licensing conditions and openness favour
fragmentation, against Google's own interests. Fragmentation is a
"threat" connected to the freedom of forking. In a proprietary setting
the tight control over copyright, trademarks and patents makes it easy
to avoid fragmentation. Conversely, in a Free Software environment,
fragmentation is avoided by consensus and leadership on merit, and
sometimes through the use of trademarks (Red Hat, Mozilla). Linux, the
kernel common to the Android and GNU/Linux operating systems, has so
far escaped fragmentation not because such a thing would be impossible
or prohibited – it certainly is not -, but because it would be
pointless. In a platform, ensuring the widest compatibility and high
degree of standardization is a constant concern of any project,
providing a strong incentive to avoid abuses of the community and a
constrant pressure on the leader(s) of the project to proceed by
consensus.4
In a powerful illustration of how the Free Software model enables
competition, we note that all recent additions to the list of mobile
operating systems are largely Free Software. Though Android devices
currently make up around
70% of mobile phones and tablets sold, several other Free Software
mobile operating systems based on the Linux kernel are setting out to
to compete with Android. Examples include Firefox OS (backed by the
Mozilla Foundation), Jolla (from the ashes of Maemo, a Nokia project
terminated after the company's strategic alignment with Microsoft),
Tizen (backed by Samsung, Intel and various telecom providers such as
Vodafone and NTT Docomo), and UbuntuMobile (backed by Canonical).
Gratis distribution of code has nothing to do with predatory
pricing
In its submission, the FairSearch coalition claims that Android's
gratis availability makes it difficult or impossible for others to
compete in the market for mobile operating system.
However, selling software licenses has never been an important
strategy in the mobile market. Blackberry maker RIM basically sold
devices and server-side software and services to the enterprise
sector. Apple subsidized its proprietary iOS with the sale of hardware
and services, both by Apple and by third parties, taking a significant
cut of the revenue for products sold through its iTunes online
store. Nokia tried for a time to sustain two different operating
systems, both of which were eventually released as Free Software
(Symbian and Maemo, then renamed Meego, now forked by Jolla into
SailFish). Only Microsoft has maintained an Independent Software
Vendor position, mostly leveraging and marketing the integration with
its network services.
It would therefore seem that the only conceivable motive for the
FairSearch coalition's complaint is that the existince of a number of
Free Software mobile operating systems, including Android, makes it
difficult for Microsoft to replicate this business model in the mobile
space. FairSearch is essentially asking the European Commission to
favour one business model over another. This is exactly the opposite
of what an antitrust authority should aim for in order to maintain a
competitive market.
FSFE has consistently taken the stance that proprietary licensing is
an outdated and inefficient system of producing software. From our
point of view, Google has no incentives or means to monopolize the
smartphone operating system market, simply because there is no market
for proprietary operating system licenses.
The predatory pricing theory proposed by FairSearch is plainly
unsuitable to describe a market where there is no price, and a product
that, being Free Software, can literally be taken by anybody and
"forked", a practice that the Commission has already discussed in past
activities. There is no "below cost" distribution in Free Software,
because the price which market participants set for copies of mobile
operating systems in these circumstances is precisely zero.
Software is easy to copy at near-zero cost. In economic terms, this
means that there is originally no scarcity in software. Such scarcity
can only be introduced articificially, with proprietary licensing
being the most frequently used way to do so.
Conversely, Free Software creates a commons, in which everyone can
participate, but which no one can monopolise. Free Software thus
creates wealth and new growth opportunities for a wide range of
companies and business models. An example of this is Red Hat, a
company whose yearly turnover reached USD 1.3 billion, entirely by
providing services around the free GNU/Linux operating system. Android
has arguably created a competitive advantage for Google; but, contrary
to Microsoft, Google's focus is not on software and monopolizing
platforms, but on services, delivered on whichever platform the user
happens to be using. Conversely, some analysts believe that Microsoft
now makes more money from Android than it does from Windows
operating systems on mobile devices, after the company engaged in an
aggressive
patent licensing campaign towards makers of Android devices.
Google's competitive advantage is essentially ephemeral: the only way
to stay ahead of the competition in Free Software is to provide better
products or services, and to win users' trust. Barriers to entry for
competitors are extremely low. An example is that the platform allows
installing alternative marketplace (or "app stores"). The Free
Software Foundations promote a "Free Your
Android" campaign where they solicit adoption of an alternative
marketplace called F-Droid where only Free Software applications are
provided.
Conclusion
With its submission, the FairSearch coalition seems to assume that
European regulators are unaware of the developments in the software
market over the past decade. Rather than highlighting a genuine risk
to competition in the mobile market, the FairSearch submission gives
the impression that Microsoft - a company convicted of
anti-competitive behaviour in high-profile lawsuits on three
continents - is attempting to turn back the clock. The company is
essentially arguing that the Commission should protect its outdated
business model in the mobile sector against a more effective
disruptor. We respectfully beg to differ.
The nature of Android as a commons makes it very valuable to OEMs,
precisely because Google can only control it through leadership, not
through an iron fist and lock-in, as is the case with proprietary
alternatives. This very fact should be considered a source of strong
competitive pressure.
We recommend that the European Commission should dismiss the
application without even opening a formal case. In any event, should a
statement of objections be issued, it should avoid to contain any
reference to the Free Software licensing as a source of competitive
concerns. Indeed, the Free Software nature of Android should be
considered per se a powerful tool to reduce barriers to entry and to
enhance competition.
At FSFE, we will continue to work with the European Commission on
leveraging Free Software in order to create and maintain competition
in the marketplace. As experts and stakeholders, we stand ready to
support the Commission in all matters relating to Free Software.
Sincerely,
Karsten Gerloff, President
Carlo Piana, General Counsel
Free Software Foundation Europe
1 Often referred to as “open source”. “Free
Software” is the original and more accurate name which reflects all
the aspects of the same phenomenon.
2 As of June 2013, fully
68% active websites run on the Free Software server programs
Apache and nginx.
3 Decision in Case No COMP/M.5529 – ORACLE/ SUN MICROSYSTEMS, paragraph 935.
4 Decision in Case No COMP/M.5529 – ORACLE/ SUN
MICROSYSTEMS, paragraph 655.
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Authored by: SirHumphrey on Monday, July 29 2013 @ 09:25 AM EDT |
An elegant verbal contraction.
Alternatively, an Australian mondegreen - "Abusurd about the lonesome
loser?"[ Reply to This | # ]
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Authored by: Kilz on Monday, July 29 2013 @ 10:32 AM EDT |
Please list the mistake in the title of your post. [ Reply to This | # ]
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Authored by: Kilz on Monday, July 29 2013 @ 10:33 AM EDT |
For all posts that are not on topic. [ Reply to This | # ]
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- Peering: The secret deals that make—and break—online video - Authored by: Anonymous on Monday, July 29 2013 @ 10:38 AM EDT
- Apple's subcontractors violate Apple guidelines. Again. - Authored by: Anonymous on Monday, July 29 2013 @ 11:53 AM EDT
- Jurors jailed for contempt of court... - Authored by: Anonymous on Monday, July 29 2013 @ 12:45 PM EDT
- Nokia unhappy with Windows Phone 8 progress - Authored by: Anonymous on Monday, July 29 2013 @ 04:36 PM EDT
- M$ - Lean and Efficient... - Authored by: Anonymous on Monday, July 29 2013 @ 05:53 PM EDT
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- Proud supporter of the "female dollar" - Authored by: Anonymous on Monday, July 29 2013 @ 07:30 PM EDT
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- Kathy Sierra is blogging again - Authored by: Anonymous on Tuesday, July 30 2013 @ 03:28 AM EDT
- Apple and Internet crime .. - Authored by: Anonymous on Tuesday, July 30 2013 @ 05:08 AM EDT
- First Open Source Airplane Could Cost Just $15,000 - Authored by: Anonymous on Tuesday, July 30 2013 @ 07:32 AM EDT
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Authored by: Kilz on Monday, July 29 2013 @ 10:34 AM EDT |
Please mention the news story's name in the title of the top
post. A link back to the story in that post is a good idea
because they do fall off the home page.[ Reply to This | # ]
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Authored by: Kilz on Monday, July 29 2013 @ 10:35 AM EDT |
Please post all transcriptions of Comes exhibits here for PJ.
Please post the html in plain old text mode so she can easily
copy it.[ Reply to This | # ]
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Authored by: artp on Monday, July 29 2013 @ 11:11 AM EDT |
I hope they put in a copy of Bill Gates' Letter
to Hobbyists, from way back in 1976,
where he complained about hobbyists
ruining his chance to
make money by sharing his software with others, AS WAS
THE
CUSTOM FROM THE CREATION OF THE COMPUTER UNTIL THEN. Almost
all software
was shared then, and "User's Group" tapes were
routinely circulated that had
better software on it than
Gates was providing. Gates wanted everybody to
change their
ways so that he could make money from software. The software
that
was sold back then rarely included OS, utilities or
compilers. It was usually
specialized software for a niche
market.
As the majority of
hobbyists must be aware, most
of you steal your
software.
--- Userfriendly on WGA server outage:
When you're chained to an oar you don't think you should go down when the galley
sinks ? [ Reply to This | # ]
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Authored by: Anonymous on Monday, July 29 2013 @ 11:44 AM EDT |
While this is an elegant review of the FOSS position, it
misses what I feel is the key argument - what "predatory"
pricing means, and why it's illegal in the first place.
There's nothing inherently "predatory" about selling a
product for less than it costs to make. That's just a bad
business decision.
What's predatory is doing so to achieve an intended effect.
In most cases, that effect is to suppress competition - to
force less-well-funded competitors to operate at a loss,
force them out of business, then RAISE THE PRICE after being
the only one left standing in the market. What's predatory
is the intended effect to artificially drive out
competitors.
The reason it's a rational strategy (i.e. more than just
throwing money away) is the last bit - the ability to raise
the price later, thus recouping the temporary lost revenue
during the "predation" period. And that's also why it's bad
for consumers - in the short term, predatory pricing is
great! We get stuff for way lower prices. The reason it's
illegal is the long term anti-consumer effect of an imposed
monopoly.
But that doesn't apply to FOSS - FOSS by definition CANNOT
raise the price. Ever. GPL don't work like that.
And that's the distinction. If companies who made consumer
goods could only "prey" on companies by PERMANENTLY AND
PERPETUALLY committing to offer their goods at less than
cost, no one would do it - it's a GUARANTEED losing
strategy. [ Reply to This | # ]
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Authored by: rsteinmetz70112 on Monday, July 29 2013 @ 12:04 PM EDT |
I notice the FSFE does not mention the false claims of bundling. Perhaps some
Europeans writing to the EU DG Competition might want to respectfully and
professionally point out these claims are false (incorrect) by citing examples
that were listed in earlier articles.
It seems likely that if you want Google's assistance with Android then Google
may require certain Google Applications be included, however as has been pointed
out these are not mandatory on all Android devices.
---
Rsteinmetz - IANAL therefore my opinions are illegal.
"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk
[ Reply to This | # ]
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Authored by: kawabago on Monday, July 29 2013 @ 12:15 PM EDT |
why don't they adopt the model? The Bull Shit Alliance is
basically saying that open source is a superior model for
software development. If they don't adopt the model, they
are hurting their own customers by delivering less for
higher costs. Since it is the companies behind the Bull Shit
Alliance that are hurting consumers, shouldn't their
products be banned to protect consumers? Does anyone have
time today to tear apart their complaint and use it to show
that they, in fact, are the entities that should be banned?
I've got too much happening today.
[ Reply to This | # ]
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Authored by: Anonymous on Monday, July 29 2013 @ 12:40 PM EDT |
I recall that Microsoft destroyed Netscape by offering a browser at zero cost.
So it's clear that the zero-cost option is fine when Microsoft use it, but it's
bad when anyone else does the same thing.[ Reply to This | # ]
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