Tag Archives: law

Router = Computer

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According to the online magazine Techeye.net an ADSL modem/router is considered by a German court. The dispute is over if a user is allowed to install software that changes the ADSL modem’s firewall settings. It was actually a battle between two companies, the company that makes the router and the company making software for the router. I think that this ruling has some extremely interesting implications.

First, by defining a router as a computer it opens the door for a HUGE number of devices to be defined as a computer. Most of us wouldn’t think of a router as a computer. It’s a switch, it has a very specific purpose of deciding which packet gets through to the network at a given time and to prevent congestion on the network. In this case, it has the additional function of pulling out the high speed data from the phone line as well. It does have a user interface, but it’s typically restricted to a web browser. This is hardly something the average user would consider a computer. Which tells me something about the judge in the case – he understands technology and computing. The US and rest of Europe could use more judges like this.

Second, since a broad range of devices are now considered devices, at least in Germany, it could force companies to open up their hardware to user software manipulation. I see a few areas where I think this will cause major companies problems.

The first would be video game consoles. If a router is considered a computer there is no way that a company could argue that a video game console is not a computer. Consider the following, you are able to install software video games onto the console, you actually interact with an operating system, you are able to browse the internet and of course play games on the console. These are all things you are able to do on your PC. There are more restrictions on the console than the PC of course. Now, let’s say a third party company wants to come along and create something that will allow you to increase the functionality of the software or the machine in someway. In Germany, the user should have the right to do that.

The second would be cell phones. It’s pretty obvious that cellphones are computers and this ruling would just cement that. I think this will cause more problems for iOS than for Android. For two reasons, first Android already allows third party app stores onto the devices which increases the control of the end user over the computer. Second, Apple controls what software can be allowed into the app store thus controlling what a user is able to install on their computer. The German ruling basically says that a company cannot stop a user from installing software onto their computer if they want to install it. Apple and the App store are directly controlling what a user can and cannot install onto their device. I would not be surprised if this type of control is challenged in the German courts.

One other implications could be that as you own the computer user may be able to stop companies from remotely installing software onto their computer they don’t want on there. For instance, in the US it’s not uncommon for Verizon Wireless to push software out to specific devices without notifying you. You are giving implicit consent by using their networks. However, if the same thing happened to my PC from Comcast there would be a law suit. Since phones are in a weird quasi state of rights in the US there isn’t the same sort of feelings. However, I believe as the gap between PC and phones close and the desire to control what goes on the phone and what doesn’t increases there will be lawsuits over installing and deleting software from your computer.

Are democracies or autocracies better with technology Management?

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According to neoclassical economics knowledge is a non-rival (I can use it without preventing you from using it) and non-exclusive (available to everyone) resource. This has two impacts on their economic theory. First, the actual impact of research and development is excluded from economic growth and is ignored. Second, that any company should be able to pick up and produce any technology. Both of these points are relatively ridiculous. For two reasons. First, we know that research leads to the formation of new companies. Second we know that most companies cannot produce any product and many companies that produce products outside their expertise fail at it.

From a neoclassical perspective democracies are terrible at sharing knowledge and technologies. Democracies have a slew of laws that regulate access to technology form monopolies for specific technologies if they have something called a patent. Additionally, there are other contracts that can get in the way of sharing of knowledge in a way that is neoclassical. Non-disclosure agreements and non-compete clauses. If you aren’t allowed to discuss a specific technology with other people, it prevents knowledge from spreading and being shared to other companies. If you aren’t allowed to compete within the same industry after you leave a company, it prevents you from using that knowledge in a positive way at another firm.

These laws have been put into place in our democracies to ensure proper protection of technologies for firms. It’s designed to prevent the spreading of tacit knowledge from company A to company B. As a company this is incredibly desirable. Without these protections some research would be worthless to conduct. Knowledge spill-overs would cause prices to fall to cost or lower as firms compete for market share. It’s great for consumers, but bad for firms.

So what happens in China? Well according to Make it in America, China requires many firms to hand over their Intellectual Property to the Chinese state. What ends up happening after this is that the Chinese government sells the information or gives the information to one or more Chinese company. These companies tend to be made up of former employees at the company that made the product before. This allows tacit knowledge transfer to the firm and a fast ramp to compete directly with the inventor of the technology. The knowledge is freer in China than it is in the US because of this. This increases competition and may be impacting the cost of goods like solar panels.

In a way this type of behavior forces companies to compete based on the actual costs of the technology. This is what is expected in the neoclassical theory. All prices will eventually drop to the marginal cost of a product with near zero profits for the producing company. In a perverse way, this is a “freer” market than ours because it comes closer to the non-rival non-exclusive knowledge base.

In my next blog, I’ll discuss this topic more.

The ACTA has been signed

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For those of you who aren’t aware the US and many other countries have signed the Anti-Counterfeiting Trade Agreement or ACTA. This law provides a legal framework for nations across the world to enact something similar to the US Digital Millennium Copyright Act (DMCA). This framework gives additional control to law enforcement and copyright holders. Something also abnormal about this trade agreement is that the US claims that it doesn’t need congressional approval. I find this extremely odd, as it’s part of the charter of the legislative branch to approve trade agreements. Additionally, as I’m not a lawyer, I don’t understand what’s inherently different in the ACTA from the South Korean Free Trade Agreement, which has been stalled since Bush II.

At this point the EU hasn’t signed the agreement yet. France and Germany have both enacted some already strict laws in regard to the number of strikes an infringer can have before they lose internet connections.Of course there are some serious issues with the approaches that are used to accuse copyright infringers. most of them deal with how to identify a suspected infringer. At this time France’s first three strike infringer doesn’t know how to do that. Additionally, in Germany, where a legislator wants a 2 strike law, the same legislator has already violated this before the law has gone into affect.

I believe that these cases really indicate that legislator really don’t understand how the internet and copyright works. It’s clear from the DMCA that they don’t and neither do judges. However, I think that Judges are starting to seriously figure out what’s going on with copyright and the controls that are being put into place. Recently in several districts judges have severed joint cases of copyright cases, because most of the IP addresses, which are typically associated to a region or city, were outside the jurisdiction of the court they are being tried in. Additionally, some judges are noting that IP addresses aren’t people and other people could be using the IP address. Even more recently a judge writes that in the DMCA suggest if you own a DVD it’s ok to rip it.Which is something that the DMCA is trying to prevent. DMCA was design to prevent circumventing the copy blocking technologies. It made it illegal.

Overall, the ACTA is a huge blow for advocates of reducing or eliminating copyright. I seriously hope that if this trade agreement does have to go through the US congress that it will be rejected. It’s a law that doesn’t take into account the current technologies and what culture really means.

Fortunately, not all governments support the ACTA. In fact Brazil has created an interesting framework that is the antithesis of ACTA. It is designed to support privacy, encourage usage of Creative Commons copyright(left) protection and have true net neutrality.

Antitrust and Cell Phones

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In my last three posts (one, two and three) I have been discussing the risks of antitrust for Google. With Android Google controls what applications are installed as the base as well as the search function. In South Korea apparently this is a big deal. Which took me the points of IE and WMP in my last post. Most people use the default programs on their computer or phones unless they have some external reasoning to use a different product. In the case of iTunes and WMP it was the iPod which drove the usage away from the default. However for many people that don’t have an iPod there isn’t much point is using anything else. Especially if you only play CDs on your computer or you have a very small MP3 collection.

There are, of course, other factors which may drive users to other products, such as seeking the ability to play lossless files instead of MP3s. On computers, in my opinion, it is much easier to take control over the device and install other applications or systems to replace the default. You just need to know how to find the program you want and install it. With phones this is much more difficult. I think that the Google Search functionality is going to be the first of many of these investigations.

For other applications that serve the same function as the search, it may be difficult to acquire a different app. At the app store for whatever phone you’re using, there’s a gate keeper (is there a confused keymaster too?). In the case of Apple they reject applications that duplicate a program which comes preinstalled on the phone. I’m fully expecting that these rejections will eventually become the target of some antitrust investigation. Google is better than Apple in this regard, however there is control over what goes into the app store. Interesting note there are at least 4 Bing search apps in the Android market place.

Google does allow third party app stores on Android. I think that this is a really smart move. This will actually prevent some future antitrust investigation that I think Apple will have to face. There will be a market of app market places that cater to different kinds of needs or may be phone company specific. For instance Samsung has their own app store on my Galaxy S. I would not be surprised if Steam, EA and other digital content providers are already planning on creating app stores for the phones. While some of the major game developers aren’t creating games for phones yet, I believe that will change in the future. With Windows 8 going to be used for PCs, Tablets, and phones why wouldn’t larger game developers created stripped down versions of their games to be played on phones?

However, I’ve wandered a bit from my initial point. While phones are different than computers in some pretty significant ways, they are small computers. They are more powerful than the computers I grew up with. Google will need to be aware of this and will need to evolve how it deals with the android system. The controls put on users in phones will eventually be forced out of existence by law suits and users demanding more freedom over their phones. Eventually, phones will require as much freedom as a PC, especially as we start to bridge between the two platforms.

Google’s Anti-Trust problems III

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In my last two posts (one and two), I’ve been discussing the current problems as well as potential problems that will be facing Google in the antitrust arena. Yesterday I mentioned I was going to discuss Windows Media Player (WMP) and how this pertains to Google. However, I realized I need to go one step back first. First, we need to look at what happened with Netscape and Internet Explorer (IE). Initially Netscape was THE internet browser. It was the browser to program websites to be displayed on, IE wasn’t even really on the radar. Also, at this time with the web, these programs were being sent out by CD, it would take an extremely long time to down load this application. Why? because it was over a telephone line. A modem that was getting about a tenth or less of the download speed you have now with whatever your broadband connection is. That and your mom would probably pick up the phone to call some one while you were trying to download the software, or while playing War Craft 2 against a friend.

Since the medium of delivery for the browser was over CD it was a level playing field for both browsers to compete. You’d get one in the mail for whatever browser, Netscape, IE, AOL, etc. However, Microsoft realized the importance of this market. They figured out a way to leverage their desktop monopoly to foreclose on the browser market. They started installing IE onto all of their operating systems. Then went as far to integrate everything together to ensure market dominance. It worked because of slow connections and the fact that people are lazy. If something already works they will use it.

Flash forward about 5 years. MP3s have gotten popular through Napster and other digital Peer 2 Peer file transfer systems and the next big market is music players. Winamp was a major player at this time and WMP was not really any sort of competition for it either. In Windows XP WMP got a major over haul and was at least able to compete with Winamp. Microsoft decided to bundle the software in the same manner they had done with IE.

This is where the story changes though. The EU filed suite against this claiming this was anticompetitive. At this time the iPod had just come out and there was no reason to expect the product to come to the PC. It seemed like it was a long way from happening. Plus, even if the iPod was going to PC it was still going to be a niche market. So, the law suit. We all know now that because of the pace of technology and the fact that there were other factors involved with the selection of the music player it prevented market dominance of Microsoft. Without the requirement for iTunes with the iPod who knows what player would have won the market.

How does this relate to Google though? Well, looking at the search engine suit from Korea I mentioned yesterday, I think this has some pretty significant implications. Using a platform to control the method in which you use other functions can be shown to be anticompetitive. Google search engine is the first for mobile phones, however, I see no reason why it will be the last.

More on this topic in my next blog.