by Dana Blankenhorn
Volume V, No. XXXV
For the Week of September 10, 2001

This Week's Clue: Meet the New Boss

This Week's Clue: Meet the New Boss

SSP (Shameless Self Promotion)

SP (Shameless Promotion)


Exhibit A

Fighting the Power

Clued-in, Clueless

American elections don't mean what they once did. 

Two decades ago the victory of a conservative ideologue, Ronald Reagan, forced a worldwide lurch to the right, and collapsed the world's other power center, the Soviet Union. This time, it may backfire.

Europe is flexing its muscles, and it's not knuckling under to George Bush's back-sliding on international obligations, environmental agreements or civil rights. They're launching a new currency for a bigger market than the U.S. has, and their economy has much less underlying rot because it didn't go through the speculative fever that gripped the U.S. in 1999. This has huge implications for America's tech center, which supported Bush heavily and now finds it can't force its way to dominance any more.

Microsoft may be in for the rudest awakening. Its tap dance with the U.S. Justice Department is reaching a climax but now the E.U. is starting to make noise about bringing its own case, this one on behalf of Real Networks' RealPlayer . The Europeans have already scuttled the GE-Honeywell merger - fighting Microsoft seems the natural next step.

Worse, all the Microsoft arguments that succeed here - that critics are "anti-innovation" or (worse) "anti-American" - just grate on European ears. This seems obvious from the growing trend by European Parliaments to demand that their bureaucrats, where possible, support "Open Source" software and reject Microsoft products . By piggy-backing on Bush's nationalism and unilateralism, in other words, Microsoft has done itself tremendous damage. It's a lesson American conglomerates in other industries learned long ago - you exist not just where you are headquartered but everywhere you do business. 

The schism between the U.S. and Europe is the first big story of 2001. The big follow-on story will be their jockeying for leadership of the Free World. This is a struggle the U.S. seems determined to lose, because its unilateral attitudes won't fit into the Internet's multilateral realities. 

The coming struggle will be a political struggle, and a propaganda struggle. It will be a battle over images. What better image can there be for the European view that America has rejected its own heritage than the picture of a Russian national in an American jail on a charge of writing something the American government didn't like? While the American media hasn't stood by Dimitri Sklyarov my guess is Europe will - loudly. 

What will make this more clear will be the destruction, by the U.S., of its own Voice of America. The VoA has planted the seeds of its own demise by encouraging the use of anti-censorship technology  to help the Chinese people . But that same technology can violate U.S. laws, too, and given a choice between protecting campaign contributors (the copyright industries) and standing up to China, the Bush people will stick with the money. This means the next step will be for Europe to provide its own freedom-loving media, and spread the technology the U.S. opposes.

Elections in many countries will thus come down to a choice between visions of the future, the Euro vision and the American vision. The first battleground in that war will be Australia, and it's a battle the U.S. side is likely to win, thanks to the unrelated issue of Afghan immigration. But the continuing Internet crackdown of Prime Minister John Howard could easily wear out his welcome, and when he goes I predict Australia's Internet policies will begin to change. They will move toward the European model and become supportive of Open Source. 

It is very unfortunate for the Internet industries that technology issues are being politicized. But there is a very, very important question at issue in all of this. Is the Internet designed to support people, and their free communication, or is it designed to support the self-interest of a very few American corporations? Until the case is settled, we won't know on what basis the Internet will advance. And I'm afraid that in this case the U.S. holds a losing hand.

SSP (Shameless Self-Promotion)

The draft is done. "Living on the Internet: How to Make Money, Live Right, and Fight For the 21st Century" is now in the hands of the folks at eBookAgent , which is arranging for electronic distribution. I'm hoping to add a monthly newsletter as an up-sell, available free to all buyers of the book. Your testimonials would be appreciated. Drop me a note if you need a sample chapter first .

You can join the A-Clue.Com discussion at I-Strategy , our shared e-mail digest produced with Adventive.Com. You can also read me at ClickZ , B2B, at Boardwatch, ISP Executive, Sitepoint  and the new (paid) version of WorkZ. More deals are being sought. Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

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Takes on the News


Back in the 1960s the mainframe industry consisted of IBM and the "BUNCH" - Burroughs, Univac, NCR, Control Data and Honeywell. As IBM put the squeeze on in the 1970s Burroughs and Univac merged to become Unisys. Had you sunk your money into the new company back then, you'd now have half of it left .

So if you own any stock in Hewlett-Packard or Compaq, the best advice might be to sell now . The next few months will see the bureaucratic turf war to end all turf wars as H-P tries to absorb Compaq's favorite mistakes (Digital Equipment and Tandem), decide which thousands of people to lay off, and get after the IBM of its own PC space, Dell.

Carly Fiorina has about as much chance of pulling this off as I do of winning next year's Pulitzer. (The Pulitzer, dear fans, is a newspaperman's prize.) It costs money to get rid of people, to get rid of lines of business, and to create a new strategy (that probably won't work). Combining two dumb dinosaurs is the Clueless move of the year.

Exhibit A

The greatest threats to the Internet's future are arrogance and nationalism.

The first threat is exemplified well by Microsoft's latest release of Internet Explorer . Now that competition has been effectively crushed (anti-trust case be damned) Microsoft has dropped all support for competing technologies in the browser. There's no support here for plug-ins, and no support for Java.

Many millions of people will have this software foisted on them in the next few months, and most won't go to the trouble of finding the support they need for alternative applications. Microsoft is betting that most people are sheep. But it has just provided Exhibit A in the European Union's own anti-trust case against it. Time will tell whether that was its biggest mistake ever.

There are three tests of monopoly. Does the company control the market, does it use that market power to extend its control into other areas, and does it use its dominance to crush competition. Internet Explorer 6.0 is guilty on all three counts. Microsoft may have bought the Bush Administration, but this may be its Waterloo.

Fighting the Power

The second great threat to the Internet's future is nationalism. The worldwide network won't do its job if national governments are able to control it for parochial ends.

Our "Clueless" item points to one government in this regard, but let's also point the finger at the U.S. It is increasingly obvious that the U.S. government maintains control of ICANN, which is walking further away from, not closer toward, democracy in its latest draft on "at-large members." ICANN is, technically, a private company, but it acts more like an arm of the U.S. government, specifically that part of the U.S. government devoted to controlling what can be said and written through copyright , as its latest report on the DMCA makes clear

The recent LinuxWorld show, in fact, saw a great debate on how such power should be fought. Most programmers ignore bad law. They see it as a technical problem to be gotten around. But now a programmer named Dimitri Sklyarov is in jail for practicing that very philosophy, so Lawrence Lessig hectored the group on behalf of the Electronic Freedom Foundation, demanding that they organize against bad law and bad lawmakers. .

Talking to the bad lawmakers won't work, he said. (Then why hasn't the EFF taken the next step and launched a Political Action Committee?) Later in the day Lessig spoke at a Sklyarov fund-raiser attended by 200 people and called it "the beginning of a revolution." Unfortunately, the only revolutions groups of 200 start are Bolshevik - what's needed is a Menshevik revolt, one of the majority, and that doesn't seem to be in the cards.

So how can the power be fought? It can, and will, mainly be fought economically. It will be fought by international governments refusing to support Microsoft with their dollars. It will be fought by Internet companies failing, and the U.S. economy faltering. We can't have an economic recovery without a tech recovery, we can't have a tech recovery without an Internet recovery, and we can't have an Internet recovery with the present DMCA, which essentially makes every file transfer suspect.

As the recession grinds on, however, it will be up to people with big microphones like Lessig to connect the dots. The price of recovery is fair use. Until the Hollywood-Microsoft stranglehold on policy is broken people will continue to suffer.

Clued-in, Clueless

Clued-in is Bob Adams , partly because he asked, but mainly because he understands the limits of the present era and continues to work well within them. Also Clued-in was the anti-racism Congress , which unexpectedly didn't call for new Internet censorship against hate groups.

Clueless is Australia, which seems determined to nullify Internet liberty at home and abroad in every way it possibly can.

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