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6/23/2006
06:15 PM
Rob Preston
Rob Preston
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Big Vs. Small? It's Not That Simple

We tend to oversimplify issues like net neutrality, patent reform, and predatory business practices.

It's the land barons vs. the serfs in the tech industry--at least that's the populist interpretation. The companies that control the networks, the intellectual property, and the market share are getting more belligerent in protecting their assets. The serfs--users, content providers, technology licensees, and other victims--are organizing and fighting back. Let's cheer for the little guy!

But this tech industry dynamic isn't as simple as big vs. small, bully vs. bullied, and no side is producing clear winners. Consider the following industry hot buttons:

Net Neutrality. Those who oppose letting AT&T, Verizon, and other carriers charge extra for premium delivery of Internet content paint them as greedy, state-sponsored quasimonopolists just trying to extract more profits from the captive masses.

Sure, the carriers are out for themselves--what else is new in big business? This isn't, however, just another one-sided power play. For one thing, those unwashed masses fighting for net neutrality, organized under the high-minded Save the Internet moniker, include the likes of Google, Microsoft, and eBay, no strangers to the tactics of market domination. And even net neutrality proponents acknowledge there's a downside to flat out prohibiting the carriers from building more profitable Internet "toll roads."

As commentator Cory Doctorow argues, any regulations intended to keep the carriers from discriminating against certain kinds of content and providers (as they give priority to others who pay extra) must not discourage the carriers from investing in next-generation networks and services. Can we all agree that everyone loses--haves and have-nots alike--if all the Internet lanes clog because the network's architects don't have the financial incentive to innovate?

Patent Litigation. If there's a conventional wisdom here, it's that patent speculation is out of control, as marginal innovators and patent "trollers" shake down deep-pocketed companies. Here, the perception is that the little guys are beating up on the big guys. One classic example is tiny NTP, which managed to milk $612 million from BlackBerry creator Research in Motion for licenses to mobile E-mail technologies that are still under review by the U.S. Patent and Trademark Office.

But the tech patent issue is a lot more complicated than the small fries having their way with big business. Take SCO's aggressive (preposterous?) stance on its Unix rights. SCO has hauled Linux champion IBM and even a couple of big Linux users into court for allegedly violating those rights, positioning itself as a plucky David vs. Goliaths. Yet in the process, SCO has alienated the entire open source community of Davids. Meantime, IBM isn't just a victim of patent speculation; it earns more money from technology licensing than any other company. The lesson: Patent law reforms are necessary, but every case must be judged on its own merits.

Predatory Business Practices. Most of the dominant tech vendors--Microsoft, Intel, Cisco Systems, Hewlett-Packard, IBM--are under constant scrutiny, if not legal action, for alleged anti-competitive business practices. Following the U.S. antitrust decision against Microsoft several years ago, for instance, the righteous European and Asian authorities are trying to force the vendor to dumb down Windows to ensure a "level playing field" with competitors. And just last week, the CEO of security vendor Sunbelt Software charged that Microsoft is selling its consumer and enterprise security software at prices below cost to drive out smaller competitors. How getting Microsoft to charge higher prices will ultimately benefit customers, the true little guys, is anyone's spin.

With these and other big technology issues, keep an open mind. The answers aren't always as clear-cut as they first appear.

Rob Preston,
VP/EDITOR IN CHIEF
rpreston@cmp.com

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