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20130729.EC.Fairsearch.letter.en.xhtml 13KB

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  1. <?xml version="1.0" encoding="UTF-8" ?>
  2. <html>
  3. <head>
  4. <title>FSFE objects to claims of 'predatory pricing' in Free Software</title>
  5. </head>
  6. <body>
  7. <h1>FSFE objects to claims of 'predatory pricing' in Free Software</h1>
  8. <p>
  9. To:<br />
  10. European Commission <br />
  11. DG Competition <br />
  12. B-1049 Brussels <br />
  13. Belgium
  14. </p>
  15. <p>
  16. According to reports in specialist online media, the so-called
  17. "FairSearch" coalition - comprised of Microsoft, Nokia, Oracle, and a
  18. number of online service providers - argues, in its latest submission
  19. to the European Commission, that the free-of-charge distribution of
  20. Android, a Free Software<a href="#footnote1">[1]</a> mobile operating
  21. system developed by Google, constitutes predatory pricing. Suggesting
  22. that the distribution of Free Software free of charge is harmful to
  23. competition is both wrong in substance, and dangerous to competition
  24. and innovation.
  25. </p>
  26. <p>
  27. We urge the Commission to consider the facts properly before accepting
  28. FairSearch's allegations at face value. We are writing to you today to
  29. explain how the distribution of Free Software, whether gratis or for a
  30. fee, promotes competition, rather than damaging it.
  31. </p>
  32. <p>
  33. <a href="http://fsfe.org">Free Software Foundation Europe</a> (FSFE) is an independent, charitable
  34. non-profit organisation dedicated to the promotion of Free
  35. Software. FSFE maintains that the freedoms to use, study, share and
  36. improve software are critical to ensure equal participation in the
  37. information age. We work to create general understanding and support
  38. for software freedom in politics, law and society-at-large. We also
  39. promote the development of technologies, such as the GNU/Linux
  40. operating system, that deliver these freedoms to all participants in
  41. digital society. In pursuit of these goals, we have a long history of
  42. active involvement in competition proceedings that affect Free
  43. Software.
  44. </p>
  45. <h3>Free Software is about freedom, not price</h3>
  46. <p>
  47. The "Free" in Free Software refers to freedom, not
  48. price. Specifically, Free Software offers users the following <a
  49. href="https://www.gnu.org/philosophy/free-sw.html">freedoms</a>:
  50. </p>
  51. <p>
  52. <ol>
  53. <li>to use the program without restrictions; </li>
  54. <li>to study the program's source code, and understand how it works;</li>
  55. <li>to share the program with others, either gratis or for a
  56. fee; </li>
  57. <li>to improve the program, and share the improvements. </li>
  58. </ol>
  59. </p>
  60. <p>
  61. Taken together, these four freedoms turn the Free Software model into
  62. a powerful and disruptive force for competition. Free Software has
  63. considerably contributed breaking up the long-standing monopolies
  64. built up by makers of non-free software such as Microsoft.
  65. </p>
  66. <p>
  67. In many sectors, Free Software programs have long been either the
  68. leading applications, or the most powerful competitors. This includes
  69. web servers <a href="#footnote2">[2]</a> web browsing (Firefox),
  70. office productivity (LibreOffice, OpenOffice), and server operating
  71. systems. 93% of the 500 super computers worldwide run on Free Software
  72. operating systems.
  73. </p>
  74. <p>
  75. Free Software is the norm for makers of embedded devices, such as
  76. "smart" TVs, DSL routers, and cars' on-board computers, to name just a
  77. few. Today's leading web companies, such as Facebook, Amazon and
  78. Google, rely heavily on Free Software to build their offerings. Free
  79. Software also powers a plethora of startups and competitors with
  80. architectures and service models which offer alternatives to the
  81. established providers.
  82. </p>
  83. <h3>Trend in mobile and elsewhere is irreversibly towards Free
  84. Software</h3>
  85. <p>
  86. According to publicly available sources, the substance of FairSearch's
  87. claim is that by "giving away Android for free" Google undercuts the
  88. ability of its competitors in the mobile operating system to recoup
  89. investments in competing with "Google's dominant mobile platform."
  90. </p>
  91. <p>
  92. FSFE strongly objects to this characterization: Free Software is a
  93. highly efficient way of producing and distributing software, and
  94. selling licenses is just one among many possible ways to monetise
  95. software.
  96. </p>
  97. <p>
  98. Android is a software platform built around the Linux kernel and Java,
  99. forked into Dalvik, thanks to the fact that both Java and the kernel
  100. are available under Free Software licenses. Anybody can take Android
  101. and turn it into a better and freer distribution with few or no ties
  102. to Google, as long as the source code is made available, as it is. <a
  103. href="http://replicant.us/">Replicant</a> and <a
  104. href="http://www.cyanogenmod.org/">CyanogenMod</a> are just two
  105. notable examples, both of which are currently installed in millions of
  106. devices. Facebook's adoption of Android for its own purposes shows how
  107. the platform is actually open, so much that a competitor can ship an
  108. alternative GUI which is basically oriented to serving a competitor's
  109. purposes.
  110. </p>
  111. <p>
  112. The Commission, with regard to Java, has already found the value of a
  113. non fragmented platform to be high, and recognizes strong incentives
  114. to prevent its fragmentation <a href="#footnote3">[3]</a>. If anything, Android has attracted
  115. criticism because its licensing conditions and openness favour
  116. fragmentation, against Google's own interests. Fragmentation is a
  117. "threat" connected to the freedom of forking. In a proprietary setting
  118. the tight control over copyright, trademarks and patents makes it easy
  119. to avoid fragmentation. Conversely, in a Free Software environment,
  120. fragmentation is avoided by consensus and leadership on merit, and
  121. sometimes through the use of trademarks (Red Hat, Mozilla). Linux, the
  122. kernel common to the Android and GNU/Linux operating systems, has so
  123. far escaped fragmentation not because such a thing would be impossible
  124. or prohibited – it certainly is not -, but because it would be
  125. pointless. In a platform, ensuring the widest compatibility and high
  126. degree of standardization is a constant concern of any project,
  127. providing a strong incentive to avoid abuses of the community and a
  128. constrant pressure on the leader(s) of the project to proceed by
  129. consensus.<a href="#footnote4">[4]</a>
  130. </p>
  131. <p>
  132. In a powerful illustration of how the Free Software model enables
  133. competition, we note that all recent additions to the list of mobile
  134. operating systems are largely Free Software. Though Android devices
  135. currently make up <a
  136. href="http://www.canalys.com/newsroom/smart-mobile-device-shipments-exceed-300-million-q1-2013">around
  137. 70% of mobile phones and tablets sold</a>, several other Free Software
  138. mobile operating systems based on the Linux kernel are setting out to
  139. to compete with Android. Examples include Firefox OS (backed by the
  140. Mozilla Foundation), Jolla (from the ashes of Maemo, a Nokia project
  141. terminated after the company's strategic alignment with Microsoft),
  142. Tizen (backed by Samsung, Intel and various telecom providers such as
  143. Vodafone and NTT Docomo), and UbuntuMobile (backed by Canonical).
  144. </p>
  145. <h3>Gratis distribution of code has nothing to do with predatory
  146. pricing</h3>
  147. <p>
  148. In its submission, the FairSearch coalition claims that Android's
  149. gratis availability makes it difficult or impossible for others to
  150. compete in the market for mobile operating system.
  151. </p>
  152. <p>
  153. However, selling software licenses has never been an important
  154. strategy in the mobile market. Blackberry maker RIM basically sold
  155. devices and server-side software and services to the enterprise
  156. sector. Apple subsidized its proprietary iOS with the sale of hardware
  157. and services, both by Apple and by third parties, taking a significant
  158. cut of the revenue for products sold through its iTunes online
  159. store. Nokia tried for a time to sustain two different operating
  160. systems, both of which were eventually released as Free Software
  161. (Symbian and Maemo, then renamed Meego, now forked by Jolla into
  162. SailFish). Only Microsoft has maintained an Independent Software
  163. Vendor position, mostly leveraging and marketing the integration with
  164. its network services.
  165. </p>
  166. <p>
  167. It would therefore seem that the only conceivable motive for the
  168. FairSearch coalition's complaint is that the existince of a number of
  169. Free Software mobile operating systems, including Android, makes it
  170. difficult for Microsoft to replicate this business model in the mobile
  171. space. FairSearch is essentially asking the European Commission to
  172. favour one business model over another. This is exactly the opposite
  173. of what an antitrust authority should aim for in order to maintain a
  174. competitive market. </p>
  175. <p>
  176. FSFE has consistently taken the stance that proprietary licensing is
  177. an outdated and inefficient system of producing software. From our
  178. point of view, Google has no incentives or means to monopolize the
  179. smartphone operating system market, simply because there is no market
  180. for proprietary operating system licenses.
  181. </p>
  182. <p>
  183. The predatory pricing theory proposed by FairSearch is plainly
  184. unsuitable to describe a market where there is no price, and a product
  185. that, being Free Software, can literally be taken by anybody and
  186. "forked", a practice that the Commission has already discussed in past
  187. activities. There is no "below cost" distribution in Free Software,
  188. because the price which market participants set for copies of mobile
  189. operating systems in these circumstances is precisely zero.
  190. </p>
  191. <p>
  192. Software is easy to copy at near-zero cost. In economic terms, this
  193. means that there is originally no scarcity in software. Such scarcity
  194. can only be introduced articificially, with proprietary licensing
  195. being the most frequently used way to do so.
  196. </p>
  197. <p>
  198. Conversely, Free Software creates a commons, in which everyone can
  199. participate, but which noone can monopolise. Free Software thus
  200. creates wealth and new growth opportunities for a wide range of
  201. companies and business models. An example of this is Red Hat, a
  202. company whose yearly turnover reached USD 1.3 billion, entirely by
  203. providing services around the free GNU/Linux operating system. Android
  204. has arguably created a competitive advantage for Google; but, contrary
  205. to Microsoft, Google's focus is not on software and monopolizing
  206. platforms, but on services, delivered on whichever platform the user
  207. happens to be using. Conversely, some analysts believe that <a
  208. href="ttp://arstechnica.com/information-technology/2011/10/microsoft-collects-license-fees-on-50-of-android-devices-tells-google-to-wake-up/">Microsoft
  209. now makes more money from Android</a> than it does from Windows
  210. operating systems on mobile devices, after the company engaged in an
  211. <a href="http://fsfe.org/campaigns/swpat/nortel.en.html">aggressive
  212. patent licensing campaign</a> towards makers of Android devices.
  213. </p>
  214. <p>
  215. Google's competitive advantage is essentially ephemeral: the only way
  216. to stay ahead of the competition in Free Software is to provide better
  217. products or services, and to win users' trust. Barriers to entry for
  218. competitors are extremely low. An example is that the platform allows
  219. installing alternative marketplace (or "app stores"). The Free
  220. Software Foundations promote a <a
  221. href="http://fsfe.org/campaigns/android/liberate.en.html">"Free Your
  222. Android" campaign</a> where they solicit adoption of an alternative
  223. marketplace called F-Droid where only Free Software applications are
  224. provided.
  225. </p>
  226. <h3>Conclusion</h3>
  227. <p>
  228. With its submission, the FairSearch coalition seems to assume that
  229. European regulators are unaware of the developments in the software
  230. market over the past decade. Rather than highlighting a genuine risk
  231. to competition in the mobile market, the FairSearch submission gives
  232. the impression that Microsoft - a company convicted of
  233. anti-competitive behaviour in high-profile lawsuits on three
  234. continents - is attempting to turn back the clock. The company is
  235. essentially arguing that the Commission should protect its outdated
  236. business model in the mobile sector against a more effective
  237. disruptor. We respectfully beg to differ.
  238. </p>
  239. <p>
  240. The nature of Android as a commons makes it very valuable to OEMs,
  241. precisely because Google can only control it through leadership, not
  242. through an iron fist and lock-in, as is the case with proprietary
  243. alternatives. This very fact should be considered a source of strong
  244. competitive pressure.
  245. </p>
  246. <p>
  247. We recommend that the European Commission should dismiss the
  248. application without even opening a formal case. In any event, should a
  249. statement of objections be issued, it should avoid to contain any
  250. reference to the Free Software licensing as a source of competitive
  251. concerns. Indeed, the Free Software nature of Android should be
  252. considered per se a powerful tool to reduce barriers to entry and to
  253. enhance competition.
  254. </p>
  255. <p>
  256. At FSFE, we will continue to work with the European Commission on
  257. leveraging Free Software in order to create and maintain competition
  258. in the marketplace. As experts and stakeholders, we stand ready to
  259. support the Commission in all matters relating to Free Software.
  260. </p>
  261. <p>Sincerely, </p>
  262. <p>Karsten Gerloff, President </p>
  263. <p>Carlo Piana, General Counsel</p>
  264. <p>Free Software Foundation Europe </p>
  265. <p id="footnote1">[1] Often referred to as “open source”. “Free
  266. Software” is the original and more accurate name which reflects all
  267. the aspects of the same phenomenon.</p>
  268. <p id="footnote2">[2] As of June 2013, <a
  269. href="http://news.netcraft.com/archives/2013/06/06/june-2013-web-server-survey-3.html">fully
  270. 68% active websites</a> run on the Free Software server programs
  271. Apache and nginx.</p>
  272. <p id="footnote3">[3] Decision in Case No COMP/M.5529 – ORACLE/ SUN MICROSYSTEMS, paragraph 935.</p>
  273. <p id="footnote4">[4] Decision in Case No COMP/M.5529 – ORACLE/ SUN
  274. MICROSYSTEMS, paragraph 655.</p>
  275. </body>
  276. </html>