Sunday, August 14, 2011

When 'denying market access' is dressed up as 'piracy prevention'

How can you prevent a PC manufacturer from bundling Debian or Ubuntu?
Easy, just get them to sign an exclusivity clause in order to allow them to preinstall Windows.

If a domestic supplier of PCs in China makes a PC model (let's say PC500 just to give it a name), in order to be able to preinstall Windows 7, they have to sign an agreement that says that no PC500 models will ever be distributed with anything other than Windows 7.

So if that manufacturer wants to produce 100,000 PC500s with Windows 7, and has a small market of 15,000 it thinks it could serve by preloading Ubuntu, it simply cannot.

Tying up hardware manufacturers so that they cannot preload an alternative OS, is dressed up as a piracy prevention measure, but it seems to me is more about denying market access to newer rival OSs such as Debian or Ubuntu.

The phrase "other unlawfully pre-installed software" appears in the USTR report discussed in this Forbes article.

Because of those tied manufacturer agreements, that unlawfully pre-installed software includes Debian and Ubuntu.

The nonsense in the argument - where is the fallacy?

The argument (from the proprietary software company) goes a little something like this.

We went to china and in this one market, we found that there were 100 PCs that were preloaded with illegal copies of Windows XP
This provides the cover for 'denying market access' which I will return to later.

The Fallacy - some preamble:
        Selling proprietary software that has not been paid for is an offence, so the software vendor has existing recourse to seek law enforcement help, and financial compensation for those 100 PCs preloaded with unpaid copies of Windows XP

The fallacy is the suggestion that there needs to be additional 'legal protection measures' in the form of tied manufacturer agreements.

Tying a manufacturer by creating an additional 'legal offense' and creating a category of 'approved software' is just a cover, to deny market access to vendors wishing to serve local markets with alternative operating systems.

By using these tied agreements the manufacturer who wants to serve a local market with Ubuntu, is forced to create a new model identifier PC500n or similar and go again through the expensive certification processes that lead up to sale through retail channels.

Plenty of manufacturers will baulk at the idea of paying twice for certification process, and this amounts to denial of market access - precisely what the proprietary software vendor seeks to obtain.

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