[Am-info] RFC: attacking Lessig's attack on States's position

[Hans Reiser]

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I am going to email this in today, and thought some of you might have 
comments/suggestions/spottings of typos.

Hans

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Technical Flaw in Lessig's Argument Against States Position

Lawrence Lessig's advice to the court has a major technical flaw that
the court should be wary of.

Software is unique in that "Compiler" technology allows consumers to
effectively reassemble software themselves.  

A compiler is a computer
program that takes a set of instructions about how to build a program
(called "source code"), and builds the software.  Almost all software
is actually assembled by compilers not humans, and the work of humans
is almost entirely in creating the source code.

You have probably never assembled software yourself as a consumer
because:

* you are not a Fortune 500 company with a staff of trained system
administrators

* you probably use Windows not Linux, and Windows does not give you
  access to the essential facility known as "source code" that your
  "compiler" needs to reassemble your software

Because you have never done it yourself, your intution may tell you
that it is not feasible, or that it is not feasible for a large
market.  Beware this intuition, it is simply wrong.  The Fortune 500
are a significant market for antitrust purposes, and Linux is rapidly
moving towards making reassembly by average persons a friendly
experience as well.

Such an experiential intuition is likely what led Lawrence Lessig to a
deep and fundamental error in his conclusions.

It is frequently efficient to post-sale integrate software for a large
part of the market, and it is getting more so with time.  This is
deeply different from physical products such as cars, in that most
persons do not find it as effective to buy a collection of parts and
self-assemble because they would have to do the work of assembly.
With software, the computer does the work of post-sale assembly, and
the consumer simply tells the computer to do it, goes to make some
tea, comes back, and the job is done.

For instance, the business that I own (Namesys, see www.namesys.com)
made its money entirely from sales of a filesystem (ReiserFS) that was
sold separately from the operating system (Linux) for the first few
years of our business.  The revenues from this were enough to support
us.  Paying consumers such as MP3.com would take our source code, add
it to the Linux kernel source code, use a compiler, let their computer
do a few minutes of work to reassemble the kernel, and get a better
filesystem as a result of it.  This allowed MP3.com to save $20
million dollars according to their estimate.  Others in my industry
also sell filesystems separately from operating systems
(www.veritas.com got its start that way, and still makes simply
enormous amounts of money from doing so).

Notice that I say filesystem.  Your intuitive notion of what is an
operating system probably tells you that the filesystem is part of the
operating system.  You may be tempted to think that what is part of
the operating system is not viable as a product sold separately from
the operating system.  Lessig thought so, and this is because he lacks
experience selling operating system components in the Linux/Unix
programming industry.

Think of Jefferson Parish, and understand that software takes the fine
distinctions of Jefferson Parish to their extreme.  

* Software can be integrated in its functioning, and yet separate in 
  its sale, and this means separate as a product for purposes of
  anti-trust law. (Most software products are functionally integrated
  with a separately sold operating system.)

* Software can be integrated in its physical distribution, yet separate
  in its sale.  (Purchase of a CDROM holding the software is often
  separated from purchase of a license to use, and it is often
  considered efficient by publishers to bundle physical distribution
  without bundling licensing.)

* Software can be sold and transmitted over the Internet with no
  physical product created at all.

There is only one characteristic that necessarily defines the
separation of a software product, and that is the license.  A license
is a contract, and contractual tying is illegal under the Clayton and
Sherman acts.

Yet wait, if software products are so easily separable, why aren't
there far more OS components out there being sold? Control over an
essential facility is the answer.

There is a reason why the States want Microsoft's source code to be
available to all.

Secret source code can be an essential facility the equal of putting a
combination lock on every bolt in a car, and then declaring the
combination to be a trade secret.

You wouldn't allow this for a car, yet traditional industry practice
is that source code is kept a trade secret.  The crisis our industry
is facing, in which monopoly control is the norm in all parts of it
not in infancy, is directly caused by this industry practice of secret
source code.  It is not necessary that the text be kept secret for
copyright protection on books to be maintained, and it is also not
necessary for software that the source be kept secret to protect
ownership of it.  Far from it, the underlying historical motivation of
copyright and patent laws is to bring more information out of trade
secret status.

We have a widespread well-entrenched industry practice that keeps an
essential facility (source code) under the control of monopolists (of
which Microsoft is merely the largest), and we have almost complete
monopolization of the software industry in each of its mature niches.
These are cause and effect.

I pray to you to not allow their continuance.  Open up the operating
system source code as the States ask, and go even further.  Declare
that software is per se separable where source code is available.
Declare source code to be an essential facility.  Return copyright and
patent practices to their historical roots, and require that
information created be made public if it is to be protected.  

Please do not hesitate to ask me to comment in greater detail or
respond to your questions in this matter.  I am available for in
person testimony if desired.

As for my needs, please create the legal conditions which will allow
me to port ReiserFS to Windows and sell it separately from the
operating system, by giving me the access to source code that I need
to do the port.

Essential Facilites Related Citations:

[U.S. vs. Trans-Missouri Freight Ass'n, 166 U.S. 290 (1897)] is the
original precedent.

[MCI Communications v. AT&T Corp. 708 F.2d 1081 (7th Cir.),
cert. denied, 464 U.S. 891 (1983)] describes a case more recent (it is
a persuasive rather than controlling authority).  Note that the 4 part
test lacks any component referencing the need for a market to have
been active at some point prior to the refusal to deal, and is the
better for that lack.

Profit To The Monopolist From Tying:

The Chicago School, to which the current DOJ administration adheres,
holds that there is no incentive to monopolists to engage in tying
because it believes they cannot extract more profit from forced sales
of the tied product than they would from raising the price of the
tying product, unless business efficiencies exist.  For this reason,
they feel that there is no need for the Clayton prohibition against
tying, and feel there are civil liberty reasons to avoid government
intervention into markets.  Their analysis assumes the tied product is
part of a fully competitive market, and for this reason it is deeply
flawed.

The profit to the monopolist from engaging in tying is the difference
between the market price and the marginal cost.  For less than fully
competitive markets, which is to say most markets, this is a non-zero
amount.  For software, especially software sold and distributed over
the Internet, the marginal cost is close to zero, and the motivation
for engaging in tying is extremely high.

Senators Sherman and Clayton were much more knowledgable about
economics than the Chicago School is paid to think.  Some might like
to think that, but for government, free choice expressed in the market
would free us, but in sad reality the government is not the only means
by which people organize to control and plunder the public.  Cartels
and monopolies take away our freedoms as well.  The only thing worse
than a government controlled economy is a monopoly controlled economy.

The Settlement As A Whole:

I am opposed to the settlement as a whole.  President Bush owns stock
in Microsoft, and he appointed to head the antitrust division at the
DOJ someone who is widely known to be opposed to laws against tying.
When someone is opposed to a law that they are supposed to prosecute,
they should not be allowed to settle a case their predecessor started.
The proposed settlement is designed to be toothless, and to do
nothing.  Do not allow President Bush to settle this case, and thereby
cripple the ability of the next administration to enforce the law.
The failure of Microsoft and the DOJ to adhere to the contact
disclosure provisions of the Tunney Act is one more reason to reject
the settlement.

If you have the courage to firmly reject this settlement, and if you
move aggressively to enforce the claim of the States while we wait for
a new administration, you will have earned the admiration of the
American people.  Some of them will even know this.  More importantly,
you will.  


Sincerely,

Hans Reiser
Owner/Operator Namesys
Author of ReiserFS, a significant component of Linux

5918 Marden Lane
Oakland, CA 94611
phone: +1 510-339-1044 (USA)
       +7 095 290 6405 (I am currently in Russia)
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