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Friday, November 5, 2010

Bristling over closed-source market dominance

Procurement perversities stifle Bristol's IT
Thought you'd heard all the obstacles preventing Bristol City Council implementing an IT strategy based on open source and open standards? Now you can hear about one more.

To recap: big software companies use proprietary standards to sit on the market like the dragon Smaug on his mound of gold. Bristol's famed community of digital businesses are like aw-bless little hobbits. The council's IT strategy, like the government's, was going to cast open source and open standards like a magic spell that would slay Smaug and scatter his ill-gotten treasure among the jubilant halflings.
Only the spell doesn't have any power. It's not been cast with enough conviction.

What's worse is EU procurement rules are stacked against the hobbits. That's right: procurement rules, for which there aren't any suitable parallels in J.R.R.Tolkien's fantasy world. (Though if there were, they'd have been delivered by an edict of Elrond's tedious council).

And so to the point. Bristol wanted to procure services from local IT firms instead of ugly great multinationals. But procurement law prohibits such favouritism. So Bristol considered how it might get around the rules.

A free market fundamentalist would call foul on such shenanigans. But the Smaugs in this tale get favouritism under the procurement rules. Why shouldn't Bristol's hobbits?

Take Microsoft for example. EU procurement rules prohibit tenders for software from Microsoft. But they permit tenders that specify Microsoft software. This is clearly perverse. The whole point of procurement law is to ensure tenders aren't fixed. That should mean you can't specify what the product is, only the sort of product you want. But it doesn't.

The European Commission itself is the ideal case study in how these perverse rules work. In 2007 the Commission signed a €48m contract to update the Microsoft software on 36,000 PCs. The Commission tendered specifically for Microsoft software, precluding competition from competing software publishers.

The Commission told outraged MEPs it's tender could specify Microsoft as long as it was not asking to be supplied by Microsoft directly but by an accredited Microsoft dealer. There would be competition for its software contract, it said, between Microsoft dealers. That's like saying you have democracy when only rich white men have the vote.

Competition for software is stifled under this arrangement. Microsoft's ball-breaking grip on the market was sustained by rules overseen and payments made by the very institutions that were simultaneously fining it for operating a monopoly.

The EC's Microsoft-favouring software contract came into force on 1 March 2008, three days after it fined the software Smaug £680m for ignoring previous fines for abusing its monopoly power.

Lawyers told Bristol it couldn't specify Microsoft in its upcoming tender for software to put on its 7,000 PCs, even though the monopolistic market left it no choice but to use Microsoft software.

Mark Wright, the Bristol councillor campaigning to free the market from beneath Microsoft's fat belly, has been told he has to refer to the tender in council meetings as one for "Microsoft Windows or an equivalent alternative".

"It's nuts," he says. "There is no alternative."

Neither can Bristol issue tenders specifying software made by local firms. It would break those bizarre European rules. Wright says the council could get round the problem by breaking its contracts up. If they were small enough, only local firms would bid for them.

The council is finding, however, that since so few dominant software companies use proprietary standards, it can't easily break its IT systems and services down into modular components amenable to local firms. That's because the dragon's not yet been slain.

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