February 04, 2004

Out Microsofting Microsoft

The People's Republic of China is going to mandate proprietary wireless network standards. The technical reasons for this are patent nonsense. There is a security problem with the international encryption standard. It's really only good enough to keep honest people honest. But the globally adopted solution has been to run secure traffic over end-to-end encrypted links that are secure and can be changed if there is a fault found in the encryption scheme.

The PRC effort very much reminds me of Microsoft's continual efforts to undermine international standards on protocols by leveraging its control over the worldwide PC desktop market into protocol dominance. In the original article, a false choice is presented between hardware link encryption and no encryption at all.

The truth is that international standards are adopted, and take so much time to adopt because everybody has to be consulted to go forward. If the PRC succeeds in dictating worldwide adoption of its unilateral standard, it will gain the ability to manipulate IT companies' dictating hardware changes on its own schedule and for its own reasons. The PRC will be able to give its own favored firms advanced access to standards and give these companies months of crucial time to get a jump start on satisfying new technical standards.

This is the same reason why Microsoft has made protocol and file format differentiation such an important part of their business strategy. If they call the tune, they can always halt a competitor's momentum by changing an underlying technology and forcing them to devote engineering resources to solve that problem instead of adding to their competitive advantage and Microsoft can keep on repeating that strategy until it succeeds at little cost to itself.

It's ban enough that Microsoft continually tries to kneecap other firms with its market power. Having a nation state do it is an entire order of magnitude worse. As a sovereign power, they aren't subject to the same anti-trust pressures that Microsoft is and they can print their own money to get out of most financial difficulties from bad business decisions. It's not a widespread phenomenon yet, but if the PRC decides to go wholesale down this path, it marks a troubling turn for the world economic system.

Posted by TMLutas at February 4, 2004 12:21 PM