Back to the future

The FTC is suing Qualcomm, the chip maker, in the first major monopoly case since the Microsoft one all those years ago. In his weekly newsletter, Matt Stoller provides a useful historical comparison to put the case in its context:

Qualcomm is a very important corporation, but one you may not have heard of because it doesn’t do consumer oriented work. The company makes critical components for cell phones, the stuff you don’t see but that goes into the guts of telecom systems. Its technology connects phones to cell networks, and it makes its money by selling chips and by licensing its patents to device makers.

The story of how Qualcomm monopolizes is pretty simple. The corporation does what Bill Gates did to computer manufacturers and what John D. Rockefeller did to railroads, as I wrote a few weeks ago. Rockefeller’s oil was critical to railroads, and Gates’s operating system software was critical to computer makers. Both of them thus forced their dependents to give them a fee not just for every Rockefeller barrel of oil or Microsoft OS license, but a fee for every one of their competitors’ as well. They taxed their competition and made it impossible to compete.

Qualcomm does this as well. As its competitor Intel explained, Qualcomm “refuses to sell [phone makers] any chipsets unless those manufacturers also purchase separate patent licenses that require them to pay exorbitant royalties for every handset they sell, regardless of whether the handset contains a Qualcomm chipset.” In other words, it’s the Gates/Rockefeller playbook. Find an essential chokehold, and use it to control the industry.

Qualcomm uses a few other anti-competitive tactics. It refused to license its patents – essentially standard and necessary for the industry – to competitors. And it cut exclusive deal arrangements with customers to box anyone else out of the market. (You can read the rest of Intel’s amicus brief if you want to hear expensive lawyers accurately whine about being treated unfairly.)

The strange thing is, though, that important sectors of the US government are trying to intervene in the case, effectively opposing the FTC. Their argument is that the suit undermines national security.

The DOJ argument is basically saying, yeah, Qualcomm does all that stuff, but Judge Gorsuch said it’s all legal and efficient, and we don’t want to dissuade the liberty to abuse patents and market power. Two other officials, one at the Department of Defense and another at the Department of Energy, also weighed in. Ellen Lord, a former defense contractor and the Under Secretary of Defense for Acquisition and Sustainment for the DOD, argued that Qualcomm’s position as a monopolist enables it to support national security and help China. A Department of Energy official Max Everett basically said the same thing.

The national security argument is BS, says Stoller, but not for the reason you’d think. He quotes an excerpt from a WSJ OpEd by Michael Chertoff, a former senior Cabinet officer in previous US administrations.

In the technology race against China, the U.S. should prefer to let competition drive innovation rather than support exclusive national champions. Apart from the economic inefficiency, a single-source national champion creates an unacceptable risk to American security—artificially concentrating vulnerability in a single point. The government’s argument in support of Qualcomm isn’t prudent, and if courts accept it, the result would be a self-inflicted wound to U.S. national interests. We need competition and multiple providers, not a potentially vulnerable technological monoculture.

Underpinning this argument is a prevailing denialism about China in the American Deep State. What happens, Stoller says, is that China either hacks US corporations to steal their intellectual property, or acquires it legally when they try to do business in China. So: China innovates at speed by topping up its own (substantial) native ingenuity with the ideas and wisdom of its US competitors, while those same competitors are locked out by monopolisation and patent restrictions from exploiting that same, locally-developed intellectual property in their own country.

End result: China races ahead. Madness on stilts.

Dinner-table capital

Well, well. This from the Sloan School at MIT:

A new study shows that, thanks to inequality, the U.S. has potentially missed out on millions of inventors during that time — what the researchers refer to as “lost Einsteins.” Kids born into the richest 1 percent of society are 10 times more likely to be inventors than those born into the bottom 50 percent — and “this is having a big effect on innovation,” MIT Sloan professor John Van Reenen said.

The research also shows that innovation in the U.S. could quadruple if women, minorities, and children from low-income families became inventors at the same rate as men from high-income families. Making that happen is the hard part, though. It means exposing more children to innovation when they are young — and the younger they are, the better.

The researchers wanted to see what part childhood wealth plays on future innovation. And guess what? “The most striking thing was how sharp the relationship was between the wealth of your parents and whether you grew up to be an inventor or not” reported one of the researchers.

By linking patent records with de-identified IRS data and school district records for more than one million inventors, the researchers found that, while ability does play some part in a child’s chance of becoming an inventor in the future, it is far from the biggest factor.

Instead, wealth played a much larger role. Among children who excelled in math in third grade, those whose families’ incomes fell into the highest fifth of the population were more than five times as likely to be inventors than those whose families’ incomes were in the lowest fifth.

This disparity is amplified among children whose parents were in the top 1 percent of earners — they were 10 times more likely to be inventors than those in the bottom 50 percent.

Oh – and white children were three times as likely as black children to be inventors. And only 18 percent of inventors were women.

The great Chinese hardware hack: true or false?

This morning’s Observer column:

On 4 October, Bloomberg Businessweek published a major story under the headline “The Big Hack: How China Used a Tiny Chip to Infiltrate US Companies”. It claimed that Chinese spies had inserted a covert electronic backdoor into the hardware of computer servers used by 30 US companies, including Amazon and Apple (and possibly also servers used by national security agencies), by compromising America’s technology supply chain.

According to the Bloomberg story, the technology had been compromised during the manufacturing process in China. Undercover operatives from a unit of the People’s Liberation Army had inserted tiny chips – about the size of a grain of rice – into motherboards during the manufacturing process.

The affected hardware then made its way into high-end video-compression servers assembled by a San Jose company called Supermicro and deployed by major US companies and government agencies…

Read on

Hacking your tractor used to be a crime. Now it’s a breach of contract.

This morning’s Observer column:

John Deere is a large corporation that makes tractors. They’re green, big and powerful and they don’t come cheap. I’ve just noticed a nearly new 6175R model for £77,500 plus VAT, for example. That’s £93,000 in real money, so imagine how proud you’d feel if you were fortunate enough to own one of these magnificent machines.

Well, it depends on what you mean by “own”…

Read on

Two cheers for the Librarian of Congress

Sometimes the Librarian of Congress does the right thing:

Every three years, the Librarian of Congress issues new rules on Digital Millennium Copyright Act exemptions. Acting Librarian David Mao, in an order (PDF) released Tuesday, authorized the public to tinker with software in vehicles for “good faith security research” and for “lawful modification.”

The decision comes in the wake of the Volkswagen scandal, in which the German automaker baked bogus code into its software that enabled the automaker’s diesel vehicles to reduce pollutants below acceptable levels during emissions tests.

“I am glad they granted these exemptions,” said Sherwin Siy, vice president for legal affairs for Public Knowledge in Washington, DC. “I am not glad it was necessary for them to do so in the first place.”

The auto industry, and even the Environmental Protection Agency, opposed the vehicle-tinkering rules that were proposed by the Electronic Frontier Foundation and others. About every 36 months, the Librarian of Congress and the Copyright Office entertain proposals for exemptions to the DMCA, which was passed in 1998. The DMCA prohibits circumventing encryption or access controls to copy or modify copyrighted works. The ultimate decision rests with the Librarian of Congress.

The takedown boom

From Ars Technica:

Piracy news site TorrentFreak reports that Google removed 75 percent more URLs in 2014 than it did the previous year. Google doesn’t tally up annual totals, but it does release weekly reports on DMCA notices, and TorrentFreak took it upon itself to add up the weekly reports. Most of the takedown requests are honored. Google has a longstanding tradition of supplying DMCA takedown notices to Chilling Effects, a website that archives such requests.

Just a few years back, the number of takedown requests could be measured in the dozens, not the millions. In 2008, Google handled 62 DMCA takedown requests, and, in that year, each request was over just one copyrighted work. In later years, DMCA notices came to ask for millions of URLs to be removed to protect multiple works.

Content mining just got easier

This from Peter Murray-Rust’s blog:

Today 2014-06-01 is a very important date. The UK government has pushed for reform of copyright and – despite significant opposition and lobbying from mainstream publishers – the proposals are now law. Today.

Laws are complicated and the language can be hard to understand but for our purposes (Scientific articles to which we have the right to read ) :

If you have the right to read something in the UK then you have the right to extract and publish facts from it for non-commercial use.
This right overrides any restrictions in the contract signed between the publisher and and the buyer/renter.

Of course we are still bound by copyright law in general, defamation, passing off and many other laws. But our machines can now download subscribed articles without legal hindrance and as long as we don’t publish large non-factual chunks we can go ahead.

Without asking permission.

That’s the key point. If we had to ask permission or were bound by contracts that forbid us then the law would be useless. But it isn’t.

For those of us interested in extracting information from online sources for research and network-analysis purposes, this is a significant moment.

If you think the music industry is a big deal, think again

Industry_global_revenues

Given all the noise the recording industry makes — and the idiotic amount of attention it gets from government ministers — you’d be forgiven for thinking that it was one of the most important industries on the planet. In fact, as this chart shows, it’s minuscle compared to the industries that drive our economies. It’s about the same size as the watch industry. That doesn’t mean that it isn’t important to those who work in it, or that its future doesn’t matter. But let’s have a sense of proportion about it.

HT to Benedict Evans for highlighting the chart.

Google Books: fair use

Chin_verdict

“In my view, Google Books provides significant public benefits. It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders. It has become an invaluable research tool that permits students, teachers, librarians, and others to more efficiently identify and locate books. It has given scholars the ability, for the first time, to conduct full-text searches of tens of millions of books. It preserves books, in particular out-of-print and old books that have been forgotten in the bowels of libraries, and it gives them new life. It facilitates access to books for print-disabled and remote or underserved populations. It generates new audiences and creates new sources of income for authors and publishers. Indeed, all society benefits.”

Judge Chin’s judgment in Authors Guild v. Google, p.26.

Forbes has a useful commentary on the decision.

Exclusive! NSA and Homeland Security lack sense of humour

nsa-lawsuit-1
Photograph from CBS.

This comes to us via the you-couldn’t-make-it-up department.

The National Security Agency and the Department of Homeland Security have issued “cease and desist” letters to a novelty store owner who sells products that poke fun at the federal government.

Dan McCall, who lives in Minnesota and operates LibertyManiacs.com, sells T-shirts with the agency’s official seal that read: “The NSA: The only part of government that actually listens,” Judicial Watch first reported.

Other parodies say, “Spying on you since 1952,” and “Peeping while you’re sleeping,” the report said.

Federal authorities claimed the parody images violate laws against the misuse, mutilation, alteration or impersonation of government seals, Judicial Watch reported.

I particularly admire the crack about the NSA being “the only part of the government that actually listens”.

Brian, who told me about the first link, also pointed me to a fuller account about the artist, Dan McCall who came up with the tee-shirt.

What McCall meant as pure parody, apparently wasn’t very funny to bureaucrats at the NSA.

While he calls it parody they call a violation of the spy agency’s intellectual property.

“Because when you’re pointing straight at an organization or making fun at it, turning it on itself, that is classic parody,” he said.

The agency ordered him to cease and desist and forced his T-shirts off the market.

Hmmm… I’d have thought that he’d have a good First Amendment and Fair Use case. But maybe m’learned friends think not.