Pluralistic: 28 Sep 2022 Maintaining monopolies with the cloud


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A dark sky filled with thunderclouds, split by a jagged lightning bolt. On the left side, a remix of Monopoly's Rich Uncle Pennybags dances atop a cloud; he has removed his face to reveal a grinning skull beneath it. On the left, a trustbuster-era editorial cartoon version of Roosevelt with his 'big stick' perches on another cloud-mass, ready to smite the Monopoly Man. Both are backlit by radiating penumbrae of light.

Maintaining monopolies with the cloud (permalink)

Correction: An earlier draft of this article incorrectly stated that John D Rockefeller owned the railroads that shipped product for the Standard Oil Company. In reality, Rockefeller controlled those railroads through bribery and coercion, not an equity stake. I regret the error.

"There is no cloud, there is only other people's computers." It's funny because it's true, and the "other people" in this case are rapacious, vertically integrated monopolies that use their cloud businesses to put their customers in cages.

The Coalition For Fair Software Licensing is a group of businesses that have banded together to resist some of the worst cloud-based abuses. Their main targets are companies like Oracle and Microsoft who sell software, software as a service, and cloud hosting, and use these three prongs to gouge and entrap their customers.

Writing for Bloomberg, Brody Ford gives a high-level view of the scam: whereby integrated monopolists charge extra to run their rivals' software on their cloud systems, or block them altogether. That makes it hard – or impossible – to shop around for cloud services:

https://www.bloomberg.com/news/articles/2022-09-27/software-makers-restrictive-license-rules-targeted-by-new-group

The group itself lists nine demands for "cloud fairness," ranging from no-brainers ("Licensing terms should be clear and intelligible") to absolute yikes!es like "Freedom from retaliation for cloud choices" (involving "intrusive software audits" and "higher software licensing fees").

https://www.fairsoftwarelicensing.com/our-principles/

The Coalition's beefs are familiar ones, echoing the fights that led to the creation of antitrust law in the 19th century. Back then, small businesses were at the mercy of another kind of infrastructure: railways, who operated chokepoints between producers and their customers.

These railways weren't just operating the playing field – they also owned one of the teams. They would operate their own businesses that competed directly against the freighters whose goods they carried. They would charge the freighters more for carriage than they did their own businesses, making it impossible to compete with them.

This turned out to be an incredibly hard problem to solve with regulation. Even when there were rules ordering railroads to charge the same rates to all comers, there were so many subtle ways to cheat.

For example, Rockefeller's Standard Oil controlled many railroads via bribery and other underhanded tactics, which let them control the delivery of oil from the pumphead to the refineries and thence to market. The railways were ordered to charge everyone the same rate – whether a train was carrying his oil or a rival's.

And they did! All the oil shipped from Ohio to the port shipped at the same price. All the oil that shipped from Chicago to the port also shipped at the same price. But the Ohio price was much higher than the Chicago price, and Rockefeller owned all the Chicago refineries, while the Ohio refineries were owned by the independents.

What's more, the price-per-mile for everything that wasn't oil (lumber, for example) was the same from Chicago or Ohio – it was only oil that had this steep price differential. The nondiscrimination order for Rockefeller merely stipulated that there couldn't be discrimination on a given route – but left open the door for discrimination between routes.

When you control the infrastructure, there are so many ways to cheat against the companies that use the infrastructure, and they can be incredibly hard to detect, and even when you do, it can be incredibly hard to write a loophole-free rule to block a given tactic.

That's why the trustbusters were so big on "structural separation": the principle that a business can own a platform, or use the platform, but not both. They banned the railroads from running their own freight businesses, and they banned the banks from owning businesses that competed with the firms they loaned money to.

Rather than trying to construct rules that kept the referee honest even when they played on one of the teams, they ordered the companies to choose one role – either you were the ref, or you were a player, but you couldn't referee a match where you were also in the competition.

Today, with tech antitrust surging around the world, we're speedrunning the lessons of the rail-barons, trying to impose rules on companies that ban them from abusing their vertical monopolies, rather than ordering them not to form vertical monopolies:

https://locusmag.com/2022/03/cory-doctorow-vertically-challenged/

After all, if Microsoft and Oracle had to choose between running clouds and selling cloud software, they wouldn't have any reason to screw with businesses to leverage their cloud into software licenses and their software licenses into cloud subscriptions. And for so long as they are in both businesses, they will have infinite tools at their disposal to subtly (and blatantly) cheat on whatever limits we put on them.

One fascinating wrinkle: Senator Gary Peters has proposed legislation that would overhaul federal procurement rules, requiring companies that want to sell cloud services to the US government to play fair.

https://www.bloomberg.com/news/articles/2022-09-09/revamp-of-federal-software-buys-could-force-microsoft-changes

This is a very powerful move. Every government – US and foreign, federal, state and local – should have a rule that says, "If we're going to spend public money on your products, you have to promise not to lock us in." That's just basic prudent governance, and there's plenty of precedent for it. Lincoln had a policy that he would only buy rifles for the Union Army from companies that used interoperable tooling and bullets. No general wants to have to cancel a battle because the single-source supplier decided not to make any ammo this month.

This policy could and should be extended to cars in government motor-pools (requiring manufacturers not to block third-party parts and to supply diagnostic codes to independent mechanics). Likewise software like Google Classroom (requiring Goog not to block third-party textbooks, assessment tools, etc). It should be universal, all the way down to requiring printer companies that sell to the public sector to stop blocking third-party ink.

Cloud lock-in is incredibly unpopular. Bloomberg's Ford cites a study that found that 90% of tech executives support the Coalition for Fair Software Licensing's demands. But we need to do more than order tech monopolies to play fair – we have to take away their incentive to cheat.

I think there's momentum for this. Before she took over the FTC, chair Lina Khan published "The Separation of Platforms and Commerce," a banger of a law-review paper from the Columbia Law Review ("the potential hazards of integration by dominant tech platforms invite recovering structural separations"):

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3180174

And businesses are unlikely to be happy with mere rules ordering fairness, given the big companies' propensity to cheat and the incredible upsides for doing so. They just can't help themselves, whether that's Amazon mining its sales data to figure out when to clone its own customers' products:

https://pluralistic.net/2020/04/24/slicey-boi/#moral-hazard

Or Apple using its control over the App Store to block companies that directly compete with its own apps:

https://pluralistic.net/2022/06/17/no-gods-no-masters/#oh-the-irony

We don't let judges hear cases where they have a stake in the outcome, we don't let lawyers represent the plaintiffs and the defendants, we don't let referees call games where they own one of the teams.

Hey look at this (permalink)


This day in history (permalink)

#15yrsago Terry Pratchett’s “Making Money” — economic comedy https://memex.craphound.com/2007/09/28/terry-pratchetts-making-money-economic-comedy/

#10yrsago UK banks use robo-callers to make fraud-check calls, conditioning customers to hand out personal information to anonymous machines that phone them up out of the blue https://www.theguardian.com/technology/2012/sep/27/automated-calls-fraud-banks

#10yrsago Panama’s new copyright law is the worst in the history of the universe https://www.technollama.co.uk/is-panama-about-to-pass-the-worst-copyright-law-in-history

#5yrsago Better education doesn’t correlate strongly to economic mobility (but union membership does) https://www.theatlantic.com/education/archive/2017/09/education-and-economic-mobility/541041/

#5yrsago A glimpse of the European Commission’s plans for ham-fisted, indiscriminate mass online censorship https://felixreda.eu/2017/09/when-filters-fail/

#5yrsago Former Equifax CEO Richard Smith collects $90M for his last year of outstanding work https://fortune.com/2017/09/26/equifax-ceo-richard-smith-net-worth/

#5yrsago Landscape With Invisible Hand: Late Stage Capitalism, by way of a YA alien invasion novel https://memex.craphound.com/2017/09/28/landscape-with-invisible-hand-late-stage-capitalism-by-way-of-a-ya-alien-invasion-novel/

#1yrago Democrats can pass the reconciliation today (sorta) https://pluralistic.net/2021/09/28/timescale-dependent/#reconciled


Colophon (permalink)

Today's top sources: Slashdot (https://slashdot.org/).

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  • Spill, a Little Brother short story about pipeline protests. FINAL DRAFT COMPLETE

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