The news that Microsoft has somehow managed to permanently lose the data stored online by tens of thousands of T-Mobile Sidekick smartphone users has the technology world in an absolute uproar. Beyond the immediate, baffling question -- How is it possible that the data was not backed up properly? -- there is a larger issue: What does this mean for the credibility of "cloud computing"?
Cloud computing refers to the model in which your data is stored online, in some vast server farm -- instead of on your desktop. Gmail or any other Web-based app is an example of the cloud computing model. Increasing numbers of us don't give a second thought to the idea of storing our photographs on Flickr or our documents at Google Docs and so on. But when a disaster of Sidekick proportions occurs -- your contact and calendar info, photos, etc., all gone with apparently no hope of recovery -- the calculus changes dramatically. It is, as InformationWeek's Eric Zeman dubbed it, "a code red cloud disaster." Sidekick users are furious, and T-Mobile is scrambling to make amends, and the very future viability of the Sidekick in the hotly contested smartphone market is in serious jeopardy.
Whom to blame? Danger, the company that created Sidekick, or Microsoft, which purchased Danger for $500 million 18 months ago? Felix Salmon theorizes that the fiasco came about in part because after Microsoft purchased Danger, the company buried the founders way down in the depths of the corporate bureaucracy. Salmon suggests that "It's pretty obvious that company founders aren't going to act with the same drive and sense of ownership when they're a tiny part of a monster organization as they did when they owned and ran their own shop."
But I have a competing theory. Traditionally, cloud computing has always been considered a threat to the classic Microsoft business model -- in which every desktop or laptop or netbook computer user is expected to purchase his or her own copy of Windows and Office. Maybe we should consider this a Machiavellian shot across Google's bow? What better way to defend the Windows/desktop franchise than to create a sense of fear, uncertainty and doubt concerning the fundamental security of cloud computing?
Forget about bogus health care reform townhall outrage: For a real grassroots rebellion, check out the firestorm protesting Ikea's decision to switch fonts in their online and printed catalogs.
Time's Lisa Abend has a good overview of the contretemps touched off by Ikea's decision to switch from Futura, a classic font created by the Bauhaus-influenced German typeface designer Paul Renner in the 1920s, to Verdana, a Microsoft product designed to look good on computer screens.
The protesters claim Verdana is ugly, dumbed down, and an insult to Ikea-fan sensibilities. But in a tough economy...
From Time:
So why would Ikea make such a change? The very ubiquity of Verdana seems to be part of the font's appeal. Freely distributed by Microsoft, the typeface allows Ikea to use the same font in all countries and with many alphabets. "It's more efficient and cost-effective," says Ikea spokeswoman Monika Gocic. "Plus, it's a simple, modern-looking typeface."
But in a world where people care deeply about font design, the watchwords of efficiency and cost-effectiveness carry little sway. Bucharest designer Iancu Barbarasa, a leader of the font rebellion, managed to simultaneously scoff at the decision and express a world-weary acceptance of the uncaring masses' inability to give a fig.
I doubt IKEA's sales dropped much during the crisis considering their target (take a look at McDonald's, they're booming), so jumping to a cheap, inappropriate typeface just because it's a bit cheaper on the short run seems to me like very bad management.
But, of course, nobody can tell for sure if it really matters. Sales may drop or may rise, but nobody will link them to a typeface. After all, most people can't tell the difference between serif and sans. For them it will be a change that never happened: "hasn't it been like this all the time?"
Which, come to think of it, will be exactly what most people will be saying ten years from now, if real health care reform actually passes.
At a conference last year, reports Farhad Manjoo in "The Case Against the Case Against Google," Christine Varney, the new head of the Justice Department's antitrust division, said, "For me, Microsoft is so last century. They are not the problem. I think we are going to continually see a problem, potentially, with Google."
In light of the news that Microsoft has cut a 10-year deal with Yahoo to merge their search engine operations, perhaps Varney should rethink her position, at least a little bit. Microsoft was a distant third in the search engine universe. Now, at a single stroke, it is No. 2. Henceforth, Yahoo's search results will be provided by Bing, Microsoft's own newly rebranded, and positively reviewed, "decision" engine.
Glyn Moody, writing in ComputerWorldUK, thinks the deal is expensive for Microsoft, but the advantages to the move are obvious. From a financial standpoint, Microsoft can now score bigger advertising deals. From a technical perspective, the key to improving search engine performance is crunching a lot of data on what people are searching for and using that information to refine results. Microsoft now has access to vastly more info on what people are looking for than ever before.
Bing already works pretty well, if your metric of success is that it returns Googlish-looking results. But I'm guessing that Google is unlikely to be alarmed. If anything, the news might even be welcomed by Google, as it shoots a big hole in the theory that Google is the 21st century version of Microsoft, lording it over the Internet universe without any significant competitors in sight.
For Yahoo, it all has to feel a little sad. Long ago, in the prehistory of the Web, as a freelance writer who was pretty excited about this thing called the Internet, I wrote a tiny little squib for Wired magazine, "Yippee for Yahoo," announcing the news that two graduate students at Stanford had received venture funding from Sequoia Capital. Back then, start-ups that got the Web like Yahoo were seen as the anti-Microsoft, and the fact that co-founder David Filo was a free-software geek made it all the better.
From now on, every Yahoo search result will be "powered by Bing."
For Jerry Yang and David Filo, that's gotta hurt.
Clash of the Titans! One Operating System to Rule Them All! Google Drops A Nuclear Bomb on Microsoft!
It is a tribute to Google's extraordinary mindshare that the company's announcement of a new operating system that won't be available for another year spawned an instantaneous outpouring of over-the-top commentary so frenzied that I was immediately flung into a fit of browser-war flashbacks, circa 1995. Google is a much more formidable threat to Microsoft than Netscape ever was, but it is remarkable how similar the contours of the current explosion of hype are to the babble that preceded Netscape's astonishing IPO in August, 1995. The Web, we were told back then, was sure to dethrone Microsoft, and Netscape would be the flagbearer of the revolutionaries.
Netscape got stomped, of course, and Microsoft is still hanging around, dominating the vast majority of computers in use on the planet. So excuse me if I counsel wait-and-see to those who already are imagining Redmond as nothing more than a smoking crater oozing radioactive fallout.
And yet: Anyone old enough to remember the sturm und drang of 1995, but who pays attention to how kids are growing up on the Internet today, has to admit that that while Netscape and scores of other would-be Microsoft competitors lost all their battles, the Web is winning the war. My daughter's first step after turning on the computer is a trip to Facebook. My son's is to a Web-based online gaming network that connects him to all his friends. Both of them have Gmail accounts and neither particularly cares whether they are doing their homework in Google Docs online or Microsoft Word on the desktop. It's all the same to them.
Until the WiFi drops. At which point they become lost souls, cut loose from all online moorings. Dad! The Internet is broken. Fix it! Fix it! Fix it!
No matter what happens to the "Chrome" operating system, Google, so far, is on the right side of history -- provided there's ample Internet connectivity. Microsoft has always tried to figure out how to protect its established business model while venturing onto the Web. But Google is indigenous to the Web. When Microsoft gave away its browser free with every instance of Windows, it was considered an antitrust violation by competitors. But when Google says it plans to give away the entire operating system for free -- no one blinks. The real shocker would be if the company announced plans to charge for Chrome. (And yes, I know, the Justice Department is exploring whether there is a basis for an antitrust case against Google. But not because Google's consumer-facing products are free. That's just taken for granted.)
I will make no speculation as to whether the Chrome OS will succeed in grabbing market share from Microsoft. After all, my daughter wants a Mac Air and my son scoffs at anything that can't run the latest high-end PC game: (Translation: Windows). But they also assume that everything they need should be available to them, for free, when they turn on their computer. If it isn't Google, someone will deliver that to them.
And then there's this, from the original Google announcement:
We hear a lot from our users and their message is clear -- computers need to get better. People want to get to their email instantly, without wasting time waiting for their computers to boot and browsers to start up. They want their computers to always run as fast as when they first bought them. They want their data to be accessible to them wherever they are and not have to worry about losing their computer or forgetting to back up files. Even more importantly, they don't want to spend hours configuring their computers to work with every new piece of hardware, or have to worry about constant software updates. And any time our users have a better computing experience, Google benefits as well by having happier users who are more likely to spend time on the Internet.
I've heard those promises before. I'm still waiting. But if Google delivers, the world is theirs. No nuclear bombs required.
"Silicon Valley companies are bracing for a tough new phase of antitrust scrutiny," report Don Clark and Jessica E. Vascellero in the Wall Street Journal, "responding to signs of heavier enforcement by the Obama administration and continued pressure from abroad."
To anyone who remembers the fear and trembling that Microsoft used to inspire in every software startup from Mountain View to Berkeley, the Journal's framing might seem a bit odd. Antitrust scrutiny was what most Silicon Valley companies desperately desired back in the 1990s, as long as it was directed at Bill Gates and Co. The words "tough" and "heavy" make it sound like the Obama administration is going to get all kinds of nasty on the poor beleaguered entrepreneurs of the Valley. When, in fact, the goal of effective antitrust enforcement is to create an environment where there is more competition and smaller companies have a better chance of flourishing.
But if the definition of "Silicon Valley companies" primarily refers to Google and Intel, then maybe the Journal has a point. Google certainly seems to think so; the company is reported as saying "its lobbyists and executives since March have met with about 40 groups, including lawmakers, regulators and advertising agencies, to argue that its business practices don't reduce competition."
The Journal also quotes a pretty well-known Silicon Valley antitrust specialist, Gary Reback, noting that "During the Bush administration nobody was interested in hearing about [antitrust]... As we go forward, we'll hear a lot more about it."
He should know. The news that the Obama administration is planning to invigorate antitrust enforcement couldn't have come at a better time for Reback, whose new book (publication date, April 16!) "Free the Market: Why Only Government Can Keep the Marketplace Competitive" is a primer in the politics of antitrust over the past century, with special attention to the Reagan Revolution's profound impact on government enthusiasm for enforcement. After reading my post "The Great Crash of the 'Chicago School' of Economics" Reback sent me a copy, telling me that "It's right up your alley."
Yup. From the opening page:
"Toxic assets" didn't fell the nation's economy. A toxic philosophy did. Thousands of people lost their homes, tens of thousands their jobs, and even more their retirement savings because of a stupefyingly naive belief in markets that self-regulate with minimal government supervision.
Actually, Gary, I think that should be: Hundreds of thousands of people lost their homes and millions lost their jobs... But why quibble?
Given the sudden prominence of antitrust in the news (the Washington Post's Steven Pearlstein says that the first thing the Obama administration should look into is the proposed merger between Ticketmaster and LiveNation), I decided I should start leafing through "Free the Market" and two chapters into it, I am hooked. The second chapter alone, "Chicago Comes to Washington," describing how William Baxter, Ronald Reagan's appointee to head the Antitrust Division, fundamentally changed the federal government's approach to antitrust is worth the price of admission. But it's not a simplistic anti-Chicago school rant. Baxter was Reback's antitrust law professor at Stanford, and Reback's portrayal of Baxter is nuanced and grounded in economics. This is a meaty book, arriving at the perfect time.
During the late 1990s, I spent more time than I like to remember covering the ins and outs of U.S. v. Microsoft, deemed by many contemporary observers to be the defining antitrust case of a generation. Then, in 2001, Republicans replaced Democrats in the White House, and the U.S. Department of Justice promptly decided to drop the case. Just like that, it was all over -- as blatant an example of the politics of antitrust enforcement as one could ever hope to witness. Although maybe "hope" is the wrong word.
So it was with a healthy dose of jaundice that I read this morning that the Obama administration plans to reinvigorate antitrust enforcement:
The new enforcement policy would reverse the Bush administration's approach, which strongly favored defendants against antitrust claims. It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s.
Here we go again! Only, this time around, Microsoft probably won't be a target. The great irony of the Microsoft antitrust trial is that, even though it was clear that the company abused its near-total control of the operating system market to crush Netscape and many other competitors, ultimately it could not win the battle for Internet supremacy. Microsoft still owns the desktop operating system market, but it hardly seems like the resistance-is-futile unstoppable Borg of yesteryear. If anyone exerts monopoly power on the Net right now, it's Google.
Concrete evidence of Microsoft's fundamentally changed circumstances arrived today, with the news that the company will enter the commercial bond market for the first time by selling some $2.5 billion of its own securities. Despite the attempts to spin this as a smart move -- Microsoft plans to leverage its triple-A credit rating to borrow money, and then use the funds for a stock buyback aiming to take advantage of the software company's currently depressed share prices -- the decision to rely on the debt markets still represents a fall to earth for the longtime high-flier. Microsoft previously never needed to borrow money because it was always sitting on a ton of cash, or could use its high stock price to pay for its endless shopping sprees. Microsoft still has a lot of cash -- almost $25 billion worth. But the company has also just experienced its first quarterly decline in net revenue and its first significant layoffs. The bloom is off the Redmond rose.
The market achieved what the Department of Justice, despite its best efforts, failed to do. But maybe current economic circumstances require more vigilance. According to the New York Times, Christine Varney, the head of the Justice Department's antitrust division, declared in a speech Monday at the Center for American Progress that a firmer hand on the antitrust tiller is especially important at times of economic stress.
She will assert instead that severe recessions can provide dangerous incentives for large and dominating companies to engage in predatory behavior that harms consumers and weakens competition ... Ms. Varney is expected to say that the Obama administration will be guided by the view that it was a major mistake during the outset of the Great Depression to relax antitrust enforcement, only to try to catch up and become more vigorous later. She will say the mistake enabled many large companies to engage in pricing, wage and collusive practices that harmed consumers and took years to reverse.
Ultimately, I agree with James Kwak at the Baseline Scenario. Any indication that the government plans to actually enforce antitrust laws is a good sign, proof that the Obama administration plans to take its responsibility to govern seriously. But if Varney wants to go after any really big fish, she'd better get started now, because at the rate antitrust actions move through the courts, a Google or, just for kicks, a Citigroup, would be well served to play a delaying game until a new administration comes in and potentially reverses the Obama policy reversal.
And who knows what could happen in the meantime? After all, Google's always just one search engine innovation away from being tomorrow's Netscape.
