Open Source as IP Socialism

One of SAP's (NYSE:SAP) executives has let it slip that he perceives the open source software movement as IP socialism.

Shai Agassi, president of the product and technology group at SAP, said in a speech at a club in California that Linux is not innovative, according to an article on technology news site VNUNet this week.

"We all talk about how great Linux is," Agassi reportedly said. "But if you look at the most innovative desktop today, Microsoft's Vista is not copying Linux, it is copying Apple."

SAP will not make its software open source as it would no longer have an incentive to innovate, Agassi said.

"Intellectual property [IP] socialism is the worst that can happen to any IP-based society," he said. "And we are an IP-based society. If there is no way to protect IP, there is no reason to invest in IP." ...

SAP is not the first company to claim that open source development is not compatible with capitalism. In an interview earlier this year, Microsoft's chairman Bill Gates implied that free software developers were communists.

While we shall refrain from using the heated words socialism or communism, we must admit that we can draw parallels from the words used to defend IP patents above and the debate between drug patents and drug costs.

We are very much excited about the potential for large decentralized communities to piece by piece develop brilliant solutions more efficiently than smaller, more rigid organizations. Still, we'd like to remind ourselves that the open source software argument could be extended to drug development and once it reaches that point we'd be against removing drug patents (without getting into the moral debate for/against drug patents in terms of accessibility of service for those immediately in need). What's the difference? Perhaps at some point a solution becomes so complex and in need of maintenance that we need guarantees as to its ability to act effectively and sustain itself as well. Someone needs to be accountable. Maybe its even worth paying a premium to a patent holder for this accountability.

Thus for example, maybe a massive company just prefers to have the word of SAP backing up its systems. When something goes wrong it knows who to hang, which means hopefully that SAP is extremely careful to maintain its service quality.

We admit to stillsitting on the fence here, we haven't seen enough different viewpoints on the issue. While we're sure there are much larger debates on open source going on elsewhere, any comments or links are welcome.

Comments

[James V. DeLong]

There are three different open source software communities (and many subdivisions within those).

1) The programmers, who just want to swap code without hassles, and who are willing to let others use it as long as it is not propertized;

2) The Free Software Foundation, which regards proprietary software as immoral. But which regards sale of hardware and services as all right, an ethical distinction that puzzles me.

3) The corporate types (IBM; Sun; HP; Red Hat), who want to make the operating system a commodity and then sell the aps and services that ride on it.

These groups have conflicts with the proprietary companies, though of course IBM is itself a very big seller of software, and increasingly, with each other, a conflict now part of the current effort to revise the General Public License.

For more details than you probably want to know, see the www.IPCentral.Info blog, and search for "software" -- but be warned that we are pro-IP, with little sympathy for the academic copyleft.

There are investment implications, for Google, among others.

[Trent]

Someone needs to be accountable... what happened to the end user? Presumably the end user of an open source product is the accountable party, whether it be software that doesn't work or a drug that is ineffective or has side effects. By choosing to use a product that is not "backed" by a single producer, isn't the user implicitly saying they are willing to take responsibility?

[rarelyright]

This topic is of growing importance imho. Peter Drucker wrote about the biggest problem of capitalism being the misunderstanding about profits. Many people don't understand that there must be a return on equity or investment will not take place. The concept is no different than depositors requiring a return on their CDs. Instead, too many consumers believe that all capitalists are profiteers who are taking advantage of them. Granted, there are good and bad capitalists.

However, it seems to me that we are moving at an accelerating rate towards and economy where a larger portion of the economic value of capitalism flows to society and a smaller component flows to private industry. In a sense, efficient capitalism ultimately provides many of the benefits that proponents of ideas like socialism promote as so desirable. But, it only takes place over the loong term.

[angie]

Well a lot of the net was built by what we'd call open source before the term was made. Not just programs, but voluntary administration and opern forums where information on a variety of subjects was offered freely.

There is an "opportunity of the commons" as well as a "tragedy."

Parts of the open source community are irritating, but it is free choice. And it is especially benefecial to organizations which custom build for individual purposes because if they can share programs and information it can dramatically cut cost. That's why universities, reseacrh institutes and cutting edges of corporations worked together for the net.

For an individual monetary savings in software are not so dramatic. Communities of experts can be invaluable and they give information freely. For example I had a friedn being persuaded to Lasik by mainstream doctors. Getting to a site with those in the lead she learned that (at that time not approved, but soon to be) artificial lenses implanted in the eye were the best treatment for her degree of near sightedness. I can ask questions in physics, finance almost anything with a high chance of getting answered. I can browse freely offered sources such as this one.

Use the term "open."

There is nothing wrong with profits, they are going to be necessary in many areas, the ideological purity of some OS advocates is similar to attitudes which helped destroy the countercultural cooperative movements in the sixties and seventies which had highly educated labor willing to work below minimum wages, but did not work within markets.

However the bigger part of OS does work within markets. Extended markets which bring in other attributes such as the opportunities of commons, ways of offering (for free and sale) and attaining things things that were not used or thrown away. Think of the efficiency of ebay over yard sales and think how used junk stores would have derided it as socialism.

Business does not like competition. From an individual level it strives to build moats. Open source threatens. There are both costs and benefits for choosing it, it is another product.

But it undermines what has passed for capitalism. Milton Friedman once said every purchase was a political choice. But he acted with outrage at "fair trade" and other methods wwere individuals could direct these powers. And yes fair trade like OS can be pompous and irritating. But it is not anit capitalist. It offers a reason for purchase at least as legitimate as a half naked babe layed out on a car.

If people decide to form "communities" and share resources through whatever means then it their right. Note such communities are *not* allowed in communist societies. "Black" and "grey" markets are officially condemned, private plots and manufacturing destroyed.

The grocer down the street may yell names when the old lady down the street gives away her tomatoes. But she has every right to make friends and get ego taps and gawk cute guys. That's what she's choosing to work for.

And maybe someone will fix her windows when they're broken.

But SAP and Bill Gates want her arrested.

[wcw]

There is an "opportunity of the commons" as well as a "tragedy." essentially says it all.

SAP is a deeply self-interested party. What could be, I don't know, but I know that absolutes like "the worst that can happen" will always and ever be wrong.

I spent the better part of a decade going to little rock shows in dank rooms. Money was always exchanged, but that was just accounting. Nobody ever got rich, and yet there was still music.

Full disclosure: I am typing this on a FSF-friendly box.

[The Other Stalwart]

Thanks for your comments. In reference to two of the analogies brought up- one in regard to a woman selling tomatoes and the second in regards to little rock shows for small amounts of money, I believe both analogies fail to discredit what Microsoft and SAP are defending.

In reference to the tomato analogy, you cannot compare tomatos to software (but you COULD compare apples and oranges in this case) since standard tomatos don't involve intellectual property rights. If you can grow a good tomato, even if its the same as another can grow, you are freely allowed to sell it. Bill Gates wouldn't want that old woman in jail. Intellectual property protects products of a different sort, whereby their fixed R&D costs massively outweigh the variable costs of production. Basically which cost a lot to invent and very little to copy. Microsoft isn't trying to stop other software develops from developing their own kinds of code and even giving it away free if they please. What Microsoft (and SAP) is primarily trying to protect itself from being *forced* to open up its source code. It even goes beyond intellectual property and falls into the realm of trade secrets. Coca Cola isn't forced to divulge its secret formula (though India once tried) and many manufactured products rely on trade secrets to protect copy cats from piggybacking on years of another's R&D costs.

The same concept goes for the basement rock concert analogy. No music company is trying to make laws which stop free concerts. People can still throw a free show, and create this sort of music culture. But some artists might want to actually make a prosperous living from their skills, and these artists (and the companies which enable them) ought to have the right to protect their creative products. Free music can exist alongside IP-protected music, but music companies want to protect thei expensive to produce pop music (which we mostly abhor) and the revenue which supports their associated investments in distribution, branding, videos, studies, etc. Now some may think their music is of a lower quality and "not real", but the personal opinion of one group cannot mean that no one is allowed to make a creative musical product and protect it via IP. Otherwise we'd perhaps never get advanced develops in music production technology for example. What will pay for the advanced studios which record near-perfect sound and bring it to our homes?

My basic point is that supporting IP doesn't negate free forms of products. It actually gives us the choice whether we want people to freely access our creative products or not. For those who opt to be paid for their production, they then have the incentive to devote substantial amounts of money into trying to make ambitious achievements. Despite disparagement for "self-interest" In the end, for most people in the world, we need to make a living, and if it weren't for IP rights most of us would need to have much more boring, menial jobs in order to sustain ourselves and our families. Nevertheless, we welcome all comments!

[BC]

There's a term for this: "red baiting"

A good counter-argument is that open source / free software is all about throttles-wide-open competition, and these fat cats aren't competitive.

[BC]

There's a term for this: "red baiting"

A good counter-argument is that open source / free software is all about throttles-wide-open competition, and these fat cats aren't competitive.

[Ross Mayfield]

Um, this article and quote is a year old.

[The Other Stalwart]

Its from November 2005.

[The Other Stalwart]

Pertaining to the comment which says that these fat cats (MSFT and SAP) aren't competitive, then why must we force them to open up their codes? Just let open source outcompete them. We're not saying that MSFT and SAP are the most competitive companies, perhaps their days are gone, we're just skeptical as to why we need to force them to give up some of their IP or trade secrets in order to create competition. Look at Google, now threatening MSFT since the internet browser is replacing the desktop. Google didn't require any opening up of the Windows source code. We don't disagree with the theory behind open source, it could very well be able to outcompete "closed" strategies such as MSFT and SAP employ. But then just let open source just outcompete them as things stand if its the better strategy, why the need to force "closed" strategies to give up IP and trade secrets? Its not a matter of being against open source, its a matter of being against forcing other companies to give up their IP.