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September 26, 2003
Massachusetts Moves to Linux
An associated press story is reporting that Massachusetts will adopt a broad-based strategy of moving its computer systems toward open standards, including Linux. Massachusetts is the lone hold-out in the multi-lateral State Attorney General lawsuit against Microsoft.
State Administration and Finance Secretary Eric Kriss said Thursday that the decision, adopted at a meeting of state information officers, was made on "technical grounds" and had nothing to do with Attorney General Thomas Reilly's pursuit of Microsoft. Kriss said the state's decision was driven by a desire to reduce licensing fees but also "by a philosophy that what the state has is a public good and should be open to all," Kriss told The Associated Press. He characterized the decision as the "most visible concrete action by a state government" to move toward open standards.
I've heard rumors that Microsoft is moving to protect Office file formats under the Digital Millennium Copyright Act to protect them against reverse-engineering. That kind of move would push more states in this direction, I think.
02:18 PM | Recommend This | Print This
The Cost of Principle
A few security luminaries, including Bruce Schneier and Dan Geer, issued a report to Computer and Communications Industry Association that called the ubiquity of Microsoft software a hazard to the economy and to national security. The report states:
Because Microsoft's near-monopoly status itself magnifies security risk, it is essential that society become less dependent on a single operating system from a single vendor if our critical infrastructure is not to be disrupted in a single blow. The goal must be to break the monoculture.
The report goes beyond merely decrying the monoculture, however and points out the danger of Microsoft using its monopoly power and the security threat to further lock users into using Microsoft products:
Efforts by Microsoft to improve security will fail if their side effect is to increase user-level lock-in. Microsoft must not be allowed to impose new restrictions on its customers - imposed in the way only a monopoly can do - and then claim that such exercise of monopoly power is somehow a solution to the security problems inherent in its products. The prevalence of security flaw in Microsoft's products is an effect of monopoly power; it must not be allowed to become a reinforcer.
In a kind of unholy death spiral, the very security flaws that the Microsoft monoculture helped create a situation where Microsoft's monopoly is strengthened. Yikes! The report calls on government to set and example:
Governments must set an example with their own internal policies and with the regulations they impose on industries critical to their societies. They must confront the security effects of monopoly and acknowledge that competition policy is entangled with security policy from this point forward.
Imagine the impact if the feds or even some large states switched to open source on the desktop.
The bizarre part of this whole story is that Dan Geer's employer, @Stake fired him his part in the report. One of @Stake's biggest customers is Microsoft and while the company says that Microsoft put no pressure on them, I'm sure the self-administered pressure was immense. Its no secret that Microsoft plays hardball with this kind of thing and past actions are a strong enough signal to @Stake that failure to take action would have reduce shareholder value. Its a good thing principles are so valuable because they sure cost a lot.
09:09 AM | Recommend This | Print This
Amazon May Support Internet Sales Tax Legislation
Amazon, the world's biggest online retailer may be close to publicly supporting legislation that would create a national sales tax system according to the Washington Post:
Supporters of a national Internet sales tax proposal are negotiating with Amazon.com in a bid to win an endorsement from the largest online retailer for legislation introduced today in Congress. The legislation would put the federal government's stamp of approval on a state-led effort to require online retailers to apply sales taxes to nearly all of their transactions. In return, states would simplify their complex tax laws to make collecting taxes easier for Internet businesses.
This is a subject I've grappled with since we started iMALL. Because we supplied ecommerce services to all kinds of merchants in all 50 states and many foreign countries, we had to be able to calculate and collect sales tax. Any current system is, at best, an approximation because of the complexity. There are over 10,000 separate sales tax jurisdictions in the US alone and deciding who's in which ones is nearly impossible--so you guess. And the problem doesn't end there. Different items are taxable in one state but not in another. For example, juice is taxable in some states and not others and in some it depends on the amount of "real fruit juice" in the juice. In some states candy is taxable, in others candy is taxable, but not gum... You get the point. Oh, and did I mention that it changes all the time?
There are a lot of misconceptions about sales tax reform:
- This has nothing to do with the so-called "Internet tax moratorium." That is a moratorium on taxing Internet service, not the good bought and sold on the Internet.
- You already owe this tax, the government just doesn't have a good way to collect it. At present, a merchant doing business in Michigan can't be compelled to collect sales tax for the State of Utah unless they do business in Utah.
- This legislation would apply not only to Internet purchases, but to all cross border transactions, including catalog and mail order like the Home Shopping Network.
- The amount of uncollected sales-tax due to online and mail-order purchases is actually relatively low at $3-4 billion per year.
Many brick and mortar merchants have started collecting it already. Wal-Mart and Barnes and Noble being two. They were on shaky legal ground to begin with, but the reality of the business is what finally caught up with them. Trying to maintain the facade of independent business units for online and meatspace sales cut into their ability to offer the kind of services that people want and only a retailer with a physical presence can provide. In-person returns of online-purchased goods, for example.
If the amount of uncollected tax is small, why bother? I think there's a pretty simple and easy to support answer: fairness. Governments will always find a way to get all the money they need. If they're getting shorted in online sales, they'll make it up in offline sales by raising taxes. I don't see it as an issue of whether the government gets the money or not. I see it as an issue of whether we, as a society, want to penalize merchants who have physical stores. I think that sends the wrong signal and creates unhealthy incentives. We ought to make the playing field as level as possible.