(Version Française
ici).
About five years ago, I wrote a detailed report on how one could have the choice between GNU /
Linux and other operating systems in Argentina. that was most surprising for French people, that
have always had the greatest difficulties in getting such a choice, despite the remarkable
efforts made by the Working Group Detaxe
and Racketiciels. It was even possible at that time in
Argentina to compare on the website of major retail chains (Fravega, Garbarino, the equivalent of
Darty or Boulanger in France) the price for the same machine with another operating system or
with a Debian-based, customised Argentinian GNU / Linux, developed by an SME named Pixart (not to
be confused with the studio Pixar!).
But starting from 2 years ago, I have seen that it has become impossible to find any
longer a single machine with GNU / Linux in retail: worse, we saw some very
dubious agreements negotiated under the high patronage of the founder of the multinational
software company that monopolises the operating systems market.
One may well ask why: this is not without reminding us of the situation here in France, where
after SFR placed on the market more thatn 250000 Netbooks all equipped with GNU / Linux about two
years ago, we can not find now a single netbook without Windows (yes, I write the name in full
letters now, because I am particularly upset: I wanted to buy one for personal use this
Christmas, but despite my efforts, I have not found a single model with a GNU / Linux
preinstalled in France).
The few remaining fans of software monopolies like to say that this sudden vanishement proves
that the other operating system is superior to GNU / Linux.
Well, I happen to have in my hands right now a copy of the appeal filed against Microsoft by the
little Argentine SMEs Pixart, and it is very helpful in understanding what really happened there
... and very likely what is happening here too.
The Windows For The Poor
Microsoft does not usually sit back when it loses market share, and I already noticed back then
that Redmond had put in place a strategy to counter the spread of GNU / Linux in emerging
markets. In Argentina, already in 2005 they had managed to convince the government to spend
taxpayer money on an operation codenamed 'Mi PC', which through a microcredit whose interests
were paid by the state, encouraged the public to buy machines that are sold with Windows SE
(Starter Edition, they say), better known today as Windows FTP (For The Poor). This edition
sports ludicrous limitations like the following: only recognises 256 Mb of RAM (with XP, It's a
little short), 80 GB hard disk (ditto), screen resolution was limited to 800x600, no local
network, and you cannot open windows for more than 3 applications at once (oh well, if there is
something that poor people have in abundance is time, therefore they will only run 3 tasks in
parallel, and no more).
This version was sold cheaper than the standard Windows editions , with the aim to compete with
GNU / Linux machines, but at that time this move made me laugh quite a bit because the early
machines with Windows FTP still costed at least 500 pesos more than the equivalent GNU / Linux
systems, which had no such ridiculous limitations: one really had to be poor in spirit to
purchase them!
The rear margins (or Market Development Agreements)
What I did not know in 2006 is that the Windows For The Poor was just a first step in the
strategy: The second step was to artificially lower the final price of computers running Windows,
and financially strangling Pixart, which could not charge anymore its service for
pre-installation of custom GNU / Linux on machines manufactured in Argentina.
In reading the appeal filed by Pixart, we learn that Microsoft would have started in 2008 to give
back large amounts of money to the whole distribution chain to convince them to buy exclusively
Windows, and these sums have been disguised in various forms.
For example, I heard that Microsoft would have payed hundreds of thousands of dollars a year to
some distributors, officially for the Microsoft logo to appear on the leaflet advertising the
chain. Well, this kind of operation is called 'rear margin' here, and generally corresponds to an
abuse of dominant position from retailers who charge abusive fees to small suppliers for
purported advertising campaigns that hide forced rebates. But in our case, I have a hard time
thinking that a small retail chain in Latin America has a dominant position when facing a
multinational that generates profits of billions of dollars a year.
But why, you will say , is Microsoft complicatin its life like this? Was'nt it easier to simply
lower the cost of licensing Windows to, say, $ 5, rather than continue to charge $ 100 initially,
to repay $ 95 to distributors right after?
Well, no! Because, if we lower the cost of the officially licensed Windows FTP to $ 5, then it
must be sold $ 5 everywhere, and we can no longer pretend to charge $ 200 to large customers
(such as ministries in Argentina) for the full version .
It is much more interesting to pretend that the cost is 50 or 100 dollars, and find a way to give
back 45 or 95 dollars under the table: on one side the illusion is maintained that the price is
high and constant, on the other, one can happily strangle competition, by lowering prices only on
the competitive segment (the rebate is conditioned, of course, to stopping any sale of the rival
product).
The competition law
This wonderful monopolistic invention has one flaw, though: it brutally violates the rules of
competition, which are codified, for better or worse, in almost all countries, including
Argentina. To function properly, it must be carried out in the greatest secrecy, and stay safe
from prying eyes.
But it may well be that this discretion is not going to las much longer: using the laws on
competition in Argentina, Pixart filed appeal, describing what it thinks is the strategy followed
by Microsoft, and asking the judge to compel Microsoft, and distributors to provide all evidence
of purchases, grants, rebates, in short, an account of all financial transaction, even by means
of intermediaries, between Microsoft and distributors.
Pixart also suggests that the judge checks whether Microsoft properly pays tariffs for imports of
these licenses: it is well known that Microsoft