A Legislative Glitch Over Microsoft

Last week, MK Nehama Ronen (Center Party) submitted a bill to amend the Tenders Law. If passed, it will oblige government companies, state institutions and public bodies to purchase software that was developed by means of an open-code model.

Last week, MK Nehama Ronen (Center Party) submitted a bill to amend the Tenders Law. If passed, the amendment will oblige government companies, state institutions and public bodies to purchase software that was developed by means of an open-code model (that is, software in which the source code is accessible and amenable to changes).

Anyone who wants to depart from the law's stipulations and purchase Microsoft software, for example, in which the code of which the program is built is a trade secret, just as the formula of Coca-Cola is a secret, will have to obtain special authorization from the finance minister, who will be able to accede to such a request only for "special reasons." Anyone who is found in breach of the law will pay a fine of NIS 200,000.

MK Ronen, who in the past year discovered the software monopoly - namely Microsoft - maintains that the purpose of the amendment is to encourage the entry of software companies into the Israeli market. Why have they not entered so far? According to Ronen, Microsoft, the steamroller monopoly from Herzliya Pituah, is preventing any possibility of competition, and the state is dependent on it as its major supplier of software.

The "law to encourage competition against Microsoft" is part of a worldwide trend. France, Germany, Belgium and other countries have launched similar legislative initiatives. In Israel, though, the proposed law is problematic, defective, and based on controversial assumptions.

A central assumption of Ronen's bill is that Microsoft Israel blocks competition. However, Ronen cannot name another company that was unable to reach the market because of pressures wielded by Microsoft.

Ronen says that Microsoft has a monopoly in government ministries. According to the accountant-general of the Finance Ministry, in 2001, Microsoft sold the state a mere $4 million-worth of programs, or just 2 percent of the government's overall outlays on computerization. Ronen rejects these figures and says that she will soon prove her case. "In the public sector one can see Microsoft programs on every terminal," she asserts.

Microsoft doesn't know whether to laugh or cry. The company maintains that the programs Ronen is talking about such as the Windows operating system or the Word word processor, are small potatoes as compared to the big money of the tenders to operate the major computer systems of the government ministries, systems that are situated "behind the scenes." These tenders, which are worth tens of millions of dollars, are won by Microsoft's competitors, which specialize in developing products that are sometimes based on open-code programs.

Officials at Microsoft say that the fact that every civil servant has a word processor of its manufacture creates an optical illusion that it is the dominant factor in the arena.

In practice, Microsoft would be happy to give up control over the computers of Interior Ministry clerks in favor of control of the computer system of the Interior Ministry.

The bill's crude distinctions will bring about absurd situations. Thus, for example, a tender for the purchase of open-code programs to manage data bases will discover that hardly any such programs exist, as the majority of the large commercial firms are far from eager to provide their source code to all and sundry. What will the government do then? Where will it obtain the programs? And although the bill purports to promote competition, what about excellence? Has it not occurred to Ronen that companies that develop open-code programs will understand that they do not have to exert themselves to develop the program, if the state is obliged by law either to purchase it or to undergo the agonies of an exhausting bureaucratic process of obtaining "special permission" from the treasury?

It turns out that behind Ronen's publicity campaign about the monopoly she has discovered lies a mysterious body called the Forum of the Freedom to Choose Online. This body is represented by attorney Gidi Fristik. But who pays his salary? No one knows. It is even more embarrassing to discover that MK Ronen, too, has no idea. She says it makes no difference, because she has nothing to do with the forum. But is this really the case? Fristik represents her in legal suits related to protection of the environment (in which Ronen has specialized), and she herself admits that it was the attorney who made her aware of the issue of competition in the software world. Like it or not, Ronen is being used by this forum as its long arm in the legislature, and the fact that she takes no interest in who is activating her is puzzling and unforgivable.

The antitrust case that Microsoft faced in the United States exposed the thuggish methods to which the company had recourse. Microsoft Israel has no such record. Its business history is not stained by illegal practices. The intervention of the U.S. administration in the software market occurred only after it transpired that Microsoft was undercutting competition and adversely affecting the market and American consumers. Microsoft is far from being a naive firm in the U.S., and in Israel, too, its activity has to be followed vigilantly. At this stage, however, it is difficult to understand why MK Ronen wants to drag the legislature into the mire of local software.