Over the last few days a debate has flared up over the GPL (the GNU General Public License). Specifically, the debate relates to the refusal of DIYThemes to release its WordPress Thesis theme under the GPL.

The details of the debate encapsulate a major nerdfest, with legal and technical nerds crawling out of their boxes and greeting the world. But beyond this, the debate has much wider implications.

In fact, at Vox Sapiens we wonder whether this debate will be seen as the tipping point that identifies the crest of the Open Source wave. We think that, maybe, the strength of the Open Source movement will wane from this moment because of the fear and confusion that is being created.

The heart of the current debate itself centers upon what constitutes a derivative work, because the GPL license mandates that any derivative work of a GPL-licensed product must inherit the GPL license. The representatives from the WordPress developers claim that themes written for WordPress are derivative works – and therefore must be distributed under the terms of the GPL. This means that customers who pay for a premium theme are then able to give away copies of this theme (recipients of these copies would not be entitled to support from the theme developers).

Many premium theme developers have been persuaded to adopt the GPL, but DIYThemes refuses to do so and the representatives of the WordPress developers are being urged to take legal action.

The case of DIYThemes is, legally, a bit of a red herring because a former employee has admitted that lines of original WordPress code have been copied and pasted into the Thesis theme. So it is pretty clear that DIYThemes would lose a copyright case on this point. But many commentators are blurring the issue by not differentiating between the “copypasta” and the definition of a derivative work.

To make matters worse, many commentators are also suggesting that customers of DIYThemes are also legally liable for using the Thesis theme, even though the GPL applies to distribution and not users.

The Vox Sapiens opinion is that the debate has escalated into one with only one possible outcome – and that is lose-lose. Furthermore, we see this war as different to previous technical or legal disagreements in the Open Source arena, and we predict the slow decline of Open Source as a result.

So it looks like SAP is going to buy Sybase, database vendor. But SAP is paying a lot of money for the company placed fourth in its main market. The price per share, at USD65 and a 44% premium to the pre-announcement price, hearkens back to the mid-1990’s when Sybase was still considered a serious competitor to Oracle, IBM, Ingres (another decliner), and Microsoft was not taken seriously as an enterprise computing vendor.

Here at Vox Sapiens we are not sure this is the right move for SAP. Firstly, Sybase is probably a poor choice at virtually any price. But there is plenty of commentary available on this elsewhere on the web.

So instead, here at Vox Sapiens we will discuss the company that SAP should have bought. And that company is Software AG (or “SAG”).

SAG is the second largest German software vendor, after SAP. The SAG headquarters are in Darmstadt, just south of Frankfurt and only 70km (45 miles) north of Walldorf, the home of SAP. There would be huge cost synergies achievable in a very short timescale. In fact, on cost synergies alone SAP has a huge advantage over any other potential acquirer of SAG. Furthermore, the market capitalization of SAG is approximately half that of Sybase pre-announcement, making it easier to swallow.

But more importantly, SAG is probably a much better fit strategically.

Sybase brings two things to the table: a database and mobile computing capability. What can SAP do with these?

Well the mobile capability is interesting, and fits with SAP’s strategy of moving access onto mobile platforms. But there are plenty of small companies with this capability that SAP could snap up at a fraction of the price of Sybase.

And the database is really no big deal at all. SAP has alliances with the three bigger database vendors, alliances that allow the SAP application(s) to work on these databases. And existing customers are highly unlikely to be persuaded to switch databases just because SAP owns Sybase. The cost of switching will be very high, and it is 99.99% certain that the former database couldn’t be eliminated entirely from the enterprise because other applications would be using it.

Furthermore, selling the SAP application to existing Sybase-only customers is unlikely to be significantly affected by the acquisition. The Sybase database sale is a very technical one, the key customer contacts are the CTO and the database specialists. Contact with these people will not give SAP the links to the senior executives to whom SAP would try to sell the application.

And SAP already has a database for customers that don’t have or want one from the leading three vendors – it is called MaxDB and is based on technology developed by … Software AG. MaxDB is actually a modified version of SAG’s ADABAS D database, licensed by SAP. So there are big opportunities here for cost synergies and for modifiying MaxDB even more to meet SAP’s requirements. ADABAS D should not be confused with ADABAS, another SAG database, and another leading technology that is closely linked to SAG’s Natural programming language.

An issue with the SAP application that many customers raise is the difficulty to integrate it with other applications. Many customers have to buy middleware, business process management (“BPM”) and other similar technologies to facilitate this integration. SAG bought webMethods in 2007, a company that produces middleware of the same name. SAG has also recently bought IDS Scheer (which created the ARIS enterprise modeling approach) giving it even more presence in the BPM market, and also a presence in SAP consulting. With webMethods and IDS Scheer, SAG presents a bundle of technology that SAP needs and can’t find in plenty of other companies as is the case with Sybase’s mobile technology.

So yes, at Vox Sapiens we believe that SAP has missed a trick. It should have bought Software AG.

The Consumer Watchdog April 21 asked the US Department of Justice (DOJ) to launch an antitrust action against Google. In its request it suggested that Google might be broken up.

While there is the potential for Google to develop into something that needs to be broken up, right now there is a candidate that is way higher in priority. And that is Paypal.

In a previous post I pointed out that the attacks on bankers’ bonuses missed the point (see Bankers’ bonuses – wrong target). The Consumer Watchdog has performed a similar trick here.

So why should Paypal be at the front of the queue?

1. It has become a monopoly – it demonstrates Metcalfe’s Law beautifully – and, if the allegations repeated below are true, is now abusing its status. Without Paypal you are unable to send money to or receive money from a very large proportion of Internet users. For sure there are competitors such as Google Checkout and 2CO. But if you can use only these, whilst most people are using Paypal, you are extremely restricted in your ability to engage in web-based financial transactions.
2. Paypal provides a service for which there is no viable alternative. You can’t realistically barter online, you need to use some form of electronic payment system.
3. Alledgedly Paypal has repeatedly misunderstood how dangerous false positives are to a person’s financial position. The web is full of stories of people who claim that Paypal has frozen their account without warning, usually on the basis of “suspicious transactions,” only to discover that the transactions are valid. Now this also happens a lot offline – personally I find my erratic credit card usage results in a new card approximately once every three months. But I can own 2 or 3 credit cards, and if one is cancelled I can use another. It is not so easy to have multiple Paypal accounts, and even if you do have more than one account, switching is not as easy as taking a different credit card out of your pocket. You need to modify your email address associations, so that Paypal transactions linked to the email address associated with the frozen account do not fail. If you are using Paypal buttons to sell, you need to recreate buttons to associate to your new account and update your website. For some people who make their living selling online, a frozen Paypal account can put them out of business in days – and for those working as sole traders or with personal guarantees to a separate incorporated business, the result can be much worse when supplier contracts cannot be immediately termninated.
4. Alledgedly Paypal is also reticient to reinstate accounts, potentially leaving people permanently excluded from the growing online economy.
5. Your online Paypal activities can impact your offline financial status too. Many people almost see Paypal as “play money” – especially if they are sending friends, say, 99 cents. What they don’t realise is that Paypal is linked into many of the credit reference agencies, and your offline creditworthiness can be decreased by your online activities. So your application for a mortgage might get refused, or the interest rate increase by a couple percentage points, because Paypal has reported “suspicious transactions.” For sure this is not all Paypal’s fault, but Paypal could do a better job of teaching people that they need to be as responsible with their Paypal account as they do with their bank account.

So what should be done about the situation?

1. Fungibility is required between Paypal and other online payment providers. I can setup an automated payment from a bank account in one country to deliver funds into a bank accounts in another country (with a few exceptions) – I am not restricted to depositing into accounts in foreign branches of my own bank. I should be able to send money between online payment providers.
2. Paypal needs better regulatory oversight. In particular, the issue of alleged indiscriminate account freezing must be investigated and addressed. This will require international coordination between regulators.

And if Paypal does not agree?

It should be split into three or four separate companies, each with the same international coverage as Paypal provides now, thereby giving consumers a choice of online payments provider. And by starting from a common position, IT system interconnectivity will be simple, and therefore fungibility can be built in from the beginning.

A condition of the licence to trade should be that fungibility should be maintained, even in the event that one of the baby-Paypals is bought by, for example, a commercial bank.

My personal expectation is that, under this scenario, one of the first buyers would be Google, which would merge the baby-Paypal with Google Checkout to take advantage of the fungibility with the other baby-Paypals – this might then provide grounds to investigate Google if it were to use the inaccessiblity of Google Checkout-only functionality in an anti-competitive manner.

Powertrain 2020! The EV vision! The lust for lithium! The fuss about fuel cells! The automotive industry is alive with a debate over the replacement of the gasoline powertrain.

This is an extremely important debate, and will have major impacts on the strategic positioning of the OEMs. For example, what would happen if the future is rechargeble batteries and in the future the electricity supply companies give away vehicles in exchange for exclusive recharging contracts? Don’t believe it could happen? Look at the mobile phone handset industry.

But creeping up quietly is another technological shift that could have even more impact

Telematics is likely to completely change the way consumers choose, use and maintain cars.

Telematics will feed frequent, perhaps daily, maintenance data feeds to the dealer network where analysis will determine service needs in a far more precise manner than the current mileage-based approach. The data will also be used to predict imminent component malfunctions.

Telematics will support the driver with applications that are orders of magnitude more advanced than the existing satellite navigation systems. Want to take a break? Well just lock into an automated convoy.

Telematics will bring to automotive accident investigations what the “black box” has brought to aircraft accident investigations.

Telematics will enable usage-based insurance – and not just “how many miles?,” “where?” and “when?” but also speeds, severity of breaking, amount of skidding, etc. – indicators of driving style that might be indicators of propensity to be involved in an accident (let’s wait for the cries of “unfair” regarding whether or not these indicators really are predictive).

And where in the list of “telematics will” did I mention gasoline or internal combustion engines? I didn’t. The vast majority of the telematics enhancements are powertrain-agnostic and will be incorporated into future vehicles irrespective of their means of propulsion.

Add to this the fact that the vast majority of car drivers really don’t understand the technical details of their vehicles – they assess them on cost, looks, ride quality and user interface. Telematics could be the determining factor for the final element in the list of criteria.

If I wanted to predict the winners to dominate the next generation of vehicles, I would be seriously examining the telematics suppliers.

So Microsoft (presumably on the advice of lawyers) used the DCMA (Digital Millennium Copyright Act) to force Cryptome.org’s hosting provider, Network Solutions, to close down the website and keep a lock on the domain name to prevent the site being relocated. Then a day later the complaint was rescinded, allowing the site to be restored.

This was a bad thing to do? Why?

OK, where should I start?

Well firstly, it brought huge publicity to the situation, and the number of people aware of it is now many orders of magnitude greater than it would have been. Cryptome.org’s typical readership is a combination of technogeeks, political activists and privacy specialists. Most would have a good idea where to find a document that other parties might wish to keep out of cyberspace. So even if Microsoft had been successful in forcing the removal of the document from the Cryptome.org site, it would have appeared somewhere else, and the people really interested in it would still be able to get to see it.

Secondly, Microsoft has egg on its face. Such a sharp reversal of policy in 24 hours hints at a lack of crisis management expertise in Redmond. Theoretically this could impact the share price, particularly because Microsoft is not a stranger to legal battles, albeit ones that focus on monopolies rather than copyright.

Thirdly, it is another thing to think about when registering a domain name, and could impact the US-located domain registrars’ businesses. If Cryptome.org had been registered with a foreign domain registrar, it would have been out of the reach of the DCMA. I assume this is one reason behind the choice of registrar for Wikileaks. Even if you are a non-US business using a non-US server your site can still be brought down, permanantly, if the domain name is registered through a US registrar.

And fourthly, and most importantly, this will really scare a huge number of Microsoft customers and potential customers. By bringing this action, Microsoft has made the general public aware that it is keeping track of what they are doing, and archiving the information that it knows. Long term, this could be very costly indeed.

This is just the latest in a string of similar foolhardy activities. Why did people not learn from Bridgeport Hospital, from Julius Baer, from Royal Dutch Shell, and from many other large organisations?

When will lawyers learn that just become something is “the law” and their client is “in the right” there might be very good practical and strategic reasons to avoid attempting to enforce it. And when will the large organisations learn to manage their lawyers instead of being managed by them?