The World Is Flat

by Thomas L. Friedman

  The primary goal of the free software movement, however, is to get as many people as possible writing, improving, and distributing software for free, out of a conviction that this will empower everyone and free individuals from the grip of global corporations. Generally speaking, the free p. 97 software movement structures its licenses so that if your commercial software draws directly from their free software copyright, they want your software to be free too.

  In 1984, according to Wikipedia, an MIT researcher and one of these ex-hackers, Richard Stallman, launched the “free software movement” along with an effort to build a free operating system called GNU. To promote free software, and to ensure that its code would always be freely modifiable and available to all, Stallman founded the Free Software Foundation and something called the GNU General Public License (GPL). The GPL specified that users of the source code could copy, change, or upgrade the code, provided that they made their changes available under the same license as the original code. In 1991, a student at the University of Helsinki named Linus Torvalds, building off of Stallman’s initiative, posted his Linux operating system to compete with the Microsoft Windows operating system and invited other engineers and geeks online to try to improve it—for free. Since Torvalds’s initial post, programmers all over the world have manipulated, added to, expanded, patched, and improved the GNU/Linux operating system, whose license says anyone can download the source code and improve upon it but then must make the upgraded version freely available to everybody else. Torvalds insists that Linux must always be free. Companies that sell software improvements that enhance Linux or adapt it to certain functions have to be very careful not to touch its copyright in their commercial products.

  Much like Microsoft Windows, Linux offers a family of operating systems that can be adapted to run on the smallest desktop computers, laptops, PalmPilots, and even wristwatches, all the way up to the largest supercomputers and mainframes. So a kid in India with a cheap PC can learn the inner workings of the same operating system that is running in some of the largest data centers of corporate America. Linux has an army of developers across the globe working to make it better. As I was working on this segment of the book, I went to a picnic one afternoon at the Virginia country home of Pamela and Malcolm Baldwin, whom my wife came to know through her membership on the board of World Learning, an educational NGO. I mentioned in the course of lunch that I was p. 98 thinking of going to Mali to see just how flat the world looked from its outermost edge—the town of Timbuktu. The Baldwins’ son Peter happened to be working in Mali as part of something called the GeekCorps, which helps to bring technology to developing countries. A few days after the lunch, I received an e-mail from Pamela telling me that she had consulted with Peter about accompanying me to Timbuktu, and then she added the following, which told me everything I needed to know and saved me the whole trip: “Peter says that his project is creating wireless networks via satellite, making antennas out of plastic soda bottles and mesh from window screens! Apparently everyone in Mali uses Linux . . .”

  “Everyone in Mali uses Linux.” That is no doubt a bit of an exaggeration, but it’s a phrase that you’d hear only in a flat world.

  The free software movement has become a serious challenge to Microsoft and some other big global software players. As Fortune magazine reported on February 23, 2004, “The availability of this basic, powerful software, which works on Intel’s ubiquitous microprocessors, coincided with the explosive growth of the Internet. Linux soon began to gain a global following among programmers and business users . . . The revolution goes far beyond little Linux . . . Just about any kind of software [now] can be found in open-source form. The SourceForge.net website, a meeting place for programmers, lists an astounding 86,000 programs in progress. Most are minor projects by and for geeks, but hundreds pack real value . . . If you hate shelling out $350 for Microsoft Office or $600 for Adobe Photoshop, OpenOffice.org and the Gimp are surprisingly high-quality free alternatives.” Big companies like Google, E*Trade, and Amazon, by combining Intel-based commodity server components and the Linux operating system, have been able dramatically to cut their technology spending—and get more control over their software.

  Why would so many people be ready to write software that would be given away for free? Partly it is out of the pure scientific challenge, which should never be underestimated. Partly it is because they all hate Microp. 99soft for the way it has so dominated the market and, in the view of many techies, bullied everyone else. Partly it is because they believe that open-source software can be kept more fresh and bugfree than any commercial software, because of the way it is constantly updated by an army of unpaid programmers. And partly it is because some big tech companies are paying engineers to work on Linux and other software, hoping it will cut into Microsoft’s market share and make it a weaker competitor all around. There are a lot of motives at work here, and not all of them altruistic. When you put them all together, though, they make for a very powerful movement that will continue to present a major challenge to the whole commercial software model of buying a program and then downloading its fixes and buying its updates.

  Until now, the Linux operating system was the best-known success among open-source free software projects challenging Microsoft. But Linux is largely used by big corporate data centers, not individuals. However, in November 2004, the Mozilla Foundation, a nonprofit group supporting open-source software, released Firefox, a free Web browser that New York Times technology writer Randall Stross (December 19, 2004) described as very fast and filled with features that Microsoft’s Internet Explorer lacks. Firefox 1.0, which is easily installed, was released on November 9. “Just over a month later,” Stross reported, “the foundation celebrated a remarkable milestone: 10 million downloads.” Donations from Firefox’s appreciative fans paid for a two-page advertisement in The New York Times. “With Firefox,” Stross added, “open-source software moves from back-office obscurity to your home, and to your parents’, too. (Your children in college are already using it.) It is polished, as easy to use as Internet Explorer and, most compelling, much better defended against viruses, worms and snoops. Microsoft has always viewed Internet Explorer’s tight integration with Windows to be an attractive feature. That, however, was before security became the unmet need of the day. Firefox sits lightly on top of Windows, in a separation from the underlying operating system that the Mozilla Foundation’s president, Mitchell Baker, calls a ‘natural defense.’ For the first time, Internet Explorer has been losing market share. According to a worldwide survey conducted in p. 100 late November by OneStat.com, a company in Amsterdam that analyzes the Web, Internet Explorer’s share dropped to less than 89 percent, 5 percentage points less than in May. Firefox now has almost 5 percent of the market, and it is growing.”

  It will come as no surprise that Microsoft officials are not believers in the viability or virtues of the free software form of open-source. Of all the issues I dealt with in this book, none evoked more passion from proponents and opponents than open-source. After spending time with the open-source community, I wanted to hear what Microsoft had to say, since this is going to be an important debate that will determine just how much of a flattener open-source becomes.

  Microsoft’s first point is, How do you push innovation forward if everyone is working for free and giving away their work? Yes, says Microsoft, it all sounds nice and chummy that we all just get together online and write free software by the people and for the people. But if innovators are not going to be rewarded for their innovations, the incentive for path-breaking innovation will dry up and so will the money for the really deep R & D that is required to drive progress in this increasingly complex field. The fact that Microsoft created the standard PC operating system that won out in the marketplace, it argues, produced the bankroll that allowed Microsoft to spend billions of dollars on R & D to develop Microsoft Office, a whole suite of applications that it can now sell for a little over $100.

  “Microsoft wou
ld admit that there are number of aspects of the open-source movement that are intriguing, particularly around the scale, community collaboration, and communication aspects,” said Craig Mundie, the Microsoft chief technology officer. “But we fundamentally believe in a commercial software industry, and some variants of the open-source model attack the economic model that allows companies to build businesses in software. The virtuous cycle of innovation, reward, reinvestment, and more innovation is what has driven all big breakthroughs in our industry. The software business as we have known it is a scale economic busip. 101ness. You spend a ton of money up front to develop a software product, and then the marginal cost of producing each one is very small, but if you sell a lot of them, you make back your investment and then plow profits back into developing the next generation. But when you insist that you cannot charge for software, you can only give it away, you take the software business away from being a scale economic business.”

  Added Bill Gates, “You need capitalism [to drive innovation.] To have [a movement] that says innovation does not deserve an economic reward is contrary to where the world is going. When I talk to the Chinese, they dream of starting a company. They are not thinking, ‘I will be a barber during the day and do free software at night.’ . . . When you have a security crisis in your [software] system, you don’t want to say, ‘Where is the guy at the barbershop?’ ”

  As we move into this flat world, and you have this massive Web-enabled global workforce, with all these collaborative tools, there will be no project too small for some members of this workforce to take on, or copy, or modify—for free. Someone out there will be trying to produce the free versions of every kind of software or drug or music. “So how will products retain their value?” asked Mundie. “And if companies cannot derive fair value from their products, will innovation move forward in this area, or others, at the speed that it could or should?” Can we always count on a self-organizing open-source movement to come together to drive things forward for free?

  It seems to me that we are too early in the history of the flattening of the world to answer these questions. But they will need answers, and not just for Microsoft. So far—and maybe this is part of the long-term answer—Microsoft has been able to count on the fact that the only thing more expensive than commercial software is free software. Few big companies can simply download Linux off the Web and expect it to work for all their tasks. A lot of design and systems engineering needs to go around it and on top of it to tailor it to a company’s specific needs, especially for sophisticated, large-scale, mission-critical operations. So when you add up all the costs of adapting the Linux operating system to the needs of your company and its specific hardware platform and applicap. 102tions, Microsoft argues, it can end up costing as much as or more than Windows.

  The second issue Microsoft raises about this whole open-source movement has to do with how we keep track of who owns which piece of any innovation in a flat world, where some is generated for free and others build on it for profit. Will Chinese programmers really respect the rules of the Free Software Foundation? Who will govern all this?

  “Once you start to socialize the global population on the idea that software or any other innovation is supposed to be free, a lot of people will not distinguish between free software, free pharmaceuticals, free music, or free patents on car designs,” argued Mundie. There is some truth to this. I work for a newspaper, that is where my paycheck comes from. But I believe that all online newspapers should be free, and on principle I refuse to pay for an online subscription to The Wall Street Journal. I have not read the paper copy of The New York Times regularly for two years. I read it only online. But what if my daughters’ generation, which is being raised to think that newspapers are something to be accessed online for free, grows up and refuses to pay for the paper editions? Hmmm. I loved Amazon.com until it started providing a global platform that wasn’t selling only my new books but also used versions. And I am still not sure how I feel about Amazon offering sections of this book to be browsed online for free.

  Mundie noted that a major American auto company recently discovered that some Chinese firms were using new digital-scanning technology to scan an entire car and churn out computer-aided design models of every part within a very short period of time. They can then feed those designs to industrial robots and in short order produce a perfect copy of a GM car—without having to spend any money on R & D. American automakers never thought they had anything to worry about from wholesale cloning of their cars, but in the flat world, given the technologies that are out there, that is no longer the case.

  My bottom line is this: Open-source is an important flattener because it makes available for free many tools, from software to encyclopedias, that millions of people around the world would have had to buy in order to use, and because open-source network associations—with their p. 103 open borders and come-one-come-all approach—can challenge hierarchical structures with a horizontal model of innovation that is clearly working in a growing number of areas. Apache and Linux have each helped to drive down costs of computing and Internet usage in ways that are profoundly flattening. This movement is not going away. Indeed, it may just be getting started—with a huge, growing appetite that could apply to many industries. As The Economist mused (June 10, 2004), “some zealots even argue that the open-source approach represents a new, post-capitalist model of production.”

  That may prove true. But if it does, then we have some huge global governance issues to sort out over who owns what and how individuals and companies will profit from their creations.

  Flattener #5: Outsourcing

  Y2K

  India has had its ups and down since it achieved independence on August 15, 1947, but in some ways it might be remembered as the luckiest country in the history of the late twentieth century.

  Until recently, India was what is known in the banking world as “the second buyer.” You always want to be the second buyer in business—the person who buys the hotel or the golf course or the shopping mall after the first owner has gone bankrupt and its assets are being sold by the bank at ten cents on the dollar. Well, the first buyers of all the cable laid by all those fiber-optic cable companies—which thought they were going to get endlessly rich in an endlessly expanding digital universe—were their American shareholders. When the bubble burst, they were left holding either worthless or much diminished stock. The Indians, in effect, got to be the second buyers of the fiber-optics companies.

  They didn’t actually purchase the shares, they just benefited from the p. 104 overcapacity in fiber optics, which meant that they and their American clients got to use all that cable practically for free. This was a huge stroke of luck for India (and to a lesser degree for China, the former Soviet Union, and Eastern Europe), because what is the history of modern India? In short, India is a country with virtually no natural resources that got very good at doing one thing—mining the brains of its own people by educating a relatively large slice of its elites in the sciences, engineering, and medicine. In 1951, to his enduring credit, Jawaharlal Nehru, India’s first prime minister, set up the first of India’s seven Indian Institutes of Technology (IIT) in the eastern city of Kharagpur. In the fifty years since then, hundreds of thousands of Indians have competed to gain entry and then graduate from these IITs and their private-sector equivalents (as well as the six Indian Institutes of Management, which teach business administration). Given India’s 1 billion-plus population, this competition produces a phenomenal knowledge meritocracy. It’s like a factory, churning out and exporting some of the most gifted engineering, computer science, and software talent on the globe.

  This, alas, was one of the few things India did right. Because its often dysfunctional political system, coupled with Nehru’s preference for pro-Soviet, Socialist economics, ensured that up until the mid-1990s India could not provide good jobs for most of those talented engineers. So America got to be the second buyer of India’s brainpower! If you were a smart
, educated Indian, the only way you could fulfill your potential was by leaving the country and, ideally, going to America, where some twenty-five thousand graduates of India’s top engineering schools have settled since 1953, greatly enriching America’s knowledge pool thanks to their education, which was subsidized by Indian taxpayers.

  “The IITs became islands of excellence by not allowing the general debasement of the Indian system to lower their exacting standards,” noted The Wall Street Journal (April 16, 2003). “You couldn’t bribe your way to get into an IIT . . . Candidates are accepted only if they pass a grueling entrance exam. The government does not interfere with the curriculum, and the workload is demanding . . . Arguably, it is harder to get into an IIT than into Harvard or the Massachusetts Institute of Technology . . . IIT alumnus Vinod Khosla, who co-founded Sun p. 105 Microsystems, said: ‘When I finished IIT Delhi and went to Carnegie Mellon for my Masters, I thought I was cruising all the way because it was so easy relative to the education I got at IIT.’ ”

  For most of their first fifty years, these IITs were one of the greatest bargains America ever had. It was as if someone installed a brain drain that filled up in New Delhi and emptied in Palo Alto.

  And then along came Netscape, the 1996 telecom deregulation, and Global Crossing and its fiber-optic friends. The world got flattened and that whole deal got turned on its head. “India had no resources and no infrastructure,” said Dinakar Singh, one of the most respected young hedge fund managers on Wall Street, whose parents graduated from an IIT and then immigrated to America, where he was born. “It produced people with quality and by quantity. But many of them rotted on the docks of India like vegetables. Only a relative few could get on ships and get out. Not anymore, because we built this ocean crosser, called fiberoptic cable . . . For decades you had to leave India to be a professional . . . Now you can plug into the world from India. You don’t have to go to Yale and go to work for Goldman Sachs [as I did.]”