A Key to Bill Gates' Interoperability Message

I did not know how much of Bill Gates' announcement(s) about software security were directed at Microsoft employees, and how much at the whole ecosystem around Microsoft that gets hurt each time a virus hits.

Then, before we have seen it all in the area of security improvements at Microsoft, Gates releases a public call for interoperability. He makes a case for cooperation, to all industry players, for data-level interoperability--i.e. XML. In passing, he also considers as misplaced those past and present calls for interoperability at application or OS/platform level and finds one more opportunity to blast open source. Anyway, to return to data-level interoperability on XML, what is Gates' intended audience this time?

XML, SOAP, XSLT, WSDL, DTD, UDDI, etc., are usual terms describing the object of activity at organizations such as W3C--large and consensual, industry-sanctioned standard bodies that work to generate common views on just about everything ranging from http to web-services and beyond. Microsoft being member, often founder-, in most these standard bodies one may ponder as why the need for such call.

One could hypothesize for an answer any of the following: the recent anti-trust EU resolution directed at Microsoft, impatient customers, superfluous PR in a time of slow news from Redmond, and even hypocrisy.

Being a little skeptical in accepting such hypotheses wholesale, I thought to myself that Bill Gates should know all too well how busy (read behind public schedules) his colleagues are to play games. Then, all of a sudden, I recalled the B-school stuff called game theory and strategy--microeconomics/industrial organizations. So, I came with a hypothesis of my own:

What if Bill Gates is serious about all things interoperable, and is trying to make all industry players aware (rational) about a Nash Equilibrium the whole industry stands to capitalize on should anyone choose to cooperate on XML standardization? To reach Nash Equilibrium, players need to be rational and there should be a dominant strategy--no need for common knowledge or correct beliefs. I would not expect anything less from Mr. Gates, moreover, such approach is still perfectly compatible with his past behavior.

Once I had an explanation, I wondered about the odds of such call to succeed. From the same playful sources, we know about the Prisoners' Dilemma: players cheat even when knowing the outcome is sub-optimal. In reality, players may fail to be rational or they simply make mistakes. A company may choose to 'cheat' should it find comfort in the (usually short-term) gain associated with such action. Yet, the existence of the dominant strategy should give everybody a clear prescription of what to do. Moreover, according to the Flood-Dresher experiment (the players are rational and there is a rather long history/dependence path,) it is clear that a long-term prospect of the game encourages cooperation. In our case, at least the large companies/entities that do not live on borrowed time should cooperate towards interoperability. The wild card will always be some small guy with a big idea of his own.

Hence, this time, we may conclude that Bill Gates' audience is the industry at large, technology (corporate) customers included. His call has managed to stir up some powerful emotions, and I take this as a sign for the strong interest in the topic. Awareness about the interoperability challenge is the first step towards education, debate, and rational decision making. Yes, Microsoft will benefit handsomely from data-level interoperability, but so will most industry players, and, above all, the customer. The customer benefits for data-level interoperability gives the customer a better chance to make sense out of the heterogeneous nature of the IT environment, in other words to spend less money on integration leading to faster/better ROI. As a practical matter, in most upcoming squabbles around XML standardization, the corporate customer ought to be the ultimate instance of authority. This way, XML may be prevented from the predicament of, let us say, OSI. At least, today's corporate customers are more powerful, aware, and invested in technology, than they were twentysome years ago.

So, at least for the time being, there is hope and Bill Gates has apparently learned something from Ray Noorda (former CEO of Novell), the value of coopetition. This time though, Bill may be trying to get the customer to fight the battle on his side.


fCh said...

Last month, Bill Gates himself was embarrassed for not being able to give a technology presentation at Comdex Las Vegas. Apparently, no matter how many times he tried, the damn technologies would not come together working...

Both the EU and US antitrust regulators asked of Microsoft to extensively license out its communications protocols. In effect, the regulators are attempting to blow up by law (some of) Microsoft's strength as derived from its platform approach.

Such disparate examples add for sure more interesting dimensions to Bill Gates' call for data level interoperability. What would be Gates' real options in a world where everybody could come, for a price, and ensconce in the Microsoft platform ecosystem--a place where only few companies made it to any meaningful market valuations?

fCh said...

Delayed post-scriptum:

Interesting take on the virtues of interoperability at the "price" of adopting WinFS:


I can see Mr. Ozzie's point, it's just the timing and the context in which interoperability occurs. Cui prodest? In other words, let there be interoperability as long as it happens under my aegis!