IBM, Microsoft plot Net takeover

Quietly, IBM and Microsoft have been building a toll booth that could position them to collect royalties on most, if not all, Internet traffic.

commentary IBM and Microsoft have been quietly busy behind the scenes for the last two years building a toll booth that could position the two companies to collect royalties on most if not all Internet traffic.

While the technologies that form the foundation of that toll booth have yet to be officially recognized as standards by an independent standards body, the collective strength of IBM and Microsoft could be enough to render Internet standards consortia powerless to stop them.

The potential for the two giants to erect a toll booth is tied to the likelihood that Web services protocols such as SOAP, WSDL and UDDI--and the related ones to which the two companies hold patents or other intellectual property rights--will one day be as important as the standard protocols (such as TCP/IP and HTTP) on which the Internet is based today. Web services and the protocols that make them possible are destined to play a major role in most if not all electronic commerce as well as other Internet traffic.

If the protocols do become standards, either by virtue of an independent standards organization's imprimatur or by attaining a de facto status, IBM and Microsoft--or any other company that maintains the intellectual property rights to them--could legally impose royalties on that traffic. In fact, any protocols that become a part of the core Internet infrastructure without having been made available on a royalty-free basis could guarantee the owners of the intellectual property the right to place a tax on the Internet traffic that depends on those protocols.

No standard policy
For the most part, standards-setting for the Internet and Web has taken place within the working groups of two organizations: the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). Until recently, neither organization had maintained a policy requiring vendors to make the intellectual property (IP) they contribute to the standards setting process available on a royalty-free basis. According to W3C Patent Policy Working Group Chairman Danny Weitzner, "Despite the lack of a policy, there has always been an understanding amongst the various contributors that the Internet and the Web wouldn't be possible or scalable unless their contributions were available to everyone on a royalty-free basis."

But that gentleman's agreement has been tested several times over the years and it could end up being tested again by Microsoft and IBM. According to documents on the W3C's Web site, IBM and Microsoft not only own intellectual property within specific Web services protocols, but also have no intentions of relinquishing their IP rights to those protocols should they become standards. The documents indicate that the two companies are currently maintaining their rights to pursue a reasonable and non-discriminatory (RAND) licensing framework as opposed to a royalty-free-based framework. The RAND framework is widely acknowledged as the one that keeps a vendor's options open in terms of being able to charge content developers and Internet users a royalty for usage of relevant intellectual property.

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