Wednesday, December 08, 2004

IBM Sale Raises Hardware Control Questions

An interesting question at Furdlog on the news that IBM has sold its PC business to the Chinese computer maker Lenovo:
Exactly how interested will a Chinese manufacturer (3rd largest in the world) be in incorporating hardware controls that comply with US copy protection policies, but also cripple the product?
This question has already been raised by the (future) introduction of the U.S. broadcast flag scheme, one of the copy protection policies the question refers to. The broadcast flag is a technological measure to control the distribution of digital over-the-air television content via p2p-systems, and blurs the regulation of broadcasting and the internet. The broadcast flag consists of metadata and is transmitted with the digital television signal to "tell" a receiver of these signals whether it may redistribute the content or not. The Federal Communications Commission has made clear that the broadcast flag will have to be incorporated in PCs:
"We further note that we intend our redistribution control regulations to apply to any device or piece of equipment whether it be consumer electronics, PC or IT device that contains a tuner capable of receiving over-the-air television broadcast signals." (PDF of FCC Proposal)
This means that any PC sold in the United States will have to adhere to the broadcast flag scheme, which, as noted on Furdlog, cripples the product. The "freedom to tinker" with the PC is restricted. The open platform of the PC is partly closed.

This relates to the answer to the question in that any foreign manufacturer, for example Lenovo, has to comply with the broadcast flag scheme if it wants to sell PCs in the United States. If foreign manufacturers don't want to be excluded from the U.S. market they better incorporate U.S. copy protection policies. Actually, while non-U.S. manufacturers may not import them, U.S. companies may keep on manufacturing non-compliant PCs for export purposes:
"The requirements of this subpart do not apply to demodulators, covered demodulator products or peripheral TSP products manufactured in the United States solely for export." (compare C.F.R. ยง 73.9009)
This raises a fair trade issue, but more importantly foreign manufacturers may produce (U.S.) copyright protection de facto in PCs. Two production lines -U.S. compliant DRMed and non-DRMed PCs- may prove too costly to keep up. This would bring the implementation of U.S. policies on a global level.

Depending on the market share of IBM's PC business in the U.S. Lenovo's incentive to "incorporate hardware controls that comply with US copy protection policies, but also cripple the product" may be rather high. Another question is what happens when the Chinese government mandates the incorporation of filtering controls in Lenovo's products. But that's just a wild thought, as the broadcast flag once was.

Link to BBC Online story on IBM-Lenovo deal
Link to Slashdot discussion on the sale


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