ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, July 13, 2011

A Contractual Protest: A Thread to A Can of Worms.

Google  v US It is rare that a day passes without some headline or other about the affairs of the major players in the fields of information technology (IT), Internet Business (IB) or Social Networking (SN).   The cast of players - a revolving door of usual suspects – includes Microsoft, Apple, Google, Facebook etc.  The relative harmony that once derived from their clearly differentiated activities – e.g. personal computing, online searching or social networking – is now a thing of the past.  Brittle harmony has given way to -  shades of the 1990s  - blow by blow accounts of smear tactics, strategic protests, general blogfare, and of course, court actions .  Why?  Because the players are slugging it out in the mush pit which the converging IT/IB/SN  arena has become – all for a (bigger) piece of the pie. 

The average observer might be daunted by the copious data and convoluted interrelationships typically involved.    Close contemplation of contractual details, particularly those undergirding the relentless strategizing, negotiating, and (guarded) cooperation of such parties, is clearly something the average observer does not relish.  Yet the nitty gritty of who is doing what to whom, and where, to get to the bottom of what is really going on in a dispute may not be that hard to find.  Help is found in unexpected places – even in very contracts that are dauntingly associated with such transactions.  Or more precisely, even from the angst  created by such contracts.    

There is a struggle, you see, between an industry giant, Microsoft, who is determined not to be past its prime, and an equally determined giant slayer, Google, a relative upstart that is notoriously hungry for power.   Microsoft is determined to reinvent itself.  It is trying to build on its dominant market position to expand beyond the  dated server based computing approach.  The aim is to become the leader of the emerging ‘cloud based enterprise solution revolution’.  All very well.  The thing is, however, that Google is eagerly developing competing products in the same field.  And Google is striving, mightily, to market those products.  So,  here is the rub – Google has been having a hard time persuading potential customers, a significant percentage of whom are loyal customers of Microsoft’s email and other office offerings, to make the switch.

This is why  Google cried foul, and loudly, when the U.S. govt., through the agency of the Department of the Interior (DoI), issued a request for quotations – an invitation for offers as we know – but allegedly indicated that it would not entertain offers from Google.  The DoI subsequently awarded the contract to Microsoft. 

 Google objected to not being invited to the party by filing a bid protest in the U.S. Court of Federal Claims.  In the filing, Google asserted infringements of the Competition in Contracting Act’s policy requirements  which mandated that “technology vendor neutrality as far feasibly possible” must be maintained.  Google has asked the court to enjoin the DoI from awarding the contract to Microsoft until competitive bidding has taken place.

This dispute between the parties has been anything but straightforward.  The DoI has asserted that Google was ineligible for consideration because Google’s products were not certified under the Federal Information Security Management Act (FISMA)  at the time.  But here’s the thing  - it now seems that Google had this certification – or at least for a related product, while Microsoft at the time of the award of the contract, allegedly did not.  Microsoft reportedly received the certification after the award, but this disparity is a fierce point of contention.

Google clearly understands that it has a huge task to unseat the Microsoft behemoth.  Its hopes of entering into what must be an accelerating volume of contracts required for market viability, if not market dominance, depends on a spreading domino effect.  An increasing number of smaller users will need to take their cue (to contractually adopt Google products) from the bigger fish who adopt Google’s applications.

The bigger war for market dominance is not limited to Microsoft and Google, of course.  When this slender threat of a bid protest is traced, it leads to a whole other can of worms: cut throat rivalry not only for cloud computing, but voice over IP, mobile tasking, and mobile payment also (to name a few).  But that can of worms is for another day……



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