My Personal opinion of the Loren Data Corp v. GXS peering and interconnect spat

here is how I see it.

This post is now superseded by the later post, “The Central Issues of EDI Communications Industry Advocacy, the Truth behind GXS’ facade, and the true meaning of developments in Loren Data Corp v. GXS Inc.”  But for those who hate reading long form posts, there are three issues plaguing the EDI Comms Industry, most of which can be traced to GXS (only three, yes, three main issues discussed in the next article). Even companies that are satisfied clients of GXS TradingGrid, and who are perfectly happy with GXS services, should be aware of the central issues that have been surfaced in the GXS defense of the Loren Data Corp Antitrust case. For the unsatisfied, those who are somehow bound, or who feel captive to GXS, your gentle cohort is honored here. For those experts and analysts that watch the B2B IT industry, and who care about the evolution of services in the Enterprise 2.0 model (Cheaper, ubiquitous, easy, open),  we who are not captured in an analyst bureau that is bought and paid for, know that most of the ills plaguing the EDI industry, are traceable in part to the dynamics arising from the Private Equity investment of Francisco Partners in GEIS, the buyout of the IBM IE VAN, and the subsequent purchase of Inovis. The newly birthed entity of GXS Inc., from  top to bottom, has damaged the long-term prospects of the B2Bi industry and attenuated prospects for vigorous innovation. I have been covering the B2B sector independently since the late 1990’s as a general analyst, and since 2004 specifically as an analyst specializing in product advocacy.

Ignoring the boilerplate “hallelujahs’, of Gartner / Forrester, and focusing instead the issues relating to EDI communications and internetwork policy, GXS’ buy-a-lotsa-VANs-roll up has been an unmitigated disaster, with Loren Data Corp featured as the opening gambit, an initial casualty and test case of what awaits the industry, once GXS gets past the DOJ’s short-term memory, or other legal challenges, and commences to crush under their PE funded boot-heel the remaining EDI providers that they can’t buy.

I am sure that GXS excels in many areas related to large scale systems management and deployments; they are a big dog. They are not without any value whatsoever! But the GXS brand image, at least looking at the sentiment analysis of the Yahoo EDI list – is tarnished. Posts and reviews by former and current GXS employees on GlassDoor.com reveals some pretty ragged insights about the corporate soul of GXS, all from insiders with something to get off their chest.

Take GlassDoor reviews for what they are – but there is a remarkably consistent darkness surrounding  the opinion of these ostensible GXS insiders. More importantly, and to the point, is GXS the industry steward, sector leader, and corporate citizen that we would voluntarily choose? The company and its executives are in a remarkable position to do good in the EDI industry, and would not lose one dime by growing a corporate conscience.

I am going to expose my personal opinions of what Loren Data v GXS case represents, why antitrust law is ill-suited to the current problems that arise from GXS’ hegemony of the EDI Communications market, and how this mirrors  other communications monopolies that took years and decades to topple. As an industry, we should be more agile and proactive in addressing  the ills that are centered around message routing and internetwork relations. Courts and regulators should be better briefed on these issues, and not be so susceptible to blatant misinformation hiding as legal technicalities and fancy lawyering. The regulators should really give EDI Communications the pride of place it deserves – and with a light touch, help the advocates of open EDI Communications steer the sector towards its most laudable goals:

1) Open access for any trading partner, from any trading partner, to any trading partner, without gatekeepers or permissions, in the globally routed system of VANs, Specialist EDI networks, and service providers

2) The Free Choice of Communications and Services Providers by any business with a legitimate need to participate in their partner’s supply chain operations

3) Lower rates with better services based on innovation and competition in a free market.

Those preceding attributes are utter anathema to today’s GXS – but such attributes sound to me like the best values of Today’s Internet, to me. Its E2.0 Baby, its ECGridOS!

The core issues plaguing the EDI Comms sector, mentioned earlier, are as follows: (and then I will stop and work on my longer briefing)

  • The need to establish a value free, non-discriminatory, routing agnostic system among commerce network operators.
  • The emergence of a toxic Choke Point, or hegemony granted to one network (GXS), this franchise coming via both the purchasing power of Private Equity, and a lack of industry unity, or an unwillingness to act.
  • GXS has compiled a long list of influential supply cain clients; without the consent of these clients, GXS has used their “must route to” status to muscle their trading partners onto VANs that GXS has blessed, or onto TGMS itself. (these clients will not be so blissfully naive much longer).
  •  The total lack of trading partner advocacy whatsoever in the industry, and a total absence of control over their own data communications.
  •  The stagnation of the EDI Communications market among a few providers that have contributed virtually nothing to the state of the communications art. If you have stopped innovating,  then at least participate in the higher values and aspirations of the market, and contribute by getting out-of-the-way, taking a stand, or doing something for the trading partners who are your clients (maybe stop making them sign multi-year locked-in agreements – a sure sign of weakness).
  • The creation by GXS of a small, disadvantaged class of otherwise respected and august EDI system operators. We know the Loren Data Corp has struggled to obtain the right to route to GXS, and this reasonable, collegial request has netted nothing. The author would remind all concerned parties that what are called VAN interconnects, are really misnamed – the truth is that VAN interconnects are really “message exchange and forwarding agreements” – and are controlled by a body of laws governing the bailment of messages between contractual parties.
  • It would be well to recall, that the loss of a forward-thinking (API for EDI Network Ops), independent EDI network operator, such as Loren Data Corp, would be a tragedy for the users and even other VANs – as having an independent operator operating in the ECGrid model (no end-users, no Value Added services such as mapping), as a conduit to most service providers, brings EDI to new trading partners, which in turn drives traffic to all of the VANs with minimal support overhead.
  • For the rest of industry sitting on Laurels: enjoy, for now, your GXS interconnect, look and notice well, as a distinguished colleague and EDI expert, Todd Gould, Loren Data Corp’s founder and CTO, fights in virtual isolation. This is a sad, sad commentary to witness:  blatant ass-covering, hiding behind yo momma’s skirts –  why not pick up your phone and have a frank conversation with Todd about where the industry is heading, what will be the impact of a badly behaved MegaVAN#1, and what you can do, either technically or financially, to put the scales back in balance. This goes for the trading partners too, especially those GXS clients with trading partners on ECGrid – you are being unwittingly exploited.

So stay tuned for the big monograph covering these issues, especially the impact of the latest motions in the LD vs. GXS, and what it all means in the greater context. (GXS was granted a motion to dismiss the Federal Antitrust charges, while certain claims stood, and Loren Data counsel says they will petition for leave to amend and address the technical deficiencies in the original complaint and answer to the Motion to dismiss. As the Judge’s order did not contain the words, “granted with prejudice”, Loren Data counsel sees that there is a way forward. Still, it shows what excellent legal defense a corporation can buy – Chadbourne and Parke’s motion was a tour de force, and it walked the Judge down a road that defense counsel designed for Her Honor – which is what you want in defending the alleged monopolist /antitrust violations in a Federal Case. Loren Data Corp will avail of corrective measures in amending the complaint, will pursue an alternative legal strategy invoking the laws pertaining to the conveyance of message traffic between contractual parties. I also hope to be in front of an FCC bureau or a panel of Commissioners and Administrative Law Judges before the end of the year.)

All of the opinions on this blog are my own.

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