And now, the wise convened. You are also one of the wise, so you too, shall convene.

Dear Colleagues:

Please excuse the generic salutation, however, the content of this message is anything but routine.

Today (3/14/2012), Todd Gould, President of Loren Data Corp, and Glenn Manishin (Loren Data Corp’s Antitrust Legal Counsel), are wrapping up a Web Conference covering the latest issues emerging in the Loren Data Corp v. GXS Inc. antitrust case. The other major issue is the imminent IE (ex-IBM) VAN interconnect shutdown. There are manifold  issues concerned with GXS’ manipulation of the IE interconnects, and the general antitrust Sherman Act charges of GXS abusing VAN interconnects (more precisely, using Network Effects) to harm competitors. Practical routing issues were most likely addressed, as they are unavoidable in the present unfortunate maelstrom.

Todd scheduled the web conference with the participation of our capable legal counsel; Todd and Glenn will not only update all of the parties as to what to expect, in addition, they will elucidate how any concerned party can become a constructive advocate via a small set of concrete actions.

The initial invitations were sent out to parties facing palpable impacts from IE’s interconnect closure (GXS clients with trading partners on ECGrid, other VANs, certain service providers with independent, yet similar problems with GXS). It seemed that many of our colleagues might wish to participate in this discussions, as there will be industry changing fallout  preceding and following the Oral Arguments phase of the legal proceedings, (or potential actions of FCC and DOJ), and the direct actions of others (letters to GXS, litigation by other parties, etc.). All of these issues were just discussed within the confines of Todd’s agenda.

This above conference is high on the ‘Heat Index’ (due to the inclusion of Atty. Glenn Manishin), however, other parties are just becoming interested or are just now tasting some of the backwash of GXS’ particular cologne; therefore a general inquiries conference will be conducted soon, focusing on policy, regulatory issues, and ways that mere mortals can support Loren Data Corp’s and Todd’s efforts – and more, because there is always more when dealing with GXS. I promise that this upcoming conference will be just as stimulating and informative.

Anyone who wants to participate in the upcoming conference, please contact me at awilensky@LD.com or call 412-353-9269 or Skype: awilensky

Meanwhile, think on this:

When I speak to EDI market participants about the Loren Data Corp v. GXS antitrust case, or the IE interconnect debacle, or VAN interconnection policies in general, nearly everyone states their sincere desire to constructively engage. The gravity of this situation is obvious.  Some folks pull back on their support; not in every case, mind you – Todd does have the support of several influential colleagues.

I sense that a dictum is emerging: ‘as goes LD v GXS, so goes the EDI market’. Colleagues sense that if GXS successfully runs roughshod over virtuous Loren Data Corp (a small, but not insubstantial, EDI network founded in ’87) then, the stage is set for ever more aggressive GXS actions that will harm the EDI Communications market.  Such actions are bad for innovation, competition, and are a terrible milestone for the EDI sector. Witnessing a Monopoly in formation is troubling, especially to those with a sense of history. It’s like a big rock rolling downhill while the regulators diddle, and the courts delay, as the collateral damage just piles up. Muscling ECGrid interconnects is just a GXS’ opening gambit….that’s the fear….you think they are your buddy?

For those with a Dickensian bent, the dream tableau opens as such….”where none spoke, nor acted, GXS grew by nasty turns without skills, bereft of innovation, using PE to terminate a vibrant EDI communications innovator”. Such colleagues that expressed concern (after sleeping on the issue), then call me to confess that, “I don’t want to get involved in the Loren Data v. GXS dispute”.  I say, “Indeed, you fear your involvement, as if a choice could even be made!”

The entire industry is involved, including GXS clients with trading partners on Loren Data Corp’s ECGrid VAN, as well as all consumers of EDI services, and all service providers, plus…..the Enterprise 2.0 and B2B Cloud ventures (pro-VAN, anti-VAN, closeted VAN users, As2 junkies with dirty secrets, etc.) all of these constituencies shall be affected for the worse if GXS has its way with Loren Data Corp.

This case and the supporting issues of the IE Interconnects are a must win for us all – even for relatively satisfied GXS customers (if any). This disputation may even be more important to GXS clients than any other constituency.So, what is this wavering? I queried each party I could reinterview, and a few were very forthcoming – it was the same scenario over and over again. Some colleagues had insightful comments about a dysfunctional GXS management that was…..” playing the wrong game, not watching the ball or the store,  playing a dangerous game where the courts and regulators could, at any moment, bring down their house with a hurt that the suits in Gaithersburg could not conceivably prepare for”. That is a direct quote from a powerful industry insider who cognized a potential, widespread outage at the hands of a GXS in retreat and turmoil after a predictable Sherman Act  conviction – as the Sherman Act could conceivably result in criminal penalties within GXS’ C-Suite. All so unnecessary, all of this over interconnects !

The best and most obvious explanation of such ‘misplaced risk avoidance’, is, as follows:

When a terrifying or ‘business scary’ event occurs, when the industry is being bent to the will of a toxic actor, your typical middle manager or corporate executive’s first instinct is to not get involved, even if the overall health of the market is at risk; It’s not their game, directly, and staying out of the fight seems to make eminent sense. So be it.  Next, one would expect the equity holders (entrepreneurs and owners of EDI based service provider businesses) those with ‘ample skin in the game’, would step up, because if GXS can sweat Todd Gould, it’s just a matter of time and opportunity until the Death Star moves on to others, or simply raises the heat in the EDI kitchen, until the market is no longer a good place to compete. GXS is going to squeeze and squeeze, until all of the players, mostly service providers, but possibly even IBM Sterling – will have to pay dire tribute. They do, after all, have temporal backing of PE funding….up to a point.

In this present case, one’s initial reaction is to back down, to not stick one’s head up, to remain totally silent, (not even registering the obligatory verbal protest) – such inaction will have the opposite effect of emboldening a PE funded, rogue GXS to take even more that what they had originally planned….due to the reigning, deafening silence.

The appropriate action, in the Loren Data Corp v. GXS Inc. dispute, is to take a counterintuitive stand by making known your individual and corporate concerns and intentions in the most vocal terms possible, proceeding to work with like-minded industry colleagues – in castigating a legion of clueless VP’s at GXS to wise up.

In addition, throw your moral and material support behind Todd Gould…..because you could (will) be next. The EDI industry is in the process of being monopolized. The sector is in danger of losing a rare innovator, one who has contributed more than most, and one whose innovations could potentially expand and revitalize B2B communications for the SME market –  with nearly ~30 billion dollars sitting on the sidelines waiting for the myriad of entry barriers (cost, complexity) to be erased.

If GXS get’s their way, if they can merely wipe one legitimate competitor from the EDI horizon under the nose of DOJ, an agency that specifically warned GXS in the (pre-Inovis merger) HSR review – that their approval was predicated on dealing in a manner as befits a “Sector Leader”, practicing good industry stewardship towards their competitors. However, rather than honoring the practice of reciprocal interconnection and traffic exchange agreements, a system that fertilized the EDI market (and the selfsame properties acquired by GXS),  everyone now knows the naked truth: GXS eats at the table of their reciprocal interconnects to other VANs, and therefore it is long past the time for the market to prod GXS back into line.  So take action, IBM, take action Easylink, and take action, all of you service providers, ECGrid Partners, and GXS corporate clients, all of those hoping for a fair, competitive and innovative future for the EDI Communications market. 

GXS is now using its attained size and attendant network effects (of its acquired VAN properties) to  unfairly imperil competitors. The appropriate action to take, in this case, is to stand up and be counted, to aid Todd Gould, and to let GXS know that their actions are toxic to competition and innovation. The foregoing also applies to GXS’ customers – because standing idly by while GXS dismantles the EDI Service Provider market is not at all helpful to your mid-market trading partners in their search for cost-effective and innovative B2B services. The whole game is up for grabs, as it was in the time of AT&T’s hegemony.

Sincerely, and with best hopes for EDI’s competitive future.

Alan Wilensky

Colleagues of Goodwill, who care for this market, can reach me via skype: awilensky or awilensky@LD.com or (412)-353-9269

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