Gresham's Law

Several days had passed since the matter of Gresham's Law. For Yoo Jae-won, November—which had felt especially hectic—had slipped away, and December, the final month of 1993, had arrived. In Korea, the arrival of winter would have been unmistakable, marked by biting winds, but in San Francisco, where temperature swings were minimal, it simply felt a touch cooler. Work had consumed so much of his time that the days blurred together. At the same time, every matter directly or indirectly tied to Yoo Jae-won carried immense weight. In both the United States and Korea, related news stories erupted one after another.

The first major headline concerned a joint lawsuit filed against Nextcomcast by a coalition of software developers led by Electronic Arts. At a scale of one ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠billion dollars, it was impossible for the story not to dominate the news. Though the media loved drawing clear lines between good and evil, no outlet took a strong side in this case. While the companies suffering from unauthorized internet sharing had legitimate grievances, holding Nextcomcast responsible for merely providing the lines felt ambiguous. Most critically, the Information Superhighway project spearheaded by Nextcomcast enjoyed strong backing from the Clinton administration. Media outlets aligned with the Democratic Party reported the facts in a dry, neutral tone. Conservative outlets supporting the Republicans could not exactly celebrate the story either—ID Group's advertising spend was simply too enormous. Even when combined, Electronic Arts and the other plaintiffs could not match ID Group's budget. Software companies typically advertised only in niche magazines, whereas ID Group dominated television and newspapers. America might pride itself on speaking freely even about politically sensitive topics, but caution toward major advertisers was no exception here.

Everyone watched closely to see whether this lawsuit would produce the first regulations on the internet. Yet few people knew about the real-time internet war unfolding beneath the surface. Once-famous warez sites went offline without warning, flooded with fake files that rapidly eroded user trust. Operators hit by the sudden disaster fought desperately to restore service. They created temporary new sites and uploaded verified files, but these were no permanent solutions. The moment a temporary site's address leaked into communities, traffic would surge and crash it again. Verified files vanished within hours of upload—the free transfer quota for each file was exhausted in an instant.

Operators of warez sites, or those who had uploaded massive amounts of material, soon received lawsuits demanding enormous compensation if they had carelessly revealed addresses or identities. Through this, they realized ID Group was behind the sweeping attack on warez and posted furious accusations on community boards. The response was muted. Even those interested in computers interpreted the moves as a defensive legal action by Electronic Arts against copyright infringement. Casual gamers who had relied on warez sites felt the inconvenience but quickly found alternatives—sites offering older games for free alongside massive discounts on newer titles, with no quantity limits. That site was ESD.com, which had rapidly risen in internet communities.

ESD stood for Electronic Software Distribution. Yoo Jae-won had launched the service days earlier as a carrot tactic. Despite the quick independent launch, the foundation was solid. Nextcom had steadily improved paid software sales and expanded the catalog. The service had simply suffered from poor accessibility within Nextcom and lacked the dramatic discounts of physical packages. Yoo Jae-won spun the service out of Nextcom, placed it on dedicated servers, and created a clean new web page. Choosing the name had been the hardest part. He had considered Steam—the dominant ESD platform from his previous life—along with Origin and Humble, but using those names felt wrong. Then the simple solution struck him: take the initials of Electronic Software Distribution and add the magical suffix ".com." ESD.com was born.

The organization was kept lean. The team that had managed Nextcom's paid software pages became the core management, supplemented by roughly ten fresh graduates—half from Stanford, the rest with Silicon Valley internships. Their capabilities were beyond question. Adding the one-click payment system developed by ID High Tech produced a flawless online software store. While credit cards were required for easy purchases, penetration rates were rising sharply each year, so it posed no major barrier.

Post-launch sales exceeded expectations. Seamless payments, instant downloads, and steep discounts led many customers to buy games they did not even need. Buoyed by the results, Yoo Jae-won ordered aggressive outreach to secure online distribution deals. Games one or two years past their physical release generated almost no sales in stores. Moving them online with discounts magically revived revenue. Even titles with no remaining commercial viability could be resurrected, so large discounts created no problems. Origin Systems, recently acquired by ID Entertainment for twenty million dollars, began listing Wing Commander and Ultima on ESD.com. With its dedicated fanbase, Origin saw paid downloads surpass ten thousand within days. President Richard Garriott's view of online platforms improved dramatically, and he grew more receptive to Yoo Jae-won's online projects.

Beyond these major events, San Francisco regional news briefly captured national attention: the four-million-dollar jackpot won by Jerry and David. Nextcom's adoption of the Yahoo search engine created by the two Stanford students, and the four million dollars paid for it, made headlines across the country. Yoo Jae-won had also scored big wins, but their scale defied ordinary imagination and felt unreal. Jerry and David's windfall, however, was something anyone could grasp. Public interest in Yahoo exploded, and many netizens visited Nextcom to experience its bold decision to import an external search engine.

Not every American development benefited Yoo Jae-won.

"By the way, why has the rumor spread that I'm attacking the Linux camp?"

Seated before the computer in his study, Yoo Jae-won had 2CH.com and several small Linux community sites open on his monitor. As he muttered, recent online communities were openly discussing claims that he was deliberately trying to destroy Linux. The notion was absurd. Yet on the internet, it had already hardened into accepted fact. The rumor had grown so persistent that Richard Stallman, a leading Linux developer, had even sent an email. Fortunately, Stallman had not misunderstood. His message remained courteous, thanks to the ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠goodwill established during the first Security Challenge. The misunderstanding with Stallman had been cleared before it took root, but public perception remained the problem.

"Is it because of the warez site attacks?"

Yoo Jae-won had used what was essentially a new technology at the time—DDOS—to strike Chandler's Free Software, a warez site. Its servers ran on Linux and had been defenseless. Of course, servers using Android Enterprise Edition had also fallen to the same attacks. Under identical hardware specs, the Enterprise version could handle more traffic than Linux, but nothing could withstand traffic exceeding physical hardware limits. Still, few outside observers had detected the attacks. Since the data centers and internet lines belonged to ID Group, news of the aggressive tactics used to eradicate warez never leaked. This created the misunderstanding. Some netizens concluded that the repeated outages on warez sites were Yoo Jae-won's attacks on Linux, which was gaining server market share, and spread the rumor. The speed at which sensational rumors traveled was astonishing—especially online—and within moments the claim had reached every major North American community site, where it now stood as established fact.

"Hmm. This is exactly the position Gates used to be in, constantly facing baseless attacks."

Microsoft no longer existed. Yet before Yoo Jae-won had met him, during its peak years, the company had been the origin of countless rumors. Now Yoo Jae-won appeared to be inheriting that role. Being recognized as number one by the public was positive, but becoming the center of rumors was not. Complaining would ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠change nothing; there was no avoiding it.

"So I should just enjoy it?"

Neither he nor the company could easily respond, so the only option was to wait for netizens' attention to shift elsewhere. Until then, he might as well enjoy the situation.

"I'd feel less wronged if I had actually attacked Linux properly."

Yoo Jae-won held no grudge against Linux. On the contrary, he considered its existence fortunate. As long as Linux maintained even a small market share in operating systems, calls to break up ID Group would never arise. In fact, he had quietly supported Linux in various ways. A clear example was USB driver support. Without professional programmers creating drivers to connect hardware and operating systems, the Linux camp would have faced serious difficulties. Upon USB's release, Yoo Jae-won ensured drivers were developed and distributed for both Android and Linux. That was not all. The Linux conversion project for Glide X, which had become the standard for 3D acceleration, was also under observation. Linux was a fully open-source operating system, so feature additions and version updates occurred through voluntary contributions—resulting, in other words, in chaos. Without central control, developers simply tried whatever they wanted. Recently, however, people sharing common interests had begun forming communities to build specific ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠features. The largest such community was, ironically, on 2CH.com. The Linux developer gatherings there had grown to a respectable size.

The most active community at the moment was the group attempting to run Android games on Linux. Because Android and Linux shared similar Unix architectures, execution itself posed no major issue, but libraries were the problem. This was why efforts were underway to create a Linux-compatible version of Glide X. Glide X was an open library available to anyone, but its freedom existed within the Android operating system. Porting it to Linux was clearly illegal. Nevertheless, Yoo Jae-won chose to watch for now. No line had been crossed yet, and even if forced, the port would not run as smoothly as on Android. Looking further ahead, there were many potential businesses Linux could support. He was inclined to help Linux, not attack it—yet he found himself the target of baseless suspicion, which was frustrating.

Moreover, the matters requiring Yoo Jae-won's attention were not limited to America. If America was the cash cow, Korea remained his origin and true home. Korea was also far from quiet these days, and the developments were closely tied to his own actions.

Headlines on Korea's Nextcom news page, printed in letters twice as large and bold as ordinary articles, still focused on the recent Korea-U.S. summit. The lead stories were highly positive, but turning the page revealed chaos.

The National Farmers' Alliance, mostly composed of rice farmers, had learned—either through strong intelligence or deliberate leaks—about the Uruguay Round agreement to open the rice market and reacted with outrage. For them, it was a matter of livelihood, so their reaction was understandable. Yoo Jae-won knew that even if the Uruguay Round shifted international trade from GATT to the WTO system, daily life would not change dramatically. Although the government had pursued an FTA with the United States, it had worked hard to protect domestic industries, especially agriculture, semiconductors, and automobiles. American agricultural products and cars were not particularly popular in Korea anyway. The real future issue would be livestock products, which no one was paying attention to yet.

"This is the real problem."

The massive student organization known as the National Council of Student Representatives had joined the fray at a strangely timed moment. Their stated reason was condemnation of the "contamination" of the inter-Korean summit—supposed to be independent and self-reliant—by involving the United States, an "outside force."

"Good grief, what are they even doing?"

At the time, activist groups still wielded considerable power. They had produced positive effects in 1987, but as time passed they increasingly followed the ethnic self-reliance line—commonly called the NL line—greatly strengthening pro-North and anti-American tendencies. To Yoo Jae-won, this was a show of force. The current student activist structure would end in 1993 and be reorganized the following year under the name Korean Confederation of University Student Associations. They seemed determined to end their run with a grand finale. Since Yoo Jae-won had no separate plans regarding student movements, he intended to leave them alone. University activism naturally weakened once society stabilized and democracy took root. There was no reason to invite stress by intervening now.

"Actually, this is the biggest issue."

Yet Yoo Jae-won's real concern lay elsewhere—in the least popular economic section of the news page.

With Ilsung and Daeho leading the way, a fierce competition to attract foreign capital had begun. Interestingly, a significant portion of the incoming funds came from Japan. Yoo Jae-won had once made substantial profits in Japan. That had been only two years and a few months ago, yet Japan now appeared to have resolved its economic crisis at remarkable speed. This was the result of lowering domestic bank interest rates close to zero, greatly increasing asset liquidity. Because the change was achieved through rapid stimulus rather than fundamental reform, side effects were severe. One of them was the yen carry trade: borrowing low-interest funds from domestic banks to invest in higher-yielding foreign assets. Simply borrowing yen to buy U.S. bonds yielded over 5 percent annually. Those seeking higher returns—high-risk, high-return investors—chose high-yield corporate bonds, enabling Korean conglomerates like Ilsung and Daeho to secure massive foreign capital.

"It's obvious this will end in disaster, yet there's no way to stop it."

ID Investment had issued warnings, but no one listened. Thanks to media framing, attracting foreign capital was treated as an absolute good. Yoo Jae-won separately noted the names of reporters who praised "great foreign capital attraction." It would be amusing to compare how many of them would change their tune without blinking once the foreign exchange crisis hit.

A short while later, a knock sounded.

"Chairman, it's time to depart."

Kim Dae-seok entered the study.

"Yes, I'm ready."

Yoo Jae-won turned off the computer and rose from his chair. While he usually sat before the screen in casual attire, he now wore a full suit—fully armed for the occasion. Today's event was the year-end executive meeting to review ID Group's annual performance. Though called a presidents' meeting, it was a large-scale gathering attended by all executives. Even the head of the Moscow High Tech Research Institute had flown in to deliver a report. Dozens of attendees would present their organizations' achievements and how well they had fulfilled the tasks assigned at the beginning of the year, then receive guidelines for 1994. Since no office was large enough for such a meeting, a small hotel had been rented to serve as both venue and lodging for executives and staff who had traveled from afar. It was the occasion to personally confirm ID Group's harvest for the year, and Yoo Jae-won's steps felt lighter than ever.