Concrete proof shows how Linux was excluded, just like today’s ‘non-taxable’ Linux
Yesterday we wondered whether Microsoft’s exclusionary deal with OEMs are similar to exclusionary Linux deals. Particularly, we wondered if these are similar to exclusionary contracts with government departments. What remains clear is that there is a pattern here. In order to understand this pattern better, let’s delve into concrete evidence and explore the past.
Here is Microsoft’s old contract with Compaq[PDF]. It reached the light during the Comes vs Microsoft case in Iowa.
MICROSOFT APPLICATIONS PRODUCTS
a Washington Corporation
COMPAQ COMPUTER CORPORATION
a Delaware Corporation
You can dissect the nature of the deal for yourself (OCRing is not hard, but plenty of editing must follow because of the poor quality of the scan). Mind the following bit in page 22. It’s just one outstanding example among many others.
The following provisions shall apply to all Products listed in this Exhibit C:
the above royalties require that COMPAQ distribute the Products preinstalled on all customer systems.
Microsoft OEM LICENSE AGREEMENT
FOR MINIMUM COMMITMENT PAYMENTS
#2811-7060 dated march 1, 1997
with DELL COMPUTER CORPORATION
There is a lot to be found there as well. Web browser discrimination and a Microsoft-centric programs set are some of the recurring patterns in these contracts. There are many more such contracts which were intended to remain secret at the time of signing, just like Microsoft's deal with BECTA and the deal with Novell, among other deals. In Linspire’s case, very little was revealed because it is a privately-held company.
Dell’s love affair with Linux is a clandestine affair these days, conducted in secret, away from disapproving eyes. But now the pair have been spotted in China.
When Michael Dell first saw the web-footed beauty, he fell head over heels. Six years ago Dell pledged a series of strategic investments in Linux companies, including Eazel and Red Hat. The romance attracted the disapproval of Microsoft however, and barely lasted weeks. Very quietly, Dell dumped the bird.
It later emerged that Microsoft’s OEM enforcer Joachim Kempin had promised Steve Ballmer that he’d be putting the screws on PC builders, or “hitting the OEMs harder” in his words.
The States’ remedy hearing opened in DC yesterday, and States attorney Steven Kuney produced a devastating memo from Kempin, then in charge of Microsoft’s OEM business, written after Judge Jackson had ordered his break-up of the company. Kempin raises the possibility of threatening Dell and other PC builders which promote Linux.
“I’m thinking of hitting the OEMs harder than in the past with anti-Linux. … they should do a delicate dance,” Kempin wrote to Ballmer, in what is sure to be a memorable addition to the phrases (“knife the baby”, “cut off the air supply”) with which Microsoft enriched the English language in the first trial. Unlike those two, this is not contested.
Earlier memos described that it was “untenable” that a key Microsoft partner was promoting Linux. Kuney revealed that Dell disbanded its Linux business unit in early 2001. Dell quietly pulled Linux from its desktop PCs in the summer of 2001, IDG’s Ashlee Vance discovered subsequently, six months after we heard Michael Dell declare his love of Linux on the desktop the previous winter.
Compaq was also mentioned in other memos, with Microsoft taking the line that OEMs should “meet demand but not help create demand” for Linux.
There are several more I am aware of, some of which involve Dell. To move further, however, let’s take a more ‘holistic’ view on this problem. kuro5hin.org has a good article on this issue as a whole.
They are, in short the secret to Microsoft’s success. And the word secret is to be taken quite literally: No OEM may talk about the contents of his contract, or he will lose his license, and (assumption) likely be sued for breach of contract as well.
You may then also consider the Iowa Petition[PDF]. It shows how Microsoft essentially blocked its competitors (Linux in this case) from reaching the sales channel.
Microsoft’s Predatory Response to GNU/Linux
142. GNU/Linux is an “open source” operating system that runs on Intel-compatible PCs. Microsoft has targeted the competing operating system by pressuring Intel, as well as various major OEMs such as Dell and Compaq, to boycott Linux. In late 2000, for instance, Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: “I am thinking of hitting the OEM harder than in the past with anti- Linux actions” and will “further try to restrict source code deliveries where possible and be less gracious when interpreting agreements – again without being obvious about it,” continuing “this will be a delicate dance.”
143. LindowsOS (now known as Linspire), which is developed and marketed by Lindows.com, Inc., is an Intel-compatible PC operating system based on Linux and which competes directly with Microsoft on the. PC desktop. On information and belief, Microsoft interfered with Lindows.com, Inc.’s ability to distribute its product through the OEM channel. Microsoft also initiated a lawsuit against Lindows.com, Inc. that adversely affected Lindows.com, Inc.’s ability to exist, obtain; funding and conduct business. Microsoft’s Anticompetitive Agreements With OEMs To Foreclose Competition
144. Microsoft Chairman and former CEO, Bill Gates, reportedly summarized the effects of the DOJ’s 1995 consent decree–which banned “per processor” licenses, among other exclusionary licensing terms mas “nothing.” Microsoft was able to devise other restrictive OEM agreements to foreclose competition in th…
145. A “per system” license was the practical equivalent of the “per processor” license. Under the “per system” license, the OEM had to pay royalties to Microsoft for every computer of a particular “model” or “system” that it shipped–again, as with the “per processor” contracts, regardless of whether the PC contained Microsoft’s operating system. Microsoft defined “system” and “model” so broadly in its contracts that virtually all of an OEM’s production was subject to Microsoft’s “double tax” if the OEM wanted to give the consumer a choice of operating systems. Microsoft did not agree to give up its “per system” licenses in the 1995 consent decree, even though the Department of Justice warned the federal district court that “per system licenses, if not properly fencet in, could be used by Microsoft to accomplish anticompetitive ends similar to ‘per processor’ licenses”–and in fact were.
146. Another way that Microsoft found to circumvent the federal court’s 1995 injunction forbidding its use of “minimum commitment/per processor” licenses was what Microsoft calls its “Market Development Agreements” (“MDAs”). Microsoft contrived the MDA as a device to evade the Court’s decree prohibiting Microsoft from requiring OEMs to adhere to “minimum commitments.” As Steve Ballmer (Microsoft’s current CEO) acknowledged: “We have always given better prices to customers who work with us to make the market. Those used to take the form of commits [i.e., minimum commitments] which we do not do anymore as a result of the [federal court's] decree but we still believe in rewarding people who help us create demand. Hence the iMDA.” Under the MDAs, Microsoft granted large discriminatory price concessions to those OEMs that would agree to market and promote Microsoft’s Windows to the exclusion of any rival operating system. These discounts were calibrated so as to force the OEM to sell most of its computers with a Microsoft operating system in order to obtain the lowest price.
147. Because the OEM market is so competitive and profit margins are so thin, every OEM had to get the lowest price it could from Microsoft in order to survive. In March 2002, a Gateway marketing executive (Anthony Fama) testified before Judge Kollar-Kotelly in State of New York et al. v. Microsoft, Case No. 98-1233 (CKK), about how Microsoft used its MDA program in order to force OEMs to market Microsoft’s operating system exclusively: “Given the substantial nature of these discounts, participation in the MDA, as a practical matter, is not optional. In other words, not receiving :these discounts would put Gateway at a substantial competitive disadvantage, and Gateway has communicated that self-evident proposition to Microsoft.” Microsoft also used its MDAs to lock OEMs in and competitors out by offering a discriminatory price to the OEM in a later year provided (a) the OEM reached Microsoft’s imposed goal of Windows sales over competitive sales in the prior year and (b) renewed its exclusionary contract with Microsoft for the later year. This placed the OEM on a perpetual treadmill, eliminating competition indefinitely. Microsoft continued these exclusionary terms at least past April 2002.
148. One method for encouraging competition in the operating systems market would have been the sale by OEMs of “naked machines” (i.e., computers that are sold without a predetermined suite of software forced upon the consumer). “Naked machines” would allow consumers to choose their computer’s software configuration from an array of competitive software products, either for preinstallation by the OEM or installation by the end user.
Microsoft sought and obtained the agreement of the OEMs to refrain from selling “naked machines.” Instead, OEMs universally agree to “bundle” Microsoft applications and operating systems with their computer hardware, effectively depriving consumers of any competitive choices. These restrictive agreements exited before 2000 but, in 2000, Microsoft ratcheted the restriction up so that OEMs are forced to forfeit all discounts otherwise earned if they ship any “naked machines” to consumers. This heightened restriction, which (on information and belief) continues to the present, prohibits PC users and PC retailers from buying and installing lower priced or better quality operating systems of their choice.
Articles were written at the time to cover some of the issues raised by the lawyers in Iowa. Here is one such article. (the page has expired since I grabbed a copy)
A judge on Friday told jurors they must accept as fact that a federal court found in 1999 that Microsoft holds a monopoly over computer operating systems and that it restricted computer manufacturers’ ability to use competing systems.
She said she’ll show that the company used its monopoly power to exclude competition and control prices and that it conspired with other companies to restrain trade, maintaining what she called a chokehold on software competitors and computer manufacturers.
“It isn’t illegal to be successful,” Conlin said in opening remarks. “We applaud that. … But you can’t freeze out competitors and punish and retaliate against people who cooperate with competitors. Microsoft did all that and more.”
Conlin warned jurors that she would say some unflattering things about Microsoft and its billionaire founder Bill Gates, who serves as company chairman.
Conlin’s first 3 1/2 hours of opening arguments delved deeply into computer industry history and how Microsoft fought off competitors attempting to design rival software.
Going back now to as early as 1998, Microsoft starts to realize that Linux might pose a possible threat, and Vinod Valloppillil, who is a program manager at Microsoft, is asked by Mr. Allchin, Jim Allchin, to analyze potential strategies for combatting open-source software, and specifically Linux. His memos are leaked to the press in April — I beg your pardon — in October of 1998 and become known as the Halloween documents. And the evidence will be that Microsoft uses its influence in the OEM channel, the computer manufacture channel, to make sure that end users have a difficult time buying PCs with Linux preinstalled.
Some apologists might get off their seats and argue, “it’s all in the past and Microsoft has changed since.” Well, not so fast! The same tricks have not reached and end and they may never cease. Consider Windows Vista.
PC Manufacturer Acer is complaining that Microsoft has jacked up the price of Vista, and that the basic versions are so basic no one will ship them. Since the collapse of the Microsoft Anti-trust Case under the Bush Administration in 2001, manufacturers have no choice but to accede, adding hundreds of dollars to the cost of each PC. With Gates now proclaiming victory over European Regulators, Microsoft once again seems unstoppable. But Microsoft had drawn itself close to the Republican Party. With the Republicans now evicted from the House and Senate, is it time to look at the Microsoft Anti-trust Suit? Could Microsoft be compelled to lower its inflating Vista prices, or to open their tech or even supply funding to Linux-flavored Windows such as Wine?
This bit from Slashdot presented an interesting perspective that shows the effect of having a monopoly. It is still being maintained using an iron fist. Even Novell admitted the problem last year, but it became a Microsoft ‘partner’ shortly afterwards, regardless of the severe consequences.
Microsoft Corp is using scare tactics to exert pressure on PC vendors not to explore the potential of desktop Linux, according to Novell Inc president and COO, Ron Hovsepian
The references provided in this article have hopefully shown that the nature of Microsoft deals, contracts, and negotiations are exclusionary and discriminatory by nature and by design. This is something to bear in mind in the future. This blog post may therefore be worth cross-referencing later on, if only to be considered as compelling evidence of a key contention.
An reader whom we spoke to, who also prefers to remain unnamed, has shared the following bits of insight with us.
From Louis Villa:
…if you want to see what the most advanced patent trolls are thinking, this paper (co-written by a brilliant stanford IP prof and Nathan Myhrvold of Intellectual Ventures, formerly Microsoft) is a really interesting read. It deserves much broader coverage and interest than it has received.
So, this is what they are thinking when it comes to “patent reform”; by no means do they want to abolish the patent regime over pure software and generic ideas, they just want the patent trolls out. On the other side, we, the Free Software Community should fight for a complete abolishment of software patents. We must discourage the EU authorities from legalizing software patents, so the US can take that as a model and not the reverse, where trans-national corporations are trying to export the corrupt patent regime to Europe and elsewhere with the aid of WIPO. If the problem becomes global it will be much harder to correct afterwards.
In this video you can watch Steve B. cynically asking for patent reform, but “not throwing the baby along with the bathwater”. This is what he refers to:
The only thing is that is an interesting part about patents in Ballmer’s video starts from minute 1:00 on (the first minute is a question by someone from Vodafone).
“The solution is straightforward: require publication of patent assignment and license terms. Doing so won’t magically make the market for patents work like a stock exchange; there will still be significant uncertainty about whether a patent is valid and what it covers. But it will permit the aggregate record of what companies pay for rights to signal what particular patents are worth and how strong they are, just as derivative financial instruments allow markets to evaluate and price other forms of risk. It will help rationalize patent transactions, turning them from secret, one-off negotiations into a real, working market for patents. And by making it clear to courts and the world at large what the normal price is for patent rights, it will make it that much harder for a few unscrupulous patent owners to hold up legitimate innovators, and for established companies to systematically infringe the rights of others”
As stated by Louis Villa:
‘reform’ by itself will not be sufficient to protect anyone, since trolls with a dozen strong patents will be just as threatening as trolls with hundreds of patents of unknown quality.
We MUST defend the latest software-patents-free area of the western world before the WIPO tries to take over the EU and tries to standardize the corrupt US patent regime in Europe as well (also as a stop in the middle of the way towards trying impose patents to China, as a requisite to allow that country into the WTO, but that is another story).
To fight the FUD and make people wake and be aware of the colossal TRAP for our future that Microsoft is trying to lay in front of us.
We thank the anonymous contributor for this analysis and welcome further commentary.
A shallow glance in the news yesterday brought up a set of interesting articles. They very well show that the patent-fueled fight against Linux comes not from a single front, but from several. In order to understand the threat better, here is an explanation about 3 such fronts (among more), accompanies by short fragments of text from the news.
What is Miguel de Icaza’s latest game? His obsession with tailgating everything that Microsoft develops – and trying to impress the company by producing Linux equivalents – now seems to be spreading to others as well.
“There is another way and we have covered the alternative routes many times before.”The article takes somewhat of an ad hominem approach, but the fact remains that one person’s vision will guide the project’s direction as long as there is no vocal and practical resistance. There are two issues to consider here.
First, putting aside the impracticality of incorporating OOXML support into GNOME and forgetting about the GNOME Foundation’s controversial stance on OOXML, there is a serious patent issue that is being ignored. A territory of software patents is being approached and since GNOME has become a de facto desktop in Novell’s products, there are reasons to pause and think.
Secondly, Mono, among other pieces of the stack that mimic Microsoft’s technology, bring great patent issues to mind. There is another way and we have covered the alternative routes many times before.
Microsoft, the Redmond, Wash., software giant, said it agreed to acquire software, intellectual property and other assets from Global Care Solutions, a closely held Bangkok developer of health-information systems.
Mind the bits about intellectual property and by all means remember that Microsoft likes to boast its large collection of patents. Rarely does it list specific infringement though. Patents are merely a tool to gain awe and then terrorise using the power scale, not the power of an actual bite.
Microsoft is likely to continue to praise “intellectual property” and mock everyone which it claims does not honour it. It’s a fight which is based on perceived moral grounds.
Andy Updegrove has named and shamed countries which are suspected of letting Microsoft buy their vote. See the related articles at the bottom for further details.
Here’s how the eleven countries that upgraded from O to P membership in the months (and often just days) before the OOXML voting period closed on OOXML, and also whether or not they voted in the more recent ballot (all data is from Rick’s analysis of the voting record):
– Upgrades that voted to adopt OOXML and didn’t vote later: 7 – (Côte d’Ivoire, Cyprus, Lebanon, Malta, Pakistan, Turkey, Venezuela)
– Upgrades that abstained on OOXML and didn’t vote later: 1 – (Trinidad and Tobago)
– Upgrades that voted against OOXML and didn’t vote later: 0
The following bit seems like a promotional video that features IBM’s Symphony. Promotional (and maybe viral marketing) it may be, but at times it also stresses the value and importance of OpenDocument format.
“The press appears to be portraying BECTA as a victim at the moment, but that’s not the full story.”BECTA is a government-associated body which procures for education in the United Kingdom. The press appears to be portraying BECTA as a victim at the moment, but that’s not the full story. Biased and one-sided journalism? Well, what else is new?
It is actually the BBC that offers sympathy to BECTA. Ironically, yet unsurprisingly, the BBC itself is a 'victim' of Microsoft (mind the comments int he cited page). The same goes for the British Library and National Archives, but they are not this post’s focus. In short, a lot of the British government departments are essentially in Microsoft’s pocket and they operate in Microsoft’s favour at the expense of innocent taxpayers. Just ask Dr. Pugh, who is a Member of Parliament here.
“A member of Parliament of the United Kingdom has launched a stinging attack on the U.K. government’s IT strategy, saying that it has given Microsoft too much control.
John Pugh, who is a member of Parliament, or MP, for Southport and a member of the Public Accounts Committee, was speaking in an adjournment debate on Tuesday that he had called. The aim of the debate, he said, was to explore the alternatives to using Microsoft software, including open source.”
According to the press, ‘poor BECTA’ suffers from Microsoft, which tries to take over British schools. But… it takes two to tango! BECTA just plays nice due to the European Commission’s new probe, we reckon. The OSC and others are on BECTA’s tail, so BECTA must find a way out of this mess and cover its behind. Here is a quick refresher from the news (multiple sources confirm consistency):
An advisor to Becta, the education technology quango, has complained to the European Commission about its procurement process for firms to provide online learning platforms and content to British schools.
Local Authorities are avoiding the use of Becta’s framework procurement for Learning Platforms, while the European Commission has formally registered Alpha Learning’s complaint that the framework failed to comply with European regulations for public procurement.
Open Source Consortium president, Mark Taylor, has been in contact to voice its opinion on the controversy surrounding Becta’s purchasing frameworks and the adoption of open source adoption in UK schools.
In short, it doesn’t make happy reading for Becta. “The essence of our concern is that they’re saying one thing and actually pursuing policies that are exclusive,” he said. “Becta’s own research shows there are major benefits [with open source], however the reality of the framework is that it excludes both products and services.”
MP Pugh reckons shcools should support independent or open source software firms. He says, “In my experience a school is a key part of the community and as such has a role to play in the economy of that community. By supporting SMEs the local high-technology industry will be encouraged which will benefit everyone.”
The UK Government’s own studies have shown savings of up to 60% can be made by schools and colleges using Open Source software. Despite this clear advantage, some MPs believe the software procurement frameworks from Becta and official advice from DfES effectively locks out the us of free, Open Source software.
Mind the fact that the items above do not cover the same incident. The criticism came from different directions at different stages.
Let’s assume that everyone has already become familiar with the stories cited above. Then, and only then, can one begin to consider the most recent ‘news’, which was reported by the (MS)BBC. The BBC’s report follows recent news about BECTA unleashing a report. The response to this report is not as welcoming as the press wishes to paint it. Those who have watches this problem for over a year and even had BECTA reported to the European Commission tell the full story better:
Rather than investing time and energy into helping to promote real alternatives to Redmond’s hold on school IT, Becta is simply using the OFT as a negotiating tool. Like many organisations, Becta seems incapable of thinking outside a Microsoft-defined box.
“Mark Taylor of the Open Source Consortium pressure group said: ‘This is a mini-step in the right direction but what Becta is actually doing is keeping Microsoft in front of the market to the exclusion of alternatives.’ He claimed Becta’s complaint is part of the process of negotiating a new contract for the use of Microsoft technology in schools and will therefore only add to the visibility of Microsoft in the market.”
Schools will no longer be subjected to Windows licensing for Linux or Mac computers. Furthermore, Microsoft has accepted to discontinue their commercial bundling which required schools to buy several Microsoft products to obtain discounts.
Linpro seems to have successfully resolved this issue some months ago, but the damage done over the years translates into a great deal of lock-in that will be hard to leave behind. Still, it’s a decent first step in the right direction. Now it’s BECTA’s turn.
Many other countries (probably most of them) suffer from the same issue and the same tricks are being played. I just don’t happen to watch the procurement process in other countries very closely. Perhaps you should.
The story reflects on the nature of the deal with Novell in various ways:
Capture of authority. Novell is one of the most powerful players that contribute to Linux and open source. Likewise, BECTA instructs virtually all schools in the UK, so controlling a position of command is a strategic priority to Microsoft.
Lock-in strategy. The nature of the deal with BECTA is not only exclusionary, but it also imprisons young minds (students), whose personal data and skills will be tied to one software vendor. In the case of SUSE, ‘interoperability’ limits the ability to dance from one Linux distributor to another. The same goes for support coupons.
Cost strategy. With Novell, licensing agreements mean that no matter if you buy SUSE or Windows, Microsoft will get paid. Similarly, in the UK, whether a school has some PCs running Mac OS and Linux or not, Microsoft will get paid for all the PCs, assuming all are dominated by Microsoft’s operating system and pricey office suite (or fall under Microsoft’s unsubstantiated patent claims).
Secrecy and lack of transparency. BECTA’s last deal with Microsoft was signed just a few of months ago and there was no public disclosure about the deal, even though public money was involved. Remember Novell’s SEC filing? Remember how it was redacted? We also had to wait for 9 months before seeing anything, only to be left with more questions than answers [1, 2, 3, 4, 5]. Turning to BECTA again, part of he deal was that it had to remain secret, for competitive reasons (or maybe “antitrust” outcries). This was similar to the tricks Microsoft had used to impose a “chokehold” on OEMs (that’s the word which Conlin used in Iowa when she served heaps of compelling proof).
The exclusionary deals with the OEMs would actually make a good comparison when it comes to the deal with Novell. Will anyone be interested in a detailed analysis involving rotten OEM practices and the way they relate to the exclusionary deals with Novell et al?
Yesterday I watched the following 1-hour program from the Finnish television (upscaled version on Google Video). What was interesting to explore is the way Linux is presented in the light of GNU and vice versa. Mind the beginning in particular. Also pay attention to Eric Raymond’s role.
Here is an inaccurate new writeup which presents a conspiracy against GNU. It is probably the result of tensions between the Free Software Foundation and Linus Torvalds, who refuses to accept GPLv3, at least for the time being.
OSS is being attacked on two fronts: the merciless unrelenting Microsoft market manipulation machine and Richard M Stallman. FOSS needs better; the world needs better.
Why is Linus Torvalds doing nothing?
The author is incorrect, but it does not appear to be flamebait, so there’s no danger in linking.
This writeup talks about vectors of attack on Linux. One which is not mentioned are the lawsuits. While one wave of lawsuits appears to be in the making (software patents), another goes away (plagiarism). SCO is walking its last mile at the moment. If SCO’s UNIX core business was sold, I suspect there would still be insufficient funds to pay the debt to Novell. SCO no longer matters and mentioning it gives the impression that it does.
Every trace of the disgrace which the SCO case needs to be erased, except for the links showing where funds got funneled from and why. It is time to focus on BayStar, Acacia and other suspicious parties that harvest or invest in IP [1, 2, 3, 4].