03.02.08

Microsoft’s OOXML Scandal in India and the Legal Issues Ahead

Posted in Antitrust, Asia, Finance, Free/Libre Software, Microsoft, Novell, Open XML at 2:56 am by Dr. Roy Schestowitz

“Microsoft: still a bunch of gangsters.”

Sam Hiser (reaction to Microsoft’s 'open' pledge, 2008)

Our last wrap-up covering the incident in India showed that Microsoft offered money to tens of thousands of non-profits only days before the nation’s vote on OOXML. Leaked letters, whose authenticity has not yet been confirmed, suggest that these non-profits later pressured their national standards body to cave in and fall for Microsoft. This is extremely damaging and the following new article from The Post seems to allude to this incident rather gently.

Monopoly and proprietary software have an advantage in influencing state and governmental institutions because of their large market base and ready capital. Unscrupulous ways of influencing state governments have persisted in India, for example, where executives of proprietary software cajole government heads to promote their brands in lieu of some form of charity given. FLOSS activists must overcome this huge challenge in order to get their philosophy accepted and model implemented for the good of people who are still on the barren side of the digital divide.

“Remember that the LF is partly funded by Novell, which is a Microsoft partner…”This is definitely something for the European Commission to look into. The ongoing antitrust investigation of OOXML-related abuses has another ‘smoking gun’ right there. It’s one among many, but the scale of this one is rather disturbing. It illustrates the possibility of ‘charity’ being used as a bribery funnel.

The LF‘s President, Jim Zemlin, is probably known for his liberal views that are relatively supportive of Microsoft. Remember that the LF is partly funded by Novell, which is a Microsoft partner, so he has to be nice and avoid controversies. Nevertheless, he did bother a post a gentle item bearing the sympathetic title: “It’s Been a Tough Week for Microsoft”.

It has been a tough week for Microsoft. This morning the E.U. announced it is imposing a 1.3 billion dollar fine on the company because Microsoft had “charged unreasonable prices for access to interface documentation for work group servers” and that it had abused its dominant position under Article 82 of the EC Treaty. That is not something any company wants to hear the week after announcing, “new interoperability principles and actions will increase openness of key products” and on the day of Windows Server 2008’s “Heroes Happen Here” launch event.

It’s understandable that the LF should keep an open mind that appeals to the marketplace. The LF does not, after all, wish to be perceived as "anti-Microsoft".

Going forward, Microsoft will have to face the consequences of its unacceptable behaviour. Its stock has already been knocked down by a downgrade, spurred by its recent abuses that led to considerable fines. Here is the Reuters article:

RESEARCH ALERT-Bear Stearns cuts Microsoft Q3 shr view

[...]

“We believe the EU is unlikely to levy further fines relative to this issue as they declared MSFT has been in compliance since Oct 22, 2007,” Bear Stearns said and continued to rate the stock “peer perform.”

Then came the reaction.

In Nasdaq trading, Microsoft Corp slid 1.2 percent to $27.93. Bear Stearns cut its estimates for Microsoft’s GAAP earnings per share for both the third quarter and fiscal 2008 after the European Commission levied a record fine against the company for failure to comply with antitrust sanctions.

We shall soon publish a summary of Microsoft’s financial situation, as a reader suggested that we do. We have also contacted Bill Parish, who is familiar with these matters.

In other good news, the controversial chairwoman of the FTC, who repeatedly turned a blind eye to many monopolistic abuses and more recently got caught in a conflicting interests scandal (her husband), has finally stepped down.

U.S. Federal Trade Commission Chairman Deborah Platt Majoras will resign in late March and become general counsel of Procter & Gamble, the FTC and company said on Thursday.

If the American regulators can learn from Europe (getting claws and teeth), then Microsoft, Intel and several other abusive monopolists will finally have to rethink and reconsider their business strategy.

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