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Why the Melco-Microsoft Deal is a Form of Racketeering

Posted in Deals, GNU/Linux, Microsoft, Patents at 8:22 am by Dr. Roy Schestowitz

Band on the snow

“Microsoft is asking people to pay them for patents, but they won’t say which ones. If a guy walks into a shop and says: “It’s an unsafe neighbourhood, why don’t you pay me 20 bucks and I’ll make sure you’re okay,” that’s illegal. It’s racketeering.”

Mark Shuttleworth

Summary: A deeper look at Melco’s deal with Microsoft

IN some ways, the Melco sellout resembles the Brother Industries sellout. Microsoft blogger Mary Jo Foley wrote about this deal almost gleefully and also suggested that OEMs might be next to sign (i.e. sell out to Microsoft). Does she know anything that others do not? The short story as she tells it goes like this:

On July 15, Microsoft signed a patent-coverage deal with Melco Holdings, the Japanese-based parent company of Buffalo Inc. and Buffalo Group. Buffalo makes network-attached storage (NAS) and routers, including the LinkStation and AirStation products.

It has hardly been covered by the mainstream press so far, and surely not properly. The press is busier covering products that do not exist (e.g. Vista 7). What makes this patent agreement unique is that no patents are specified, no amounts of money are disclosed, but above all, Linux is not even owned by Melco Holdings, yet it has no qualm about injuring its producers for personal convenience. It is usually to be expected from mere exploiters (‘proprietarisers’) of Linux such as TiVo or ACCESS.

“There might be more (unannounced) such deals — ones that rely on this Melco/Microsoft press release to justify the racketeering and suppress Linux adoption.”To put in perspective what Microsoft is doing here, it is a form of racketeering, which makes one wonder if the RICO ACT (Racketeer Influenced and Corrupt Organizations Act) becomes applicable. What Microsoft is saying goes along the lines of “we have a big gun here and you don’t want us to pull it out on you, so why don’t you pay us some money and we’ll leave you alone permanently?”

Microsoft is also assisted by accomplice front groups (e.g. Jonathan Zuck), who are fraudulently pretending that small businesses [1, 2, 3] want to pass laws that illegalise GNU/Linux or tax it out of the European market. That, unlike the RICO ACT, is something that the European Commission needs to be informed about. To say more about the nature of these dealings, consider this new comment from LinuxToday: “All of these deals are being done in secret. It needs to stop so that we can this BS about Patents that Microsoft keeps using resolved- one way or another.

There might be more (unannounced) such deals — ones that rely on this Melco/Microsoft press release to justify the racketeering and suppress Linux adoption. As Microsoft's earnings fall 32% (partly due to GNU/Linux) Microsoft hopes to make up for it by claiming ownership of Linux and making a cash cow out of it, using software patents. It’s like another SCO and people should report this abuse, at least to the extent possible. It is the latest example in a long series where Microsoft operates more like the mafia than a respectable company.

“That’s extortion and we should call it what it is. To say, as Ballmer did, that there is undisclosed balance sheet liability, that’s just extortion and we should refuse to get drawn into that game. On the other side, if Microsoft is concerned about its intellectual property, there is no one in the free software community that wants to violate anyone’s IP. Disclose the patents and we’ll fix the code. Alternatively, move on.”

Mark Shuttleworth

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  1. Yuhong Bao said,

    July 20, 2009 at 1:51 pm


    “The press is busier covering products that do not exist (e.g. Vista 7).”
    Do not exist? Well, Windows 7 certainly do exist, but is not released yet.
    Can you use a better example?

    Roy Schestowitz Reply:

    It exists in the same sense that Chrome OS exists. It is not a finished product. Until it’s on the shelves, it is either a prototype or testing entity. Promises can be made (and voided) about release dates, traits, and features.

    Yuhong Bao Reply:

    Correct, that is why I said it is not released yet.

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