Predictably,
Microsoft claims their tests show Felten’s program does not completely
remove Internet Explorer and does not work properly. But, the point of
Felten’s program is not to completely remove Internet Explorer, but
only to show that Internet Explorer can be disabled or replaced by
another Web browser with no adverse effect on the non-Web browsing
portion of Windows 98. Felten’s program started mal-functioning only
after Microsoft got a copy of it. Microsoft’s testimony about the
functionality Felten’s program is perhaps technically correct but
incomplete and highly misleading. So why did Allchin decline to engage
in this particular word game? Stay tuned …

Sometime
thereafter the South Carolinan Attorney General Charlie Condon dropped
the case against Microsoft, giving as reason that the Netscape/AOL
merger proves that competition exists for the Internet.

Unfortunately
for the credibility of Mr. Condon and the South Carolina Republican
party, the antitrust lawsuit is about abusing monopoly power to enter a
new market. Showing that there are (large) competitors in this new
market can not possibly show that no monopoly in another market is
abused to gain marketshare in the new one. Not only is Mr. Condon wrong
for the mentioned reason, also he is quite literally rehashing
Microsoft’s press-releases on the AOL/Netscape matter, which – given
Microsoft’s large campaign contribution – makes the integrity of his
decision suspect.

An article on the matter: http://dailynews.yahoo.com/headlines/ap/technology/story.html?s=v/ap/19981224/tc/_microsoft_lobbying_1.html

You can track individual campaign contributions at: http://www.crp.org/indivs/name.htm

See: http://www.wired.com/news/news/technology/story/16974.html

Here’s how Gates is alleged to use actors to polish his public image: http://www.theregister.co.uk/981230-000004.html

Update: The above article was written on the basis of an article in The Guardian. You can find a transcript here: http://lists.essential.org/am-info/msg07493.html

Remember that these are the criteria by
which Microsoft makes its statements the next time you read anything
from them about “cold hard facts” or “setting the record straight”.

Of
course, for anyone who attempts to interpret Microsoft’s statement
about Intuit’s “wish”, it will be hard to imagine *how* Intuit can
“circumvent competition in the marketplace” by seeking to achieve
“operating system neutrality”.

Those who have been around for
some time will remember Microsoft’s ancient claim of having a “Chinese
Wall” between the OS and application divisions. Microsoft dropped the
claim when it became too obvious that it wasn’t true. Now that Mr.
Harris seeks to revive something along this line, Microsoft rewrites
history by analysing part of the testimony as containing an “entirely
new and irrelevant concept Mr. Harris cooked up on his own – “operating
system neutrality.” Surely, they are giving too much credit to Mr.
Harris.

As is customary in Microsoft’s responses you will also
find the usual self-congratulatory remarks and the ad hominem attacks.
When you read the response you will note that Microsoft does not state
what is is reacting against, only that it is “vague”, “rampant
speculation”, “not focused on facts”, and given by a witness who really
shouldn’t be heard as he is “neither an attorney, a software developer,
nor an economist”.

As with “factuality”, Microsoft’s criteria of
“clarity” are very loose. When reading the following citation, you
should ask yourself the question HOW?

“It’s clear from this
testimony that Intuit wants the government to repeal the laws of
competition for Intuit. As the dominant manufacturer for personal
finance, tax and small business accounting software, Intuit apparently
wants the government to guarantee it a permanent lead in the
marketplace without actually competing.”

You can find the response at: http://www.microsoft.com/presspass/trial/dec98/12-29harris.htm

Update: William Harris’ testimony is now available at: http://www.usdoj.gov/atr/cases/f2000/2055.pdf

See: http://www.g21.net/news7.html

I won’t treat you to a review, but restrict myself to a few citations. Mr. Postman writes on “knowledge monopolies”:

“Those
who have control over the workings of a particular technology
accumulate power and inevitably form a kind of conspiracy against those
who have no access to the specialized knowledge made available by the
technology.”

This aptly describes Microsoft’s control over
Windows, something that is growing both horizontally and vertically.
Today Microsoft cashes in some 55 percent of all revenues made by
public companies in the software industry and this percentage is
steadily growing.

Mr. Postman emphasises the power of technology
over our lives as something anonymous, something not unlike
conventions. However, the “knowledge monopoly” in the software industry
is radically different. Here we do not find uncontrollable conventions,
but centrally given directives.

Two more quotes:
“Those
who cultivate competence in the use of a new technology become an elite
group that are granted undeserved authority and prestige by those who
have no such competence.”

“As for change brought on by
technology, this native optimism is exploited by entrepreneurs, who
work hard to infuse the population with a unity of improbable hope, for
they know that it is economically unwise to reveal the price to be paid
for technological change.”

I am not against technology per
se, but if the adoption of certain technology is to imply the
replacement of what could be a competitive market with a centrally
controlled system, I will resist it.

Microsoft’s press release emphasizes the
rejection of the preliminary injunction and ignores that the judge also
ruled on Microsoft’s Motion to Dismiss the Complaint or, in the
alternative, for Summary Judgment, with a judgment that “The court DENIES the defendant’s Motion in its entirety.”

Of course, ignoring this element of the case makes it simpler for Microsoft to refer to their press release as: “Microsoft Wins Preliminary Decision in Bristol Lawsuit”.

Microsoft’s
press release does not even mention that their own motion was denied.
This information would throw a different light on their claims that: “The
Court found that Bristol had not shown a clear likelihood of success on
the merits of any of its fourteen claims. In its court papers and after
five days of testimony Bristol failed to establish any factual or legal
grounds for its radical claims.”

and

“Microsoft looks forward to presenting a powerful case in defending itself against Bristol’s baseless allegations.”

Given
that the ruling is known in Redmond, I conclude that Microsoft seeks to
misrepresent the ruling to the public. By ignoring part of the
information they reach conclusions that would be invalid when all the
information were considered.

We find thus that we can not trust
Microsoft with regard to representing all relevant information and
including it in the reasoning that leads to their conclusions. This is
a dent in their credibility.

Aside from ignoring part of the
relevant information, Microsoft seeks to win acclaim by using strong
language instead of arguing:

“Throughout this case, it has
been clear to Microsoft that this litigation was an effort by a company
to use a lawsuit and a long-planned public relations campaign to try to
gain better terms in its contract negotiations with Microsoft.” – Steve Aeschbacher, senior corporate attorney, Microsoft.

“Bristol
elected to sue, not do business. We have offered Bristol contract terms
like those agreed to by Bristol’s principal competitor, Mainsoft.”

Note
that Mainsoft is the Microsoft partner that created the tools for
porting MSIE to Solaris. Perhaps I missed it, but I have seen no
support for Microsoft’s claim that Bristol was “offered contract terms
like those agreed to by Mainsoft”. Given the combination of Microsoft’s
low credibility and the fact that Mainsoft is a Microsoft partner, I
see no reason to believe this claim before I have seen the evidence.

You can find Bristol’s press release here: http://www.bristol.com/legal/12-31-98pr_release.htm

You can find Microsoft’s press release here: http://www.microsoft.com/presspass/press/1998/dec98/bristolfinpr.htm

The previous item on the ruling and the press
releases in the Microsoft-Bristol case represents my idea of what this
site is all about. I’d rather present only one such item in three days,
than refer to “hot” news in the media three times a day.

Expect my postings on billwatch to become less frequent but not less fierce.

But then, here’s a link to a Mary Jo Foley article at ZDNet about which I have little to say, but which may interest you:
http://www.zdnet.com/zdnn/stories/news/0,4586,2181525,00.html

Of course, Roy has his own agenda wrt his postings here.

Microsoft’s response is at:
http://www.microsoft.com/presspass/trial/jan99/01-04fisher.htm

This reply is introduced as:
“Economist’s
testimony ignores the economic realities of the marketplace,
contradicts his previous writings on antitrust, and relies on
out-of-context information and hearsay.”

From the contents I’d
say that Mr. Fisher’s testimony pretty much sums up the other testimony
that was presented so far and places it in the economical framework in
which antitrust matters are to be discussed.

I will comment on the testimony and the reply as soon as I have read those voluminous pieces.

I apologise to all readers for this inconvenience.

However, two weeks after his deposit,
he was quietly dropped from the witness list. Microsoft claims that the
reason is that the government altered its focus. Businessweek suggests
that it might have to do with Mr. Kertouzos’ nasty tendency to call a
browser an “application” and generally an “independent” stance.

http://www.businessweek.com/1998/52/b3610089.htm

http://www.news.com/News/Item/0,4,30560,00.html

Intuit
CEO William Harris admits that Intuit probably would have chosen
Ineternet Explorer over Netscape on the merits. Predictably, Microsoft
overgeneralises and says this proves the DOJ’s case has no merit. The
implication is that every Indepedent Software Vendor would have
concluded that IE is the superior browser. If this were true, then no
restrictions on dealing with Netscape would have been necessary and
Microsoft could truly show the world that they put no obstacles to a
consumer or ISV who happens to choose “inferior technology.” Or do they
perhaps have a bit too much experience with the success of the
technically inferior Windows operating system?

It now seems
that there is a persistent hardware problem. Fortunately, I will have a
couple of days off from work, so I will have time to find a solution.
Most likely, I will once more maintain a static site on another machine.

Keep the faith.

-cjr

The
list price is Dfl 1375.- (where $1 is about Dfl 2). My dealer would
take off Dfl 189.- if I would take the system without Windows98. Thus
Windows makes up over 13% of the cost of the PC.

This article “explains” Judge Jackson’s
moment of weakness in accepting Microsoft’s account. (I don’t like such
attributions, not from Microsoft and not from the Washington Post.)
What is interesting is that the Judge seemed to have referred to the
article in court and suggested that the lawyers of both parties take it
to heart.

See: http://search.washingtonpost.com/wp-srv/WPlate/1999-01/06/029l-010699-idx.html

http://www.usdoj.gov/atr/cases/f2000/gates7.pdf

Even
though he was shown to have been informed on the status of affairs, the
man presently knows nothing about any controversial action of
Microsoft. What’s he doing in that chair?

You can get a sample of Mr. Gates’ testimony at The Register: http://www.theregister.co.uk/990107-000008.html

PS.
I am not generally interested in US politics, but I find it noteworthy,
to say the least, that American Republican politicians find so much
fault with Mr. Clinton’s testimony while being so eager to defend the
Chairman and his cronies. Given the similarities in the relation
between statement and fact in both cases, it seems to me that
Republican politicians apply different standards to different persons.
My conclusion is that their “standards” don’t amount to much.

http://chicagotribune.com/business/businessnews/article/0,1051,SAV-9901080309,00.html

I
note at the end of the article, there is reference to a survey given
which indicates most consumers feel that Microsoft is good for
consumers and the anti-trust suit was brought only to help some of
Microsoft’s competitors. At least the latter is true, since by helping
some competitors, the principle of marketplace competition is upheld
and consumers are better served. In any case, the spin of this survey
is suspicious and it is interesting to note the Microsoft spokesperson
displays confusion about whether the survey received funding from
Microsoft.

Also, it
doesn’t matter that they seem to be quite biased, as is indicated by
the fact that their research director, Wayne T. Brough wrote an article
“Microsoft and Monopoly” that seems to be more closely related with Microsoft’s press releases than with Microsoft’s actions. See: http://www.cse.org/cse/cc217-csef-telecom.htm

What does matter is what they tell us about the preferences of those that are polled.

I won’t comment on CSEF’s press release extensively, but here are some things to watch out for.

• No reference is made to the questions asked.
  Results can easily be biased by giving only certain options or only
  asking certain questions. Another tool to influence the outcome of a
  poll is to suggest answers by using suggestive introductions.
• The press release contains no real poll results, only interpretations of poll results. And these interpretations are mixed with comments from CSEF executives. An example is: “Four
  out of five Americans polled (81%) believe Microsoft is good for
  consumers. The government is just wasting taxpayer dollars pursuing a
  case that the court of appeals has already rejected.” Only the
  first sentence has something to do with the poll, the second is a
  comment from CSEF’s executive vice president. Through concatenation it
  is suggested that the comment is endorsed by the earlier mentioned 81%
  of the polled Americans.

By replacing the actual poll
results by their own interpretations and comments, the CSEF people
display very little respect for the opinions of those they have polled.

You can find the press release about the poll here: http://www.cse.org/cse/nr-telecom990107csef.htm

http://www.zdnet.com/zdnn/stories/news/0,4586,2184567,00.html

dexcribes
some negotiations between AT&T and Microsoft for the purchase of,
among other things, Microsoft Network. AT&T apparently is not
interested in the purchase at this time, but Microsoft claims talks are
ongoing. And what if this deal does go through? You can bet that
Microsoft will loudly cry that this changes everything and the DOJ
should drop the anti-trust case.

But, even more than the
AOL-Netscape-Sun deal, an AT&T acquisition of Microsoft Network has
no bearing on either Microsoft’s operating system monopoly or on the
predatory conduct Microsoft uses to maintain and extend that monopoly.
In fact, the divesture would strengthen Microsoft since MSN is not yet
profitable. It appears to be another desperate attempt by Microsoft to
create a distraction in hopes of diminishing the DOJ’s strong
anti-trust case.

http://www.usdoj.gov/atr/cases/exhibits/365.pdf

The organizations are: Consumer Federation of
America, Media Access Project, US Public Interest Research Group. The
report can be found at the website of Consumer Project Technology, at: http://www.essential.org/antitrust/ms/cfa/cfa-jan99.html

Things were
different in Redmond when the Chairman wrote his auto-hagiography “The
Road Ahead”. In that book the successes of Microsoft are explained by
“positive-feedback effects”, while IBM’s loss of market power is
claimed to be caused by the egalitarian effect of other companies being
able to adhere to the same standards by buying the crucial components
from Microsoft and Intel. Interestingly, companies that sought to
compete with IBM on technological merits are chastised as they didn’t
adhere to the all-important standard.

The difference between IBM
then and Microsoft today is that IBM had “compatible” competition,
whereas Microsoft hasn’t. The fast movement of technology wasn’t what
broke IBM’s monopoly power. What broke it was that IBM adhered to
standards that were open to other companies.

The Chairman
understands this, and that explains why he forbids his crews to adhere
to any standards that are open to other parties.

Here are some quotes from “The Road Ahead” with my annotation: http://main.billwatch.net/annotated/compatibility_or_technology.html

Mike
Brown wrote to Pancerzewski: “[I]f you disclose any confidential issues
in a non privileged context, you will be doing the Company a great
disservice. All of the audit reports you have created so far would
generally be discoverable in the US . . . and could be fertile ground
for an astute litigator.”

Well, Pancerzewski got thrown out
shortly afterwards and filed a lawsuit. As we see in every case,
Microsoft tried to have it thrown out completely with a summary
judgment, won on several items where evidence was lacking to support
Pancerzewski’s claims, but lost on the item of moving its reserves to
“income”, which leads to an illegal representation of its performance.

Microsoft
settled, allegedly paying its former employee $4 million. In customary
fashion, part of the settlement included a condition of secrecy (think
e.g. of the AT&T settlement over NT source code that nobody ever
heard of again).

See: http://www.seattleweekly.com/features/romano0107/index.html

“[T]he
[Microsoft] culture [of hard work and talent] also radiates contempt.
It rejects the norms of behavior that most of us take for granted. This
part of the culture is ugly and paranoid, like a dictatorship that can
survive only as long as it crushes all dissent.”

See: http://www1.sjmercury.com/columnists/gillmor/docs/dg011099.htm

Of
course, the exclusive character of the meetings isn’t popular with
those not allowed to be present. Microsoft spokesperson Tom Pilla
commented: “The information we provide to analysts is no different than
what we provide to the press and public throughout the week.”

Are
we then to believe that the invited Wall Street analysts hear only what
they have already read in the papers earlier during the week? If we are
to believe Microsoft, the analysts have time to waste.

Of course, the press is not allowed to be present either.

See: http://www.news.com/News/Item/0,4,30731,00.html

Of course, Microsoft’s emphasis on the latter doesn’t make the former less relevant and the latter more so.

Anyway, you can get an impression of the court session from Graham Lea’s article here:http://www.theregister.co.uk/990111-000015.html

(Generally, http://www.theregister.co.uk/ gives frequent and regularly good counterweight to the major media.)

Given
Microsoft’s eagerness to present Linux as an alternative, and their
accusations of incompetence to economists that speak of Microsoft’s
market position while not being aware of Linux, one would expect
Microsoft to give a price comparison of Windows and Linux. But no, in
Redmond a “competitive price” seems to be an absolute.

Take
notice of the last section where Microsoft claims that “Nearly all
economists agree that the ability to charge different customers
different prices is not indicative of monopoly power.” It seems to me
that any economist that doesn’t consider “setting a high price and
insisting that anyone pay it” – the situation of the monopolist – as a
sufficient condition for an “ability to charge different customers
different prices” should be kicked out of the profession. Things would,
of course, be different if the “ability” to settle at differnt prices
were partly up to the customers, but that is not what Microsoft claims.

See: http://www.microsoft.com/presspass/trial/jan99/01-11pricing.htm

Given that the testimony happily offers
newspaper clippings (isn’t that “hearsay”) to show the success of
Linux, refers to the linux.org list of “OEM’s” shipping Linux.
(Question: name five major OEM’s and guess for each whether they are in
the list.)

It is interesting to see how Mr. Schmalensee comes up
with relevant testimony on the one hand, such as the price of Intel’s
processors having risen from 3% of a complete system in 1990 to 13% of
a system in 1996 – that is, the same rise that Microsoft’s operating
system made. Of course, this opens the way for critics that point at
Cyrix and AMD processors that are plug-compatible with Intel’s, while
there are no plug-compatible products to point at to show that Windows
is “competitively priced”. To circumvent such criticism, Mr.
Schmalensee hastily points out that the software market is different
from the hardware market.

Actually, the software market is
quite unique in having a “sequence of category leaders” and that
competition consists in others waiting for a chance to take over. Next
thing you know is that junta rule with regular coups is a democracy.

Anyway.
Mr. Schmalensee makes many remarks that are to the point. However, he
ignores certain data, includes controversial data as fact, and comes up
with a new theory of sequential competition that we should be happy
with.

Saying that: “Eminent economist Professor Richard
Schmalensee PROVES that government witnesses relied on defective data
and flawed economic analysis of the software industry.” is preposterous.

Testimony: http://www.microsoft.com/presspass/trial/schmal/schmal.htm

Microsoft’s introduction:
http://www.microsoft.com/presspass/trial/jan99/01-11schmal.htm

I really should look there more often, it’s worth the effort.

http://www.ljx.com/LJXfiles/dojvms.html

http://chicagotribune.com/business/businessnews/ws/item/0,1267,8297-8298-21466,00.html

The
main point Microsoft will present is that its position is vulnerable
because software is a rapidly changing market with low entry barriers,
unlike capital intensive markets like steel and oil. The claim is that,
due to the nature of software, it is impossible for any company to have
a monopoly in this industry. Without a monopoly, it is legal to be
nasty and brutish in business.

For anyone tempted to agree with
this position, may I recommend reading “Information Rules”, by Carl
Shapiro and Hal Varian? The barriers to competing with Microsoft are
not so low as they might seem due to “network effects” and “positive
feedback.” A good summary of this is that, for any software to provide
effective competition in the markets where Microsoft is entrenched
(whether it is application or operating system software), the software
must be either revolutionary, very compatible or somewhere in between
(i.e. perhaps significantly better with good compatibility would be
sufficient.)

Competition would be hard even without Microsoft’s
interference in the form of exclusionary OEM contracts and dumping of
programs with similar functionality with their dominant software
platform. This is a high-risk business where large up-front investments
are required and the winner tends to take all. As things stand, the
playing field is not a level one. With these characteristics, it
certainly does seem that anti-trust laws have a role to play in the
software industry.

Has Microsoft lived by the agreement? Anyway, one need
only walk into a computer store to see that the agreement was without
the desired effect.

For the press release, see a message by CPT’s James Love to the on-living “appraising-Microsoft” mailinglist:
http://lists.essential.org/am-info/msg00278.html

“A
review of these types of issues appears to be anticipated in the 1994
agreement, and EU consumers have a right to ask the EC to explain what
if anything has been done to monitor the success of the agreement.”

See: http://lists.essential.org/am-info/msg00285.html

Being
more of a programmer than a legal expert or a consumer activist I am
pretty much at a loss when dealing with the EC bureaucracy seems to be
in order. Some personal stimulation might help to motivate me to give
more attention to possibilities in this area :-).

Whereas Mr. Schmalensee was earlier
convinced that Bristol could not be a competitor of Microsoft, his
conviction today is that with java Sun competes with Windows. Perhaps
Mr. Schmalensee should follow an elementary course in logic and learn
to draw Venn diagrams.

Just as Mr. Schmalensee attempts to
escape the term “monopolist” by coining “category leader”, meaning just
the same, he attempts to get rid of the monopolistic Windows market by
pointing to a “paradigm shift” in the software industry. Perhaps, Mr.
Schmalensee should take a look at Microft’s revenues in the OS market,
because claiming that the industry has “shifted” away from it.

See: http://www.mercurycenter.com/business/microsoft/trial/breaking/docs/mstrial011399.htm

Mr.
Schmalensee has an interesting conception of monopolies. In effect, he
claims that they don’t exist. Actually, his claim is to apply only to
the software industry, but it applies equally to any other industry.
Mr. Schmalensee claims that the concept of monopoly is irrelevant
because the situation is apt to change in the long run.

For
quite some time economical theorists have claimed that a monopolist may
have the power and the inclination to use the economical power over
buyers that is derived from this position to enforce contracts or
behavior to help deny entry to new parties. This is bad as it denies
choice to consumers.

Mr. Schmalensee’s theory is that a
monopolist cannot possibly deny entrance to potential competitors. If
there are no competitors, it cannot deny entrance, and if there are
competitors attempting entry in the market, their very existence shows
that there is no monopoly.

Another theory of Mr. Schmalensee is
that there are only markets where there are competitors. It doesn’t
matter that Microsoft is has a monopoly, oops, is “category leader”, in
desktop operating systems, because in other markets there are
competitors. Although the competition is still in need for a desktop
operating system – note for instance that Sun is more supportive of
their JDK for Windows than for their own Solaris server operating
system – this is supposed to be irrelevant as the focus of competition
has shifted. Whereas it is part of Thomas Kuhn’s philosophy of science
that the result of a “paradigm shift” is that the old framework is
wholly dropped in favor of the new one, we don’t see something like
that here: there is no indication that the situation in which every
computer will need an operating system is about to change.

The
last theory of Mr. Schmalensee is a supposed generalization. Mr.
Schmalensee thinks that the software industry has a history of niche
players becoming major players at some time and that it follows from
this that Microsoft is continously threatened by small players that may
grow big any moment. To indicate the danger, he points to the Linux and
Be operating systems. However, Mr. Schmalensee’s claims are based on
less than scientific rigor. So far, small players have only become big
in new markets, which the old operating system market is most certainly
not. Another facts that Mr. Schmalensee ignores in his eagerness to
plead for his party, is that after growing somewhat just about every
former niche player is driven back into the niche to make place for
Microsoft. The result, in every single case, is that Microsoft is then
entering the market and driving the former niche player back into the
niche. Microsoft’s market share grows towards one hundred percent, and
it has in no single instance grown decreased. Mr. Schmalensee doesn’t
even observe this, so how can he start to explain it?

Incidentally,
Mr. Schmalensee let himself be coached during his testimony, just a
week after a Microsoft executive used a lunchbreak to coach the
testimony of Intuit’s witness. These are violations of court
proceedings.

My respect for MIT has just received a serieus dent.

Reading Gates’
words is not such a waste of time as one may think on the basis of the
evasive testimony made public so far. On the basis of my recent reading
of part of Gates autohagiography, “The Road Ahead”, I have come to
believe that Gates merely says whatever suits the major majority’s
taste of the moment and that truth is not among his intentions. Thus I
found that Gates is a major popularizer of the ideas behind the
economics of “network effects” that is today ridiculed by his lawyers
and PR departments.

You can look for some more skeleton’s in Gates’ testimony at: http://www.usdoj.gov/atr/cases/ms_gates2.htm

Similarly,
Microsoft will happily sing praises of standards and “compatibility” -
witness many fragments in Gates’ “The Road Ahead” – but as soon as
“standard” is something that they can’t change unilaterally, they are
dead against it and plead that it restricts their oh so necessary
freedom.

Well, they have appealed the injunction requiring it to modify Windows and Internet Explorer to adhere to the java standard.

You can find their press release here:
http://www.microsoft.com/presspass/press/1999/jan99/appbriefpr.htm

The motion for appeal is here:
http://www.microsoft.com/presspass/doj/01-14appealmotion.htm

(The folks in Redmond seem to confuse the different cases, as they put it in the “doj” directory.)

For developers on the Windows
platform it is essential to have access to beta versions of Windows in
order to be ready to ship when the final version comes out. Microsoft
used access to beta versions to force such developers to become a
distribution channel for Microsoft’s polluted java.

See: http://www.zdnet.com/zdnn/stories/news/0,4586,2187669,00.html

Remember how they originally tried to get rid of the
“Special master” Lawrence Lessig in the consent decree trial last year?
He wrote a personal letter to a personal friend in which he complained
about Microsoft’s browser. Microsoft argued that this indicated that he
was pre-disposed, which would make him unfit for the job.

Today
Microsoft is claiming that emails are irrelevant in finding out about
the motives of persons making up company policy. The emails at stake
are not personal emails to personal friends, but emails during working
hours to colleagues discussing company policy.

Consistency is a rare virtue, at least in Redmond.

Why
would Microsoft sell DOS for $6 to certain OEMs when the US retail
price is $199? Because these OEMs used equivalent (or better) DR-DOS
and predatory pricing could be used to “cut off the air supply” of OS
competitor Digital Research.

Why would the price of the older
product Windows95 go up today? To force OEMs to sell Windows98 with the
welded in Internet Explorer.

See: http://62.232.8.250/990113-000002.html

Gates commissioned
a poll and specified results to be targeted. Regarding another poll, I
read in The Register (they have a DNS problem, but you can find their
IP number below):

“A memo from a Microsoft researcher at the
time (February 1998) said that the survey was “not entirely unbiased,”
and shouldn’t be referred to as an opinion poll. The text of the
question, she said, should also be kept out of the hands of the press.”

If
poll results can’t stand up to scrutiny of the poll texts, keeping the
poll text out of the hands of those who are made to believe the results
is a deceitful act.

Microsoft has been guilty of such an act.

Aside
from the resulting dent in Microsofts general credibility, the result
of their past behavior is that people valueing their own opinions now
have good reason not to accept poll results coming from Microsoft
(possibly through political subsidiaries like the “Consumers for a
Sound Economy Foundation”) without a specification of the used methods
and text.

Incidentally, Microsoft regularly employs the firm Hart and Teeter to conduct their polls. Beware when that name is mentioned!

For the article by John Lettice in The Register:
http://62.232.8.250/990115-000002.html

This weekend
I bought myself a new desktop machine that is nearly twice as fast as
the previous one, and has twice as much video- and working memory RAM.
I went for cheap and bought the system without a keyboard, monitor,
mouse, CD-ROM drive, and OS. I have all those and they work fine, and
my old machine is going to be used as a Linux webserver to host
billwatch, so it won’t need these components.

It seemed like a
good idea to be broadminded and install software on the new system to
turn it into a dual boot machine. I paid some Dfl 480.- (about $240.-)
for Windows NT, so why not install it on my spacey new harddrive just
in case I want to test something that only runs on Windows.

During
the installation, however, I was confronted with the text of
Microsoft’s EULLA which tells that the OEM OS may not be used on
another system as the one with which it came. Whereas I can insert any
component in a machine I buy to into other computers when it suits me -
be innovative, help yourself, make the most of a buck – Microsoft’s
license doesn’t allow me to do this with Windows.

I chose to use
a different OS with the machine Windows came with and thereby I
forfeited my use of this copy of Windows altogether.

If my new
computer had come pre-installed with a Windows NT Workstation it also
would be been version 4, as Microsoft has trouble to come out with a
new version of Windows for years now. Effectively this means that
people who upgrade their hardware are prohibited from re-using old
software: they have to buy the same version again.

Incidentally,
I decided not to violate the law and consider the Dfl 480.- to be lost
due to the overly restrictive licensing of a greedy company.

“If you do not agree to the terms of this
EULA, PC Manufacturer and Microsoft are unwilling to license the
SOFTWARE PRODUCT to you. In such event, you may not use or copy the
SOFTWARE PRODUCT, and you should promptly contact PC Manufacturer for
instructions on return of the unused products(s) for a refund.”

People
who use a non-Windows system exclusively on systems that came with
Windows pre-installed are clearly encouraged to ask their money back. I
very much hope that they do so.

This can be quite a hassle, but it makes a good story:
http://www.netcraft.com.au/geoffrey/toshiba.html

http://www.zdnet.com/zdnn/stories/comment/0,5859,2188593,00.html

where
Charles Cooper (Coop) of ZDNN apologises to the Redmondians for the way
the press is covering the anti-trust trial. An unnamed Microsoft
executive laments that he wishes the press owuld cover the trial in
excruciating, boring detail. Instead, the press covers it like a boxing
match or a baseball game (hey, Coop does that!) and focussing on the
racey details like Bill Gates’ sullen, resentful and evasive deposition
or the fact that the only part of the price of a PC that has risen in
recent years is that of the Windows operating system.

All of
these details, which according to Coop are somehow less relevant
because of their newsworthiness, tend to support the government’s case.
I suppose his idea of more balanced coverage would be for the press to
write up all the exhibits Microsoft’s Sullivan and Cromwell lawyers put
into the record. Ah, but then the press would also have to cover all
the evidence Microsoft wants excluded from the case. In truth, the
coverage is fairly balanced. We even see the Mark Murray quotes such as
“the government’s argument would imply that the Chicago Bulls should
have been disbanded after winning their 2nd NBA championship because
they are just too good.” With grandstanding such as this, it is no
wonder we don’t hear more from Microsoft’s point of view these days.*

* – Microsoft is not prevented from distributing this drivel, for the reader can easily download it directly from http://www.microsoft.com/presspass/trial .

In the context
of this news, it is nice to read Microsoft’s press release on the
“overnight change in the software industry” that allegedly resulted
from AOL’s buying Netscape.

For Microsoft’s comments on AOL’s
buying of Netscape for two-thirds of the price that @Home pays for
Excite! see my ancient annotation: http://main.billwatch.net:81/annotated/ms_onaolns.html

For an article on the transaction, see: http://cnnfn.com/hotstories/deals/9901/19/excite_a/

I find it interesting that CNN doesn’t mention the consternation surrounding Netscape in its prsent newscasting.

Those running Linux, FreeBSD, OS/2, Netware or perhaps
Be after wiping Windows off their harddisks will be interested to
obtain what they are entitled to. They should be able to chose what
operating system is to be delivered with their hardware or at least to
buy their hardware without any operating system.

Second best is
to get their money back. Obtaining a refund is a long and tortuous road
as Geoffrey Bennett’s story indicates. However, it is worth it. In the
short run those entitled to it will get their money back. In the long
run they might stimulate OEM’s to stop tying Windows to every hardware
system.

To help people organize in their efforts to obtain what
they are entitled to, a “Windows Refund Center” has been set up. Aside
from creating a central repository with information and success
stories, the refund center hopes to stimulate people to massively ask
for a refund on February 15th.

You can find the Windows Refund Center here: http://www.thenoodle.com/refund/

The trial sessions on OEM agreements has been secret, but from the remaining testimony some things can be gleaned.

Check out Graham Lea’s article “What is it Microsoft wants the court to keep secret?”: http://www.theregister.co.uk/990118-000003.html

There is nothing new about the problem of
a “free ride” in economical theory. It means that if most of the users
pay for a service, some – too many! – may benefit from it without
paying for it. “No thank you, I don’t want to have the street swept and
I won’t pay for it.”

For Microsoft there is a dire implication
to the argument: claiming that not buying Windows for a new computer
will in all, or most, cases be followed by stealing it, is an admission
of Windows’ monopoly.

Aside from that there is of course an
issue such as my having a paid for copy of Windows NT 4.0 that I can’t
use on my new machine, while my old machine is getting a Linux server
function. Indeed, Microsoft’s OEM license tells me that I can’t install
it on new hardware and I agreed to it. Remains the fact that Windows is
tied to computer hardware as no other component in the computer is.

Claiming that this is a necessity contradicts Microsoft’s claims that they operate in a competitive market.

My
request: does anyone know where to find, or have actual citations from
OEMs or Microsoft itself containing the “piracy argument”? I’d like to
have it.

This greatly appeals to Microsoft: if
such a shift away from Microsoft’s position since the early eighties
would be possible, it’s monopoly would look more innocuous.

The
great example is the shift away from IBM’s mainframes to personal
computers. Nowaydays, but not in earlier accounts, Microsoft
spokespersons conveniently ignore that IBM’s position in PC’s was
dominant as it was in its core market, but that it allowed the PC to be
“commoditized”. It was far more important for the loosing of control by
IBM that others could create “compatible” products than that the PC
represented something entirely new that could in time replace the old.

Once
more Microsoft – and its MIT representative – are evading the terms of
economy in which an antitrust discussion should take place. “Monopoly”
becomes “category leader” and the $260+ B company is continuously on
the verge of being completely destroyed by every computer science
student in the world.

I can’t help wondering what happened to
empirical science. The shift from mainframes to PCs may have been a
“paradigm shift”, but the main influence on the role of IBM was not the
shift in technology, but commoditizing its product and thereby opening
the road for relatively small competitors. What are the other “paradigm
shifts” and did they indeed influence the organizational dynamics of
the computer industry?

Mr. Nielsen, Microsoft manager for
developer relations, takes the rather extreme position that “paradigm
shifts” take place every six months. Given Microsoft’s lone position
during the last 12 years, we can conclude that it lived through some 24
of these paradigms shifts and does so with more ease every time. If the
“paradigm shift” were a one-time danger – like a meteor driving
dinosaurs to extinction – it would be difficult to discredit Mr.
Nielsen’s remark. However, given that he implicitly claims that
Microsoft has a very long record of growing bigger through all these
shifts, it is difficult not to learn the lesson from this that history
is pretty predictable in the computer industry. When seeing Microsoft’s
index at Wall Street, I believe that I am not the only one.

Given
the above remarks and Mr. Nielsen’s answer to Redhat’s Mr. Young’s
claims, I believe that Mr. Nielsen uses forceful words without being
able to support them. Mr. Nielsen is not an honest man.

http://www.zdnet.com/zdnn/stories/news/0,4586,2191274,00.html

Note
the statement by Microsoft spokesman Sohn that OEM’s are free to load
any operating system on new PC’s. While it may be true that “nothing in
the OEM contracts says the OEM can’t ship anything else”, it certainly
is misleading. After all, if the OEM has tried to get the best price
for Windows and pre-paid for a copy of Windows for each of a particular
model of PC, that OEM certainly has an economic disincentive to load
any other operating system on that model. Generally, the PC models in
question are the lower-end consumer oriented models where price
competition is intense.

Also, spokesman Sohn says that Microsoft
plans no counter-campaign and that OEM’s need no hand-holding or
instruction from Microsoft on dealing with the campaign. But the
campaign for refund of the Microsoft Windows tax exists solely because
of Microsoft-directed discriminatory Windows pricing. This is a problem
created by Microsoft, but they say it can only be resolved by the
consumer and the OEM.

Another funny aspect of Mr. Maritz testimony is his
listing of “formidable competitors” (none of which sells or supports
this Linux thing). The reason why they are “formidable” is that they
are big and do something that might cut into Microsoft’s markets. Given
that they are big, they are supposed to be big as competitors. However,
that doesn’t necessarily follow.

Perhaps Mr. Maritz should learn
to draw Venn diagrams in order to restrict his points to relevant
markets. Sun is primarily in hardware and does java on the site (given
that java is a commodity language – many vendors can produce it – sun
won’t ever make money from it in the way that Microsoft makes money
from Windows on which it has a monopoly); Oracle is primarily in
services and software (that order!); and IBM is in hardware, services,
and software (that order!).

Paul Maritz’s testimony is quite, er, bloated, and I restricted myself to the testimony here: http://www.microsoft.com/presspass/trial/jan99/01-22maritz.htm

After
reading in the news that most of Microsoft’s profits were made in its
OS division in the latest record-setting quarter, it is a bit hard to
swallow that Mr. Schmalensee has now idea what Microsoft makes its
money on. He claims that Microsoft does its accounting with pen and
paper. I guess they must wonder why people buy their software.

Update: Here’s another one: Schmalensee trips on DoJ banana skins.

Naturally,
Spyglass attempted to get something back from their investments and
development efforts and they got a sum of money from Microsoft after
settling out of court.

I can’t help wondering if Microsoft
represented the position of the browser in its case versus Spyglass in
the same way as it does vs the DOJ today.

Did Microsoft tell
Spyglass that the licensed browser was an integrated part of the
Windows operating system? If so, the Spyglas settlement is usually
incorrectly represented by the account that the browser is an
individual product that was given away for free by Microsoft.

However,
if the browser was indeed an “integrated” part of Windows, revenues
should be allocated to it from the revenues of Windows in the same way
as happens with bugfixes. Spyglass should have received royalties on
the basis of an appropriate percentage of the price of Windows.

If Microsoft did not represent the case like this to Spyglass, it has committed fraud.

I annotated some fragments from his lengthy testimony.

You can find the result here.

The emerging networking markets,
however, that might open opportunities for new software companies to
rise and therefore at sometime even to build desktop systems and office
tools to challenge Microsoft’s own markets, are less likely than the
OEMs to enter exlusive deals with Microsoft.

The solution is to apply the traditional way of denying entrance to the competition: you buy up the channels.

Today
it was announced that Microsoft has taken a $500 million dollar share
in NTL, the U.K.’s No. 3 cable company, to speed delivery of high-speed
voice, video and Internet services in Britain and Ireland (See: http://www.news.com/News/Item/0,4,31351,00.html?st.ne.fd.mdh).
Earlier, Microsoft has bought into ComCast, the 4th largest cable
company in the US for $1 billion which gave them a 11.5% share (1997);
started for $50 million a joint venture with QualComm to form a new
wireless communications company (1998); bought 10% of Roadrunner, which
does highspeed cable and internet access (1998); has some
cross-agreements with TCI – TCI gets 20% in MSN and will use Windows CE
(1998); bought UUNet and WebTV; and bought for $1 billion into US West
which is into cable operations (1997).

Conclusion: don’t expect a level market for the Internet appliances that Microsoft is so loudly afraid of when in court.

Earlier,
Microsoft lawyers intimated that the DoJ might have prodded AOL to
extent its MSIE contract. I wonder who they think is behind this scene.

See: http://www.theregister.co.uk/990125-000027.html

Guess
what: “There simply is no more qualified player for us in this effort
than Microsoft.” Apparently, UPC is not interested in supporting
different platforms, but rather in an exclusive deal. Barriers to entry
are rapidly mounting in the software industry.

http://www.news.com/News/Item/0,4,31429,00.html?st.ne.fd.mdh

In this John Dodge column:

http://www.zdnet.com/zdnn/stories/comment/0,5859,2192748,00.html

read
about how the Microsoft Office suite, at anywhere from $499 to $999, is
‘unanimously’ perceived to be overpriced. Actually, this is not much
over some of their competitions’ prices, but also worthy of note is:
“Those sentiments are understandable, given that 40 percent of
Microsoft’s $4.94 billion in sales for the quarter ended Dec. 31 was pure profit.”

This
large profit margin might also be due to the situation of PC OEM’s who
are economically compelled to force a sale of Windows with each new
system they ship. It is difficult to get a refund on the possibly
unwanted Windows software and, despite the fact that Microsoft wrote
the contract, Microsoft denies responsibility for this situation. I
thus bring your attention to this excellent post by David Cardinal and this link to the Microsoft Boycott Campaign
Web site. It is up to the educated comsumer to make the market work for
them, but this certainly would be easier if companies such as Microsoft
would act ethically and responsibly.

See: http://www.procompetition.org/xp/p-headlines/i-current/a-917374293/p_article.view

An
additional number is that Bill Gates is now at $85B, so extrapolating
the past and having no reason not to we can expect him to hit the $100B
sometime this summer and most surely before the new millenium starts.

Gates personal wealth suffices to buy AOL/Netscape, Sun and more than half of Oracle. So much for the “formidable competition”.

See: http://www.news.com/News/Item/0,4,31494,00.html?st.ne.fd.mdh

Full story is at:

http://chicagotribune.com/business/businessnews/article/0,1051,SAV-9901270364,00.html

You can find it at: http://www.microsoft.com/presspass/trial/mswitness/allchin/allchin.htm

First comments are available now by the vitriolic hand of John Lettice (pity that the HTML italics didn’t match):
http://www.theregister.co.uk/990127-000026.html

It
is laudable to experiment with new technology, even when that restricts
readership to a specific platform, but Compaq fails to mention – aside
from a little “requirements” item that says WindowsXX or NT – that the
site does not conform to Internet standards.

I know nothing about IACT, but this makes good sense to me.

You can find the letter at: http://pages.cthome.net/iact/iact-3.html

Another cable company mentioned a few days ago was
UPC. Then the news was that they entered into a technology agreement
with Microsoft. The news now is that Microsoft will take a $300 million
part in the company.

It looks like Microsoft is closing the markets for software as AT&T closed the market for telephones.

See: http://www.news.com/News/Item/0,4,31580,00.html?st.ne.lh..ni

“98lite
is a unique application I developed that breaks the tight integration
between Windows98 and Internet Explorer, opening up a range of new
possibilities for configuring Windows98. These possibilities are
realised by implanting the leaner and faster Explorer shell from
Windows95 onto the improved core of Windows98. You keep all the great
Windows98 improvements to the hardware support, drivers, memory
management, Fat32 and improved networking, but the Explorer95 interface
is considerably faster and consumes fewer computer resources.”

See: http://www.98lite.net/

If you’re in the mood, check out the Sm@rt Reseller article about it, that concludes:

“Windows
98 without Internet Explorer 4 is a working operation system and
Internet Explorer 4.0 is not an vital part of Windows 98.”

(http://www.zdnet.com/zdnn/stories/news/0,4586,2196350,00.html)

See: http://www.theregister.co.uk/990128-000012.html

I
find it somewhat interesting that Apple is hit with a patent suit with
a damage claim of about the same size that Microsoft alleges Apple
claimed of them ($1.2 billion).

If I am not mistaken, Apple is
worth a couple of billions of dollars altogether, and Microsoft about a
hundred times as much and it has $18 billion in the bank. Given their
sketchy accounting, Microsoft wouldn’t even notice a billion more or
less. And yet, senior vice president Paul Maritz testified the
following (sorry for the uppercase, I lifted it straight from the
transcript):

“UNLESS WE COULD SOLVE THIS BASIC ISSUE, WHICH WAS
THEIR THREAT TO OUR BUSINESS, BASED UPON WHAT WE THOUGHT WAS
UNJUSTIFIED PATENT ISSUES, BUT WE WERE SUPERSENSITIVE TO YOU BECAUSE,
AS YOU KNOW, IN THE LATE EIGHTIES, APPLE HAD BROUGHT A SEVERAL BILLION
DOLLAR LAWSUIT AGAINST MICROSOFT, A LAWSUIT THAT COULD HAVE LITERALLY
PUT US OUT OF BUSINESS. SO, WE WERE HYPERSENSITIVE TO THE FACT THAT AN
APPLE, PARTICULARLY AN APPLE IN TROUBLE, COULD COME BACK AND ADOPT A
STRATEGY OF LITIGATION AGAIN.
SO, THROUGH EVERY CONVERSATION,
EVERY THREAT OF DISCUSSION, YOU FIND THIS BASIC UNDERLYING THEME, WHICH
IS YOU GOT TO GET THE PATENT ISSUES SETTLED.”

Strange, isn’t it?
$1.1 billion may be a fortune to Apple, but doesn’t mean much to
Microsoft (the profit of a month or so). And yet, Mr. Maritz claims
that Microsoft was utterly fearsome of a patent lawsuit by Apple, even
though they thought they were right (no skirmishing with principles in
Redmond this time).

(News agencies don’t seem to have caught
on, but Maritz’ testimony is really worth reading. His basic claim with
regard to Apple is that the agreement specifying that MacOffice will be
shipped if and only if Apple will make MSIE its default browser was
just an irrelevant afterthought that got bundled with an agreement that
was overwhelmingly about settling the patent matter. The transcript
from which I quoted is: http://transcripts.procompetition.org/0125pm_b.html)

Apparently,
I read the transcripts of the session with Paul Maritz too fast (read:
I skipped parts), because it was new to me that David Boies subtly
asked Maritz if Microsoft represented WebTV as a competitor when it
bought that company of which Microsoft today calls its products
competitors to Windows.

Aiks, rewriting history becomes more complicated when people are allowed to ask you nasty questions.

See: http://www.ljx.com/LJXfiles/dojvms.html (I have no permament location for the file.)

Nice reading to get in the mood: http://www.procompetition.org/xp/p-headlines/i-current/a-917630416/p_article.view

Microsoft
managed to keep the public uninformed about the deposits, even though
the law allowed it access. Although Microsoft sought to keep the public
from getting all information, they regularly complained bitterly about
out of context “snippets” of deposits being presented.

Now that
a federal Appeals Court has ruled that the public is to be allowed to
know what the law grants them, all parties can be satisfied. I’ll
patiently wait until Bill Gates’ testimony will appear on the shelves
of the local video-store.

See: http://www.mercurycenter.com/business/tech/docs/001048.htm

(By the way, Gates spoke to Associated Press about the deposit and said the following:
“I
answered every question, completely, truthfully through many, many,
many long days. The fact that they’re taking snippets out of that and
holding them up without having me there because they chose not to call
me as a witness, I think, is quite novel.” — Huh, “novel”? If so, has
Gates any objections to “innovation”?)

“All
KOffice components are still in alpha stage. This does not mean, that
the applications crash every minute, but it means that not all features
are already implemented. So, some of the components are more useable
than others, but the developement happens very fast, so all KOffice
applications will reach an useable state soon. If you already want to
test the KOffice, you can download daily source and binary snapshots.
It’s also mentionable, that some KOffice parts were already used very
successfully.”

Okay, so we have software in alpha stage here. When looking at the site we find that ten developers are working on the package.

Let’s have a fragment from John Warden questioning Paul Maritz in court:

Q. WILL YOU TELL THE COURT WHAT IS IN 2318, MR. MARITZ?
18 A. WHAT THE EXHIBIT DESCRIBES IS THE EFFORTS OF A GROUP
19 THAT GOES BY THE NAME “KOFFICE.” THIS IS AN OPEN-SOURCE
20 MOVEMENT EFFORT TO DEVELOP AN INTEGRATED SUITE OF OFFICE
21 PRODUCTIVITY APPLICATIONS, INCLUDING A WORD PROCESSOR, A
22 PRESENTATION PACKAGE, A SPREADSHEET PACKAGE, A DRAWING
23 PACKAGE, AND SEVERAL OTHER COMPONENTS.
Q. OKAY. RATHER THAN GOING THROUGH EACH OF THESE, CAN WE
25 JUST TURN TO THE FIRST SCREEN SHOT, PLEASE. AND CAN YOU
16
1 TELL THE COURT WHAT THAT SCREEN SHOT IS?
2 A. THIS IS A SCREEN SHOT OF THEIR SPREADSHEET PROGRAM
3 DEMONSTRATING THE VARIOUS CAPABILITIES OF THIS SPREADSHEET
4 PROGRAM, AND WHAT THEY ARE POINTING OUT HERE IS THAT, IN
5 ADDITION TO THE TRADITIONAL FUNCTIONS LIKE BEING ABLE TO
6 ENTER FORMULAS INTO THE SPREADSHEET AND DO ADDITIONS OF ROWS
7 AND COLUMNS AND THINGS LIKE THAT, THEY ALSO HAVE MORE
8 ADVANCED FUNCTIONS, LIKE BEING ABLE TO AUTOMATICALLY
9 GENERATE CHARTS.
10 SO THIS IS QUITE A SOPHISTICATED SPREADSHEET.
11 THE COURT: WHAT IS THIS RUN ON?
12 THE WITNESS: THIS RUNS ON THE LINUX OPERATING
13 SYSTEM, YOUR HONOR.

14 BY MR. WARDEN:
15 Q. IS THIS KOFFICE UNIQUE?
16 A. NO, MR. WARDEN. TO MY KNOWLEDGE, THIS IS ONE OF A
17 COUPLE OF EFFORTS TO DEVELOP OFFICE-PRODUCTIVITY
18 APPLICATIONS FOR THE LINUX ENVIRONMENT.

19 I AM AWARE OF ANOTHER EFFORT CALLED “ABI SOURCE.”

20 AND THEY ARE ATTEMPTING TO DO MUCH THE SAME THING. THEY’VE
21 STARTED DEVELOPING, IN PARTICULAR, A VERY HIGH-QUALITY WORD
22 PROCESSOR FOR THE LINUX ENVIRONMENT.

Somebody ought to inform Microsoft’s senior vice-president of platforms and applications about the value of a screenshot.

You can find the relevant websites at the following locations: http://koffice.kde.org/ and http://www.abisource.com/

“All successful software packages have high profit margins.
The fact that Microsoft, as a company, has a high margin reflects the
fact that it has many successful software packages. It has created what
the public wants and regards as valuable.” (emphasis in the original)

I wonder how Mr. Schmalensee and Mr. Maritz think to combine the categorical statement that “All successful software packages have high profit margins.” with their claims that free software has a very real chance to be successful. “The
knowledge that serious competitors for the operating system category
can emerge from nowhere places substantial pressure on Microsoft and
other software companies to innovate and price low. Microsoft does not
act competitively because Linux is there now. Microsoft acts
competitively because threats like Linux are always out there.”

To be more explicit: If it is a necessary condition for a “successful software package” to have a “high profit margin”,
then Linux, nor KOffice, nor AbiWord, nor Wine, can ever by successful.
If they cannot be successful, then they do not constitute a threat to
Microsoft.

By the way, WordPerfect8 (for Linux at least) can’t
convert the Word file containing Schmalensee’s testimony. Apparently,
there is more to conversion than Microsoft’s videos in court show.

Maritz said:
“Clearly
we are very concerned about what could happen here. It puts the people
that are providing you with that access to the network – the high-speed
network – in a relatively strong position to have quite a strong
influence over what software you choose to download on your computer.
So we believe that the cable network providers and other companies,
like AOL, who have provided Internet access to large numbers of users
could have a much greater say over the software that people run in the
future.”

As reported earlier, Microsoft has sunk billions of
dollars into several cable companies: $500 million in British NTL, $300
million agreed to sink into UPC, $1 billion in ComCast, $1 billion
USWest, 10% of RoadRunner, $50 million joint vendture with QualComm -
that is now rumored to be about to drop its e-mail client,
cross-agreement with TCI to have this cable company push Windows CE.

Mr. Maritz’ statement makes clear that Microsoft’s buying into cable companies is relevant with regard to its monopoly position.

The fragment came from the transcript of the 28 Jan 1999 am session of the antitrust trial.

As seen in Chairman Gates’ book “The
Road Ahead”, the Microsoft vision is a PC in every home. Of course,
with the introduction of technologies unforseen by Gates such as the
Internet and cable TV network connections, this is subject to revision
as seen in the 2nd edition of his book. The unstated assumption is that
all of these technologies will use Microsoft’s software.

We see
this vision with the current anti-trust case against Microsoft. Not
long into the cross-examination of the government’s first witness,
Netscape’s Jim Barksdale, the Microsoft attorney attacked him for
causing the Department of Justice to bring this case to enforce
Netscape’s “God-given right to 80% market share.” This theme comes up
again when MIcrosoft’s Allchin says in his written testimony that
“Netscape does not have the right to dominate the Internet.” On the
same token, one would think that Microsoft or any other company has no
“God-given right to 80% market share” and no right to dominate the
Internet. However, it is clear through Microsoft’s actions in
themarketplace and their claims in the trial that this is an issue of
keen importance to them and that Microsoft believes it is somehow
different in that it does have the right to a dominant market share.
This hypocritical attitude speaks volumes about why government
regulation is necessary in Microsoft’s case.

For an example you can just pick the latest transcript published at their site as of writing this item:
http://www.microsoft.com/presspass/trial/transcripts/jan99/01-28-am.htm

At the bottom of the transcript you’ll find:

�1999 Microsoft Corporation. All rights reserved. Terms of Use

The testimony of Microsoft’s Dr.
James Allchin is supposed to demonstrate that there are real benefits
to consumers and developers in the integration of Internet Explorer
with Windows. But, as Boies uncovers in cross-examination, those
benefits are also present if Internet Explorer is sold separately.
Fuller coverage is here:

http://www.zdnet.com/zdnn/stories/news/0,4586,2198376,00.html

If
Microsoft chose to sell Internet Explorer separately from Windows, it
would preserve competition in the browser market and they would be
competing on merits since tighter integration with the operating system
is a feature that some consumers might prefer. Making Internet Explorer
a mandatory part of Windows is anti-competitive and actually results in
a less efficient, less stable operating system. A leaner and more
stable package like Windows ’98 Lite could also be a benefit consumers would want.

Finally,
I can assure Dr. Allchin that it is entirely possible to completely
remove the Web browser from any Linux installation with no adverse
effect on efficiency or stability. I suspect the same is true of BeOS.
Has Dr. Allchin not done his homework or is he reluctant to admit to
yet more facts that don’t support Microsoft’s position?

“Microsoft is a planned economy. Left unfettered,
unscrutinized, unchecked–monopoly power can be leveraged into other
businesses.”

“If they are allowed to use that leverage before
the world moves to this new network economy, they can establish
dominant and stifling positions in these new architectures.”

“What
they are trying to do is leverage their Windows monopoly through
acquisitions, bundling time, predatory pricing, illegal,
anticompetitive behavior left and right.”

It seems to me that
McNealy is quite right, but he could and should have built a stronger
case (it could be that he did, but that the journalists missed it).
Microsoft tells Apple, Intel, Digital and Netscape who is to produce
what and it tells OEM’s what to sell and what not to sell. That sure
sounds like “central planning” to me.

(I’ll leave the quotes on the importance of not-breaking up Microsoft as an exercise to the reader.)

See: http://www.news.com/News/Item/0,4,31716,00.html

See: http://www.boston.com/news/packages/microsoft/

Related:
the government still doesn’t seem to have caught on the existence of
98Lite or still hasn’t managed to sufficiently evaluate it. It is great
fun to compare Dr. Allchin’s testimony with the reality of 98Lite.

The
first group – that has the most executive clout – is now telling that
the second group was speaking of non-Windows operating systems only.

See: http://www.statesman.com/FEATURES/technology/microsoft/ms_bundling.html

(Courtesy of Richard Fane.)

See: http://www.news.com/News/Item/0,4,31777,00.html?st.ne.lh..ni

Microsoft spokesperson Mark Murray called the affair of “essentially nit-picking an issue like video production.”
(What
does he mean “nit-picking” – Microsoft tells that it displays one
thing, but it shows something else. If they call saying one thing while
showing something else “nitpicking”, they clearly give no value to the
notion of evidence.)

The video-affair was bad for Microsoft’s
credibility. What is far worse, however, is that several spokespersons,
including their senior-vice president of law, have bagatellised the
very idea of giving truthful evidence.

The quotes are from: http://www.news.com/News/Item/0,4,31808,00.html?st.ne.lh..ni

Could this be purely coincidental?

No
kidding. Gates is going to advise the government on the introduction of
computers in education. Thus, instead of seeking neutral advise, the
Dutch government is embracing as adviser a party that is here to sell
its own products and nothing more.

I can’t help being reminded
of the local “Lockheed Affair” when the husband of the former Dutch
queen – accepted money from the company to plug their planes. What is
Gates’ doing in the prime minister’s office if not bypassing normal
buying procedures?

1. Rational
   relies on the presence of IE system services to ensure that all our
   customers have access to the latest in technical support information.
   (“Other browsers may be used to get this information, but since we know
   that virtually all customers with Windows 95 or 98 have Internet
   Explorer available we can be confident that most of our customers will
   have access to the technology to obtain our Web-based information.”)
2. Our
   customers prefer that Rational does not redistribute Internet Explorer
   components whenever possible not to do so. When different application
   developers each redistribute potentially different versions of the same
   components, conflicts will inevitably arise.
3. The open
   architecture of Internet Explorer, with ready access to all of the key
   APIs, has allowed Rational to deliver increased value to our customers
   at lower cost much sooner than would otherwise be possible.
4. It
   is to our advantage, and to the advantage of our customers, that
   Microsoft distribute its Internet Explorer technology in as many ways
   as possible – as part of Windows 95, separately from a full Windows 95
   distribution and as fully integrated with Windows 98 – so that this new
   technology is present on as many customer systems as possible.

What
is interesting about Mr. Devlin’s arguments is that they all apply if
the browser was not tied to the operating system. As for Internet
Explorer’s “open architecture”, that is not related to grafting it on
the operating system. Aside from this “open architecture” argument, all
of Mr. Devlin’s arguments would be equally fulfilled when Netscape
would obtain a monopoly on browsers and be bundled by every OEM as
Microsoft’s Internet Explorer is today.

For those interested, Mr.
Devlin has provided a list of those libraries categorized as browser
functionality that are used by software products of Rational. Again,
this is really irrelevant, as they could have been unbundled and
provided by a third party.

Coincidentally, I visited the
“Rational ’99 Worldwide Software Symposium” yesterday. What really
struck me is that Rational is very much a Microsoft-only platform -
when they say: “This product supports all platforms”, they mean: “This
product supports Windows95, Windows98 and Windows NT”. Another thing
that struck me is that no demonstration computer had an icon to
Netscape’s browser. When I saw the icon on one computer, it turned out
that the browser was indeed used to demonstrate how slow it was with a
certain java applet.

So, what is Microsoft to Rational? Although
Mr. Devlin states in his testimony: “The resulting IE APIs are publicly
available (including being available to Rational’s competitors), like
all of the Windows APIs.”, I found in the document “Alliance between Microsoft and Rational expands market for visual modeling tools” (http://www.rational.com/uml/press/dynamic.jtmpl?doc_key=173) the following fragment:

Our
relationship with Microsoft hasnot only helped increase product sales
for Rational, but alsoprovided us with the access to Microsoft
technologies weneed to best meet the demands of Microsoft developers.

Apparently, having an “alliance” with Microsoft gives “access” to sources not open as “IE APIs are publicly available”.

If
you have now reached the understanding that it is Mr. Devlin’s claim
that anything that is to be used by all of his customers is to be
included in Windows, you will find the following fragments from http://www.rational.com/sitewide/support/whitepapers/dynamic.jtmpl?doc_key=389 puzzling:

On
the tool side, Rational and Microsoft have worked together to provide
powerful integration between the tools from both companies. One example
of this is Microsoft Visual Modeler developed jointly by Rational and
Microsoft. Further, Rational Rose is the leading tool for visual
modeling and component-based development and it is tightly integrated
with Microsoft development environments for Visual Basic, Visual C++
and Visual J++.

Microsoft and Rational have a strategic
partnership aiming at providing software developers with an integrated
tool suite automating major portions of the software development
process.

Rational Summit also supports the definition and
automation of task life cycles, and is integrated with MS Project and
MS Excel.

Rational SoDA extends MS Word(tm) and provides
a way to automatically generate quality documentation from a variety of
information sources, including both Rational and Microsoft tools.

RequisitePro
is a unique, Windows(r)-based requirements management tool that is
integrated with Microsoft Word(tm), Rational Rose(r) and Rational’s SQA
Suite(tm).

Clearly, Rational manages to
“integrate” with many Microsoft applications, e.g. MS Word, Visual
Studio, MS Project, and MS Excel. If you go back to the reasons Mr.
Devlin mentioned for including the web browser in Windows, you might
agree with me that these would be equally valid for including MS
Project, Visual Studio, MS Word and MS Excel into Windows. Strangely,
Mr. Devlin does not complain that such an inclusion of applications
that his customers need to use Rational’s applications, just as they
need MSIE, has not been carried out.

For this reason I consider Mr. Devlin to apply a double standard.

This
is also visible in his attitude towards java. Whereas standardization
in Windows is considered of primary importance, he is actually against
seeking such standardization in java. Mr. Devlin considers it better to
have java develop as UNIX did: let is splinter over different
platforms. Mr. Devlin explains to us why splintering UNIX had adverse
results, but he lauds splintering java.

About being asked by Microsoft to testify, Mr. Devlin states:

“We
[Rational] concluded that my agreeing to testify would be, on balance,
neutral to our business interests, and I agreed to testify because I
felt it was my duty to do so as a citizen.”

I hope to
have shown above that Mr. Devlin’s testimony is not internally
consistent and that the reasons he gives for having MSIE being included
in Windows are not backed up by demands to have other Microsoft
applications for which the same arguments can be made be included in
Windows as well.

“One
of the great things about the software business is that if there are
some bugs in a first version of a product, you can go back and fix
them. So Video 1.0 apparently had a few things that became confusing,
so both sides agree we will be doing Video 2.0.”

In
other words, if it is pointed out that Microsoft’s evidence is not what
it should be, Microsoft considers it normal procedure that they get the
opportunity to come up with other evidence to produce intended effect.
From this it follows that Microsoft does not consider itself bound to
provide truthful evidence at all times.

Quote from: http://www.news.com/News/Item/0,4,31913,00.html

http://www.zdnet.com/talkback/22_26562_108781.html

Name: Michelle Bradley
Location: null
Occupation: X MS employee

Most interesting, indeed.

http://www.zdnet.com/talkback/22_26562_108905.html

Name: Wm. Paris
Location: Redmond
Occupation: MS Employee

Disclaimer: My thoughts may or may not coincide with anyone else's including my boss, my boss' boss, etc.

http://www.zdnet.com/talkback/22_26562_109065.html

Name: Tom Thumb
Email: null
Location:Redmond
Occupation: MS employee

And
as Mr. Paris points out, "If they had orders, they'd execute. And you'd
know it." As evidenced by Mr Paris's own post. A lot of people around
here are very unhappy about this. And we are increasingly embarressed
by what is going on. We employee's with any remaining shread of
integrity and honor are getting as much BS piled on us as the outside
world is. And very few of us any more are getting stock options to shut
us up.

Update: Wired tried to trace the author of the first posting. Interesting. See: http://www.wired.com/news/news/business/story/17745.html

Jean-Louis Gass�e writes about the claim:

Our
thanks for the plug, but alas, our NetPositive browser isn’t
integrated. In fact, we’re doing our best to let other browsers — BeOS
versions of Opera and Mozilla, to name two — flourish on the BeOS
platform without playing games with OS features, or with commercial
relationships. Our browser is an application, just like a word
processor, and it is removed just as easily. I recall us jokingly
referring to it in one of our press releases as “DOJ-approved.”

When
you remove the NetPositive browser, all you lose is the ability to read
HTML documents locally or on the Web. One might object that other
applications, such as a mail client, are affected. If you remove
NetPositive, clicking on a URL no longer takes you “there.” Right. If
you remove the printer, the word processor no longer prints. This
doesn’t mean the printer or the driver is “integrated” in the OS in the
sense that removing Explorer would cripple Windows 98.

In
Microsoft Word, you can paste a “live” Excel document into your text.
But that doesn’t mean Excel is integral to Word. If you remove Excel it
doesn’t cripple Word — it just stops you from doing a “live” paste of
a spreadsheet inside your text document.

For the full article, see: http://www.be.com/aboutbe/benewsletter/volume_III/Issue5.html#Gassee

http://www.news.com/News/Item/0,4,31986,00.html

suspicions
about the authenticity of Microsoft’s video demonstration of degraded
Windows ’98 performance caused by Felten’s Internet Explorer removal
program are confirmed. Microsoft admits the video was a simulation. Do
they know the difference between marketing hype for public consumption
and sworn court evidence?

Interestingly, here

http://www.theregister.co.uk/990204-000016.html

we
learn that Dr. Allchin at one time wanted Internet Explorer separated
from Windows for quality and performance reasons. He was overruled in
that decision and now Microsoft wants us to believe the
Orwellian-sounding proposition that a more complex operating
environment (Windows with integrated Web browser) gives better quality
and performance than a simpler one. That is highly improbable but, even
if we grant this, it certainly gives consumers less choice in their
Windows “Web browser experience.”

http://www.patents.ibm.com/patlist?icnt=US&patent_number=5860073

explicitly refers to the W3 Consortium’s standards document.

Right
now, Microsoft claims they will give a “free and reciprocal licence” to
anyone who wants to use this element of HTML. There is nothing to stop
them from charging for this license in the future. Unfortunately, there
is nothing new in Microsoft trying to convert another organisation’s
standard (i.e. HTML, Java) into their own proprietary standard. Taken
together with Microsoft’s attempt to dominate the market for Web
browsers, their plan to seize control of the Internet is clear.

For more details and discussion of the Microsoft patent on Cascading Style Sheets, see the Slashdot story at http://slashdot.org/articles/99/02/04/169219.shtml

Microsoft proposed to repeat a test that was to show that
Windows98 with Felten’s modification was under some circumstances up to
seven times slower than Windows98 with Internet Explorer. This was
their claim in court and they brought a video in as evidence. When it
was discovered by the plaintiffs that the video was forged, Microsoft
claimed after some confused detours that the presented video was a
“simulation”, merely meant to illustrate the test results. In other
words, the video was a “docudrama”, not a “documentary”. Effectively,
this means that Microsoft admitted that it misrepresented the nature of
the video as “evidence”, whereas it was not.

To the public and to
the judge, Microsoft sought to defend its blemished credibility to
repeating the test when witnessed by observers for the plaintiff. But
the test now failed.

Says spokesperson Tod Nielsen:

“Each
time we connected we got a different performance. It would have been
unfair to either side to compare one machine at one rate and another
machine at a different rate.”

Giving up after four
times? That doesn’t sound like they were looking for statistical
evidence. Why didn’t they call directly into Microsoft’s servers at
Redmond instead of letting the connection run over the jammed Internet?
And why didn’t they just install a WindowsNT server with a copy of the
Windows Update site locally? Microsoft hasn’t been exactly forthcoming
in looking for a reasonable test methodology.

Was Microsoft sorry
that it couldn’t back up what it had brought into court as evidence?
Not in the least. I quote from a C|Net article:

Nielsen
argued, though, that the Internet speed issue was not the primary part
of the video demonstration, which showed that the government witness’
browser-removal program “doesn’t remove Internet Explorer and breaks Windows…The [Internet] performance was an additional thing that it did,” he said.

If
the “Internet speed issue” wasn’t important, Microsoft shouldn’t have
brought it in as evidence. Effectively, they are now claiming that some
of their evidence is truthful and some is not.

This attitude is not
restricted to Microsoft’s engineers. It goes up to their senior vice
president of law and corporate affairs, William Neukom:

Call
me old fashioned, but I want to invite each of you to take just a
minute today and think about my assertion that what you just witnessed
this morning isthousands of times more material and substantive to this
controversy and the PC software industry than this sideshow of
melodrama about four minutes of tape.

Could it be
that Mr. Neukom refers to the fated attempt to repeat a test under
conditions that are bound to fail as a “sideshow”? Could it be that
Microsoft devised test conditions that were bound to fail, in the hope
of being credited for the attempt, while being able to blame the
failure to the circumstances?

Sources:
C|Net: http://www.news.com/News/Item/0,4,31986,00.html
Seattle Times: http://www.seattletimes.com/news/technology/html98/micr_020499.html (Not visible for the popular “Konqueror” browser.)

Update:
You can find pretty much the same point as made above in an article by
John Lettice that additionally contains a chronology of the evolution
of Microsoft’s claims about the video: http://www.theregister.co.uk/990205-000005.html

What
is the status of these visits? Is Gates acting as a neutral technology
adviser? Or is his presence accepted as a Microsoft salesperson? In
case of the former, the governments are deluded in believing that Gates
has no interest in the outcome of his own advice. In case of the
latter, I would like to learn what other salespersons have been
received by the respective governments. If none, the politicians are
walking the slippery slope of corruption.

See: http://www.news.com/News/Item/0,4,32014,00.html?st.ne.lh..ni

Steve Cohen writes:
> Is this a new develoopment? If so, I've heard nothing about it. What
> patent? Please go on.

It
is new; the patent was issued 12 January, but the fuss broke out when
the Seybold Report covered the story on 4 Feb. Seybold is only
available if you pay the pricey subscription fee, but lots of other
people have been covering it since.

Wired coverage:
http://www.wired.com/news/news/technology/story/17741.html

Slashdot coverage:
http://slashdot.org/articles/99/02/04/169219.shtml

Web Standards Project press release:
http://www.webstandards.org/patent.txt

The patent itself:
http://www.patents.ibm.com/patlist?icnt=US&patent_number=5860073

This
is pretty bad stuff. First, it covers standards ratified by the W3C
that standard browsers all have to implement; Microsoft took part in
the standardisation process but did not reveal that they were applying
for patents on key technologies that were part of the standard. Second,
there's prior art dating back to the sixties; it seems that Microsoft
will give a free license to anyone who can afford to mount a legal
challenge (read: non-Open Source projects).

Stallman save us!
--
__
/ o paul@hedonism.demon.co.uk http://www.hedonism.demon.co.uk/paul/ /
/__/ Paul Crowley Upgrade your legacy NT machines to Linux /~

The
interview is revealing in that it belies the talk in the anti-trust
trial about how Linux is a great competitor to Microsoft. When the
question about Linux is first posed, Gates’ first reaction is to laugh.
He goes on to say that Linux is “Unix as defined 20 years ago” and that
Microsoft “sets out to solve a different problem” with Windows. In
other words, he says Linux is obsolete and irrelevant. Finally, he does
concede it is his job to fear potential competitors such as Linux.
Clearly, it is also the job of the Microsoft defence lawyers to draw up
paper tiger competitors in hopes of fooling the court into believing
Microsoft has any serious competition.

Microsoft,
recently in the news for obtaining a patent for the one technology for
which it seemed to support vendor-independent standards (CSS), is not
going to play along and accuses the multitude of companies that sought
a company-independent standard of waging an “attack on Microsoft”.

Rule
of thumb: Microsoft supports company-independent standards
if-and-only-if they are not company-independent and they own the
relevant patents.

See: http://www.infoworld.com/cgi-bin/displayStory.pl?99025.ehomg2.htm

To the surprise of Microsoft’s
engineers, it turned out that connection speeds over the Internet vary
and that it is therefore not possible to obtain the kind of
non-statistical facts necessary for producting a video. Given that they
originally seemed to have thought that such a test over the Internet
helps us to estimate the technical competence Microsoft’s engineers.

Even
though Allchin wasn’t able to repeat the test that he set out to
repeat, Microsoft’s spokespersons contacted the press to tell them that
the test had successfully proved the software company’s major points.

Retrospectively,
these claims seem to be founded in those tests that showed that if one
removes the browser, browser functionality is absent (Major point,
isn’t it?). However, the tests showing that non-browsing functionality
is also damaged – which were forged on the video and the primary reason
for re-creating the video – could not be repeated.

Thus the
initiative of Microsoft’s spokespersons to contact the press and inform
it that the test was a success, while the issues brought out in court
could not be repeated, is yet another attempt by Microsoft to mislead
the public.

See: http://www.seattletimes.com/news/technology/html98/micr_020599.html

Update:
Last week’s coverage of The Register included numerous article with
titles like “Maritz on…”. As these are now unlinked from The
Register’s own pages, I’ll now add links here for future reference:

Coverage of the Microsoft video-affair in The Register:

• That video – the full transcript
• MS screws-up video remake, and admits it wasn’t real anyway
• How MS tried to dig itself out of video hell
• Allchin takes a beating over video
• MS video II – full transcript, again…
• Conclusion: DoJ spin bowls MS video clean
• How Allchin exposed video fiddle last Monday – but nobody noticed

See: http://www.procompetition.org/xp/p-headlines/i-current/a-918502695/p_article.view

• Witness: Gates required IE for desktop space
• Microsoft has lost antitrust trial, most say
• Microsoft’s courtroom foe shows bite

Update: Richard Fane sent a reference to another good beating: And the times they are a changin’ by John McCormick for Inter@ctive Week.

Despite
the claims that several large OEMs are supporting at least one
non-Microsoft operating system, the universal per-system agreements
that Microsoft has with OEMs still hold: you can try it yourself. Also,
these same OEMs will not touch third-party software like Sun’s “Jini”
as this would displease Microsoft.

Meanwhile, Microsoft is one
of the biggest global players in the cable-industry and is also
encroaching in the wireless communications industry. Generally, we see
that Microsoft is extending its reach vertically, often clearly to
support the promotion of its own software in specific markets to the
exclusion of the competition.

The following two articles give
differing views on the important matter of how the Microsoft situation
is now and what should be done about it:
BusinessWeek: http://www.businessweek.com/microsoft/updates/up90205a.htm

ProComp: http://www.procompetition.org/xp/p-headlines/i-current/a-918597967/p_article.view (article by Alfred Foer, President American Antitrust Institute)

Shortly, Cameron Myhrvold is Microsoft
vice-president of the Internet Customer Unit. He is going to explain to
us why Microsoft’s regulation of ISPs – backed up by its desktop
monopoly – was, and is, “pro-competitive” because it reduced Netscape’s
dominant market share.

More in the ProComp article: http://www.procompetition.org/xp/p-headlines/i-current/a-918598091/p_article.view

You can find it here: http://lists.essential.org/am-info/msg01377.html

In
an addendum he mentioned the hearings of the Senate Judiciary Committee
concerning the structure and power in the computer and software
industry:
http://lists.essential.org/am-info/msg01379.html

As illustration you can
think of the fate of ‘Go’ and of the small company – sorry, forgot the
name – patenting an ergonomic mouse that got branded by Microsoft after
it had been shown to them, while no royalties were being payed.

It
is considered normal that companies present their work to Microsoft,
think e.g. of Intel’s work in software and of Netscape. Microsoft
support can be obtained only if you pass your secrets on to them and
hiding your research and development from Microsoft is considered an
affront.

In 1996 a small Scottish company tried to gain favor with Microsoft by showing them their product and the expected happened:

“A
Scottish Lemon Dog has seen off Microsoft’s Rocky the Dog, in a trade
mark dispute. Inner Workings, a Glasgow-based interactive games
developer, found that Rocky, an assistant in Office 2000, bore a
strange similarity to its Lemon Dog character. Coincidently, IW had
shown its trademarked dog to Microsoft at a September 1996 trade show
in Frankfurt.”

Once in court, Microsoft launched an army of
seven lawyers and three executives against the two lawyers of the
Scottish firm. An estimate was given what the costs to Microsoft would
be if it would have to comply with a preliminary injunction, with the
implied threat that the Scottish firm would have to pay for all of this
in case it would later loose at the full hearing. In a similar
situation, Sun had to deposit $15 million to be able to finance
Microsoft’s losses for the preliminary injunction in the java case.
Such a condition would be prohibitive for a small company like Inner
Workings, but fortunately the law is a bit different in Scotland than
in the US. As one of Inner Workings lawyers stated: “In Scotland you
are allowed to be poor and right.” (Slightly paraphrased – read the
article for the correct quote.)

Fearing yet another courtroom disaster, Microsoft gave in.

For the full story in The Register by Graham Lea, see: http://www.theregister.co.uk/990210-000011.html

This is wrong. What matters
is the conditions of the agreements. Microsoft used its monopoly
position on the desktop to support its position versus ISPs. Such
pressure could not be exerted by Netscape. In other words, whatever the
merits of MSIE, Microsoft didn’t reach these agreements by the virtue
of MSIE alone, it reached them by exercising its market position on the
desktop.

An argument like the above won’t easily be found in the
coverage of a news agency like C|Net that derives a highly significant
share of its advertising revenues from Microsoft. Thus you’ll have to
apply the above argument yourself when reading articles like: http://www.news.com/News/Item/0,4,32254,00.html
or http://www.news.com/News/Item/0,4,32209,00.html

From what I’ve
glanced so far Mr. Chase’s testimony doesn’t seem to included a
comparison of Windows+MSIE with all those other modern operating
systems that integrate web browsers, but rather on the application
market in web browsers, essentially limiting the discussion to MSIE vs
Netscape Navigator.

Mr. Chase attempts the impossible in showing
the MSIE is so much better than Navigator, that the usage of the
dominant market share of the Windows operating system was entirely
irrelevant to the outcome of the process of competitive weeding out.
I’ll happily grant that the componentized MSIE makes for easier ISV
application development, but that is merely part of the story. It’s the
other part for which Microsoft is in court.

The summary, containing a link to the entire testimony, can be found at: http://www.microsoft.com/presspass/trial/feb99/02-10chase.htm

Reference:

http://www.zdnet.com/zdnn/stories/news/0,4586,2206370,00.html

Fortunately, they have now (for some time) revised
the presentation. On top of the page is a table with “runs”, “hits” and
“errors” of the respective parties and below they are explained on a
day by day basis. Quite nice.

See: http://www.zdnet.com/zdnn/stories/news/0,4586,2194970,00.html

Under the title “National taxpayer watchdog group
condemns government meddling in high-tech industry”, the CAGW has
presented a press release on a report title “The government assault on
high-tech” condemning government regulation in the high-tech industry.
Whereas many a person can think of many forms of government
intervention, the CAGW’s press release is completely focused on the
Microsoft trial. Dazzling application of argumentation.

CAGW: http://www.cagw.org/

Press release: http://209.238.124.231/Media/Releases/02-09-99.htm

Report: http://209.238.124.231/Reports/High-Tech-Series/anti-trust.html

See: http://www.theregister.co.uk/990211-000027.html

Cameron
Myhrvold claimed that the allegation is false, but hinted that the
rumor may have been caused by a sweetheart deal with British UUNET
Pipex. He also claimed that this deal was not related with IE.
Unfortunately for Myhrvold’s testimony, he exchanged emails with a
British Microsoft employee on the deal. After this person, Geoff
Hughes, suggested to make the payment conditional on UUNET Pipex’s
shipping of IE to its customers, Myhrvold replied: “I actually think
tying the payment to their shipping IE is a great idea, though I would
not do this formally.”

Such a reply makes one wonder how much more Microsoft didn’t do “formally”.

You can find the article from which the above is lifted at:
http://www.theregister.co.uk/990211-000003.html

Anyway,
I welcome suggestions for reading. I will not a regular basis scour the
net myself, but I’ll gladly cooperate in a distributed effort by
posting what people send me.

LA Times article: http://www.latimes.com/HOME/NEWS/REPORTS/MICROSOFT/lat_micro990212.htm

As
for Europe, I only checked the Dutch refund site and the French one.
The latter is particularly interesting. Aside from referring to the
fragment of Microsoft’s EULA where the refund is mentioned, we find
references to both French and EU law prohibiting the tying of products.
It is illegal to make buying of one product conditional for buying
another – I guess that is why the EULA claims that Windows is
“integrated” with the hardware. (If that were true, Microsoft would
have a serious problem explaining how there could be any competition.)

Furthermore,
we find a reference to Microsoft agreement with the EC about allowing
computer vendors to ship systems without a Microsoft operating system
without having to fear retaliation. This is the European counterpart of
the “Consent Decree”.

Actually, I have always been able to buy
systems without an operating system. I expect that European law has
something to do with that.

French Refund site: http://www.linux-center.org/detaxe/index.shtml
(Guess what, it is written in French

As
with Sun about java and with the DOJ Microsoft claims that the case is
groundless. By mouth of Tom Burt: “There is simply no factual basis for
Caldera’s claims.” On the basis of Microsoft’s past statements
regarding lawsuits which they either lost or settled (think also of the
small company that trademarked “Internet Explorer”, the webcards of
Blue Mountain) I find it hard to interpret Mr. Burt’s words as if he
uses the English language.

See: http://www.techweb.com/wire/story/TWB19990212S0009

(I
didn’t see anything at Microsoft’s or Caldera’s websites, and so far I
have only seen articles about the case in that segment of the press
that has highly significant revenues from Redmond’s award winning
advertising budget.)

Update: It has taken some time, but you can now find a list of references to the individual motions at: http://www.microsoft.com/presspass/caldera/.
Apparently, Microsoft’s legal marketing department has run out of
manpower, as they settled for a list of links to the actual motions as
a “press release”.

At
Microsoft, developers think differently. Greg Leake, lead product
developer of Visual Studio, stated that: “Java is under serious
constraint and uncertainty over how any vendor can innovate around it,
whether it’s our tools or any other. We have to determine if that
uncertainty is acceptable. It depends on the lawsuit. I can’t speculate
further than that.”

Translated to the English language, Mr.
Leake is waiting for the outcome of the Sun java lawsuit, where it is
going to be determined if Microsoft can “steal” (their own words in
internal e-mail) java or not. If so, they no longer have to accept the
“serious constraint” of a given standard and can carry out their
strategy of pollution. If not, they could of course produce wonderful
tools – which is Mr. Leake’s job – but they wouldn’t want to support
anything as a standard that might commoditize Windows and hence put a
dent in Microsoft’s monopoly position.

When Mr. Leake says:
“Java is under serious constraint” he seems to mean that Microsoft
policy prohibits him from developing his visual tools for the standard
language.

See: http://www.infoworld.com/cgi-bin/displayStory.pl?990213.ehcool.htm

Typically, such vendors have no provisions for giving
refunds even though it is mentioned in the agreement. Improvising, they
tend to blandly refuse them, or to offer to take both the hardware and
software back.

I allege that under European law, such computer
vendors are guilty of tying of products. But as the vendors have
regularly – perhaps a slip of the tongue before PR directives managed
to get through – claimed that they wouldn’t give a refund as Microsoft
let them pay for Windows for every computer shipping, it is likely that
Microsoft will be dragged into the EC courts to explain its relations
with the computer vendors when the latter are sued.

If Microsoft
instigated computer vendors to violate the law by tying, Microsoft
would be as least as guilty as the vendors themselves.

Thus,
it might well be that Microsoft has obtained a short term success in
warding off refund claims, but in the long run it would have been a far
better strategy to happily accept such claims. Microsoft has stated
that the refund actions were set up by a small group of UNIX
afficionados. If this were true, they would have to pay very little for
the refunds. Instead of following this sensible behavior, Microsoft has
opted to follow a course that is likely to bring them back in the
European courts.

“Microsoft
wants users to register with Microsoft in the first instance, and then
to have the ability to pass the registration on to its OEM customers.
This was a major factor in the tightening of the rules on boot
sequence, flushing-out any PC manufacturers’ registration procedures,
and when online registration of new Microsoft software becomes
compulsory, you’ll see why Microsoft has done this. Microsoft intends
to own the customer base, it won’t let the PC manufacturers have it.”

See: http://www.theregister.co.uk/990216-000001.html

The
people that were forced by OEMs to pay for the Windows product for
which the sale was tied to the computer are considered “valued
customers” by Microsoft. However, “valued” these customers are and
however willing Microsoft is to “listen” to them, they are entirely
unwilling to provide a refund.

Note that Microsoft does not sell
ownership for Windows but merely grants a license if certain conditions
are fulfilled. One of these restrictions is that one is not allowed to
sell the license to others. In other words, Microsoft’s licensing
politics prohibits the creation of a market for Windows. Those that are
forced to buy Windows would violate the law if they attempt to sell it
to somebody else who is interested in using the product and obtaining a
license.

Thus, Microsoft’s responsibility for the Windows
license is larger than they seem to accept today. By attempting to
evade this responsibility, Microsoft is inviting legal action.

I especially liked the statement
that one reporter remarked to another that Microsoft’s claims about how
good other products are would do fine in advertising campaigns. Just
today I read at the Koffice mailinglist that someone suggested to place
Microsoft’s remarks on oath in a web page under the category “user
testimonies”.

(real-timing/waiting for the page)Ah, page two of the list has just been loaded. I’ll read on a bit, but post this now.

Here’s the link to the first of the pages: http://www.pathfinder.com/fortune/1999/03/01/mic.html

See: http://www.seattletimes.com/news/technology/html98/micr_021699.html

(Same article as in previous item.)
See bottom remarks of: http://www.seattletimes.com/news/technology/html98/micr_021699.html

“In
short, since the inception of our company, Microsoft and Compaq have
worked together to make personal computers less expensive, easier to
use, more reliable, more functional, and faster for customers. Today’s
Compaq computers with Microsoft products deliver far greater
performance per dollar than past products.”

I
find it quite interesting that Mr. Rose thinks that a
“medium-functionality consumer PC” costs $1500. On the basis of trade
press articles I got the impression that $500 PCs are here now and $750
is pretty “medium”. It is a pity that Mr. Rose missed the chance to
come with the following data that Compaq should be able to provide: put
shipping PC’s in price classes, weigh them with the number of sales (it
would be interesting to find out if – say 70% – of all consumers would
buy PC’s cheaper than Mr. Rose’s “medium-functionality consumer PC),
and determine the percentage of Windows of the total price.

Although
Mr. Rose has a story to tell about Microsoft’s threat to terminate
Compaq’s Windows license, he doesn’t seem all that sure. Why is he
saying “As I look back on the facts today, I do not believe that
Microsoft’s actions…” – instead of “It was clear to Compaq at that
moment as it is today, that Microsoft’s actions…”:

“Microsoft
in no way limits Compaq in its license agreements or OPK from including
Netscape’s icon. Indeed, it is my understanding that Microsoft issued
the notice of intent to terminate Compaq’s license agreement solely in
response to Compaq’s removal of the MSN and Internet Explorer icons. As
I look back on the facts today, I do not believe that Microsoft’s
actions had anything to do with whether Compaq in 1996 was also loading
Netscape Navigator or any other non-Microsoft product onto its Presario
computers.”

You can find the summary here: http://www.microsoft.com/presspass/trial/feb99/02-16rose.htm

James Grimaldi of the Seattle Times reports: http://www.seattletimes.com/news/technology/html98/tria_021799.html

Apperently, Mr. Ignatius of the
Washington Post hasn’t been following the news. But then, what support
does he give for his claim? Well, he finds that prices of both browsers
have fallen to zero and that Netscape has distributed some 150 million
browsers since 1995.

First of all, Mr. Ignatius is wrong about
the prices of browsers having fallen to zero. As MSIE is now a
component of Windows, and a very large one at that, its price is part
of the price for Windows. Microsoft has claimed that the price of
Windows hasn’t fallen as it has added new components but forgot to
emphasize that MSIE is one of those components that keep Windows prices
up.

Given that Microsoft can distribute its browser in such a
way that consumers buying a license for Windows are also taxed for
using MSIE, while Netscape cannot charge money for its stand-alone
browser as it would directly translate to a margin price increase for
consumers the situation isn’t as rosy as Mr. Ignatius presents to us.

Does
anyone remember how the source code to Windows is Microsoft’s “crown
jewels”? Well, Netscape gave their sources to their browser away. Must
we not consider that an admission of defeat if we follow Microsoft’s
standards?

Microsoft has managed to have consumers being taxed
for their browsers while their marginal prices are zero. Thus it has
managed to put pressure on the revenues of stand-alone competitors
while receiving handsome revenues on their own development efforts.

I
wonder if Mr. Ignatius thinks that low-cost housing and free medical
attention were a benefit to Soviet consumers. Mr. Ignatius appears to
be one of those persons that believe that consumers are better served
by some central agency than by a competitive market.

Well, you can find the article here: http://www.washingtonpost.com/wp-srv/business/longterm/microsoft/stories/1999/ignatius021799.htm

Today, the report from Graham Lea here http://www.theregister.co.uk/990218-000014.html
has it that, contrary to Microsoft’s assertions, the decision to tie
Internet Explorer to Windows was not made until “at least 28 March
1997.” Apparently, this decision was based on market research Microsoft
had done and not on any grand technological visions from above.
Together, these revelations are more blows to an already severely
compromised Microsoft defence.

Rather pitiful for the executives for that are forced to play hide-and-seek with truth.

Eric Engstrom is Microsoft’s General Manager of MSN Internet Access, his testimony can be found here: http://www.microsoft.com/presspass/trial/mswitness/engstrom/engstrom_full.htm

Dan Rosen is Microsoft’s General Manager of new technology, his testimony can be found here: http://www.microsoft.com/presspass/trial/mswitness/rosen/rosen_full.htm

“All
told, Windows isn’t looking like the supermagnet it once was. And
unless Microsoft regains momentum quickly with Win2000 and some of its
other initiatives, it might see its influence dwindle further–and with
it earnings. That’s good news for competitors but not investors. They
have bid Microsoft’s stock up to nearly $400 billion. If Bill Gates
stumbles now–in court or in the marketplace–investors will end up
being the ones with the real W2K problem in the Y2K.”

See: http://www.businessweek.com/1999/99_08/b3617022.htm

(I
registered there some time ago to read a special on Microsoft, but
found that this required more than free access privileges. I was happy
to find that the free registration gave access to this article.)

• He misrepresented the involvement of Microsoft with the preparation of his testimony.
• Compaq and Microsoft seem to have fabricated dummy contracts to camouflage their real agreements.
• (As
  a little extra: Compaq seems to have violated a non-disclosure
  agreement by passing information from Be Inc. to Microsoft. It will be
  noted that Microsoft has brought forward repeatedly that Be is a
  competitor of Microsoft.)

See: http://www.washingtonpost.com/wp-srv/business/feed/biztop919427459475.htm

Update: The New York Times came down pretty hard on the testimony too: http://www.nytimes.com/library/tech/99/02/biztech/articles/19soft.html

The resulting trust
is used against the functioning of the market: the OEMs help Microsoft
by not pre-installing non-Microsoft software on their machines, and if
they behave well, Microsoft does them the favor of charging them way
below retail prices.

Although Compaq now claims that a
“medium” consumer PC now costs some $1500, I believe that it is
actually much less. (Especially if you take in account that many
consumers are not buying their first PC and are able and willing to use
their old monitor and speakers, but perhaps that is only for
price-conscious people like me.)

The difference between the
retail price for Windows and the price on the basis of an exclusive
deal is large enough to make up a highly significant percentage of the
profits for OEMs. Thus OEM profits are to a significant degree
determined not by their business acument, but by the degree Microsoft
is willing to reward them for complying with Microsoft’s demands.

Well, the setup looks like a classic conspiracy against consumers and that’s what has given rise to the class-action suits.

“MS socked with two class action suits”
http://www.zdnet.com/zdnn/stories/news/0,4586,2213207,00.html

“Charles Lingo: Microsoft’s worst enemy”
http://www.zdnet.com/zdnn/stories/news/0,4586,2213263,00.html

If this part of the ruling is
read, it appears to be a victory for Microsoft and, indeed, Microsoft
lost little time in declaring it as such. But Microsoft is of course
still not allowed to infringe Sun’s Java trademarks or copyrights.
Another hearing in the case is scheduled for the 12th of March. At this
point, it is not clear what the ruling would mean in practice.

Why
would Microsoft seek such a ruling? Nothing would prevent Microsoft
from coming up with their own “innovative” C++ successor language and
declaring it to be superior to Java. The only purpose in seeking the
judge’s approval for an independently developed Java would be as a way
to get around the injunction and still create confusion in the Java
market with a product that is Java in name but just another Windows
development tool in practice.

References:
http://java.sun.com/lawsuit/021999clarify.html
http://www.zdnet.com/zdnn/stories/news/0,4586,2213401,00.html

The
best thing for both competition and consumers would be to have true
standards to which software makers adhere. The rapid success of the
Internet is a prime example of this. Microsoft has a history of
fighting open standards to prevent its software from being
“commoditized” (in other words, to maintain its monopoly position).

It
would be rather rough to tell Microsoft it has to adhere to standards
that others come up with. (Drop nationalistic presuppositions, don’t
think of the US government, think of the US government + EC + MITI.)

The
alternative is allow Microsoft to come up with any new protocol they
like, on the condition that they fully document it, so that it can’t be
used to deny entrance to the market to new players. In other words, to
prohibit Microsoft to use new protocols for the purpose of fighting
commoditization.

You can find Ian’s article here: http://www.svlug.org/editorials/19990220-ms-antitrust.shtml

The real benefits of
such a lawsuit might rather be that it hurts Microsoft’s name (think of
all those spokespersons and commentators that claim that consumers
aren’t heard against Microsoft) and it might lead to a decrease in
monopolistic abuse to prevent such a lawsuit from succeeding.

Per
consumers the benefits are small, but per lawyer they can be enormous.
The system of taxation that Microsoft created with the trust with OEMs
might be a true goldmine for lawyers that manage to win a class-action
lawsuit and get a percentage of what Microsoft is to pay. Indeed, “it’s
a wonder anyone waited this long”.

See: http://www.zdnet.com/zdnn/stories/zdnn_rc_display2/0,3733,2213627,00.html

(Link courtesy of Richard Fane.)

I thoroughly enjoyed Dan Gillmor’s article: http://www.sjmercury.com/svtech/news/indepth/docs/dg022199.htm

Anyway, the article is here: http://www.mercurycenter.com/opinion/perspective/docs/katz21.htm

http://www.nytimes.com/library/tech/99/02/biztech/articles/21gates.html

(New York Times: registration required.)

(One
of those ubiquitous Microsoft advertisements accompanied the article as
I viewed it: (1)”SQL SERVER 7.0″ (iterated all over) – (2) People
continue to talk about Microsoft SQL 7.0″ – (3) Find out what it all
means – (4) Attend one-day meeting for $99 /click here/. — You mean I
should follow a course on something because other people “continue to
talk about it”?)

http://www.businessweek.com/microsoft/updates/up90219a.htm

http://www.zdnet.com/sr/stories/news/0,4538,2213920,00.html

“While the Justice Department and Bill Gates
have locked horns over whether Microsoft is
guilty of monopolistic business practices, I
think Microsoft is guilty of a bigger crime. Its
real crime over the years has been its lack of
concern for reliability.”

I wonder if the New York Times will pick up on this?

http://www.zdnet.com/familypc/stories/main/0,4858,388390,00.html

Yet it is also true that there is an established
pattern to the Compaq-Microsoft relationship: Compaq takes an
independent path, Microsoft bristles and an accommodation is made.”

http://www.charlotte.com/click/wiretech/pub/029448.htm

http://www.latimes.com/HOME/NEWS/REPORTS/MICROSOFT/MICROWIRE/tCB00V0876.1.html

Microsoft witness contradicts himself and others

“I
thought the points on the witness’s credibility had been made,” Boies
said, after abruptly ending his questioning of Rosen at 3:30 p.m. EST
when it was expected to continue for at least another hour. “The
witness countered his own deposition, the depositions of other people,
his own documents, and the documents of others.”

http://www.infoworld.com/cgi-bin/displayStory.pl?990222.wirosen2.htm

http://www.zdnet.co.uk/news/1999/7/ns-7063.html

“A
recent wise-crack we heard was: “It’s so characteristic of them to not
prepare their case meticulously, but rather ship first and try to debug
in the field,” which basically sums it up.“

http://www.theregister.co.uk/990223-000005.html

MS trial to recess over March – this story has a little more to say about Mr. Rosen’s credibility.

http://www.theregister.co.uk/990223-000006.html

http://news.bbc.co.uk/hi/english/special_report/1998/04/98/microsoft/newsid_284000/284219.stm

“How
could this company, with 40 percent profit margins, that is supposedly
driving their competitors in the ground, be so inept when it comes to
putting on a few witnesses in court?” Robert Levy, a senior fellow at
the libertarian
Cato Institute, commented in the Seattle Times. The question continues to perplex trial observers.

http://www.mercurycenter.com/svtech/news/viewpoints/docs/062684.htm

Does the Internet affect only the people who use it? Or does it affect everybody?
BY MOIRA GUNN

Another San Jose Mercury editorial – she considers the effects of the immediate release of trial transcripts on the Internet.

http://www.mercurycenter.com/svtech/news/viewpoints/docs/mg021799.htm

http://www.theregister.co.uk/990223-000021.html

At
the start of this morning’s proceeding, Judge Jackson quipped that
“It’s always inspiring to watch young people embark on heroic
endeavors,” seemingly in anticipation of Lacovara’s attempt to reverse
the damage to Rosen’s credibility which Boies managed to instill among
many of those watching the trial yesterday.

http://www.zdnet.com/zdnn/stories/news/0,4586,2214885,00.html

U.S. Says Microsoft Witness Made Up Evidence
By David Lawsky

Boies
showed an e-mail Rosen wrote May 11, before the meeting: “Can I
borrow/copy the Netscape Win95 new client they gave us?” meaning the
new Netscape browser.

Rosen said he never actually got the
browser. He said it was a test version that did not work, which a
colleague received at a meeting with Netscape.

Boies looked at the witness and said slowly: “You don’t remember that, do you sir? You’re just making that up right now.”

http://nt.excite.com/news/r/990223/14/net-microsoft

http://www.zdnet.com/zdnn/stories/news/0,4586,2214716,00.html

“In
contrast with Monday, when Rosen’s frequent blunders elicited
occasional laughter from those in the courtroom, today’s antics were
greeted with silence, either from a sense of empathy, or because those
present just wanted the show to end.”

http://www.mercurycenter.com/business/microsoft/trial/breaking/docs/mstrial022399.htm

Another one bites the dust
Commentary by Rich Gray

“As
I read the reports of this morning’s dismantling of Daniel Rosen, I
realized I did not have the heart to mock Microsoft’s witnesses on a
day when one of them had effectively been stripped naked in open court.”

http://www.mercurycenter.com/business/microsoft/trial/breaking/docs/gray022399.htm