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Posted on 05/14/2002 10:48:36 AM PDT by Dominic Harr
States: Microsoft Urged Linux Retaliation
Tue May 14, 1:26 PM ET
By Peter Kaplan
WASHINGTON (Reuters) - A Microsoft Corp. executive urged the company to quietly retaliate against supporters of the rival Linux (news - web sites) operating system in an August 2000 memo that nine states still suing the software giant want admitted as evidence.
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In the memo, Microsoft senior vice president Joachim Kempin complained to Gates and other senior executives that computer chip-maker Intel Corp. was encouraging computer makers to support Linux and funding development of new devices that would work with Linux.
Kempin said Microsoft should withhold technical information from Intel and "work underground" to promote its competitors in the computer chip industry, according to portions of the memo disclosed in the states' legal filing.
"I would further try to restrict source code deliveries where possible and be less gracious when interpreting agreements -- again without being obvious about it," Kempin wrote.
Microsoft had no immediate comment on the states' filing.
The nine states, who have rejected a proposed settlement of the four-year case, say strong sanctions are needed to prevent Microsoft from continuing to use its Windows operating system monopoly to bully competitors.
Originally developed in Finland and updated by programmers around the world under its open source status, Linux has been touted as a possible alternative to Windows but has never been widely used on personal computers.
"ANTI-LINUX ACTIONS"
Kempin recommended that computer makers who were not "friendly" with Microsoft should be hit "harder than in the past with anti-Linux actions."
U.S. District Judge Colleen Kollar-Kotelly disallowed the Kempin memo -- along with several others -- during Gates' testimony after Microsoft's lawyers objected to it.
The states' attorneys argued in their filing on Monday that Kempin's e-mail shows Microsoft continued to discuss anti-competitive tactics even though the original trial judge had already ruled those tactics in violation of antitrust law.
The states said the strategy suggested by Kempin is similar to the one Microsoft used to force Intel to stop working with Sun Microsystems Inc. several years earlier -- work that would have threatened the Windows monopoly.
In March, an executive from Linux distributor Red Hat Inc. told Kollar-Kotelly that Linux operating system was being blocked as an alternative to Windows because computer makers feared retaliation from Microsoft.
Red Hat chief technology officer Michael Tiemann said computer makers had rebuffed his attempts in recent years to pre-install the Linux operating system on their machines because they feared Microsoft's response.
Microsoft's lawyers countered in court that Red Hat failed to popularize Linux because of its shortcomings, not because of any interference from Microsoft
A federal appeals court last June upheld trial court findings that Microsoft illegally maintained its Windows monopoly, but the appellate judges rejected breaking the company in two and sent the case back to a new judge, Kollar-Kotelly, to consider the most appropriate remedy.
The two sides concluded 32 days of testimony in the case on Friday. There will be arguments in court Wednesday through Friday by lawyers on various motions but final arguments are not expected until mid-June.
Kollar-Kotelly is also weighing whether to endorse the proposed settlement reached between Microsoft, the U.S. Justice Department (news - web sites) and nine other states in November.
The nine states still pursuing the case are California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia, plus the District of Columbia.
Purposeful breach of contract, threats, coercion, fraud, retaliation.
Just "hard-ball" business tactics? Or illegal, anti-capitalistic monopolism?
This is a real question, not a slam. I am not a guru by any means.
Is monopolism anti-capitalistic? As long as the monopoly was not built by force of law (such as electrical distribution systems), how is it not the result of capitalistic forces?
Waiting to be enlightened, not flamed.
Shalom.
Yes.
The reasoning goes that a 'competitive free market' is required for capitalism.
A monopoly is a soviet-style 'single-supplier' planned economy. So when a company like MS is convicted of Sherman violations, they are guilty of "attacking the free market".
There must be specific evidence that you used the power of that monopoly to prevent consumers from being offered choices.
I'd say this article is one perfect example of that. And of why that must be illegal.
Thanks for the feedback, but there is a problem somewhere. Nobody forced the Microsoft monopoly a'la the state planning you referred to. Microsoft has a de facto monopoly because so many people bought their software. They had to gain a great deal of market share before they could start acting like an 800 lb gorilla.
So isn't their monopoly a result of capitalism?
I only brought the question up because a libertarian asked me. I'm actually against monopolies, but not because they're anti-capitalist.
After all, who is John Galt?
Shalom.
In other words, the judge decided that this memo was without legal merit, or something similar. It cannot be factored into any legal analysis of what MS did.
A disallowed memo proves nothing.
Exactly.
The 'villians' in Atlas were the looter corps -- Taggart Transcontinental, etc.
I would argue that a monopoly is not possible in a true 'free market', and that the only way MS was able to become a monopoly in the first place is by using threats, force, coercion, fraud and purposeful breach of contract to retaliate against distributors.
That is what was proven in a court of law, after all, on a mountain of evidence.
Just like Hitler arose out of a democracy, any system can give rise to a dictator. And no, please don't think I'm comparing MS to Hitler's evils. I simply mean to show another example of the systemic behavior we're talking about.
Monopoly without government protection can only ultimately survive by giving the customers what they want at prices low enough that no one else can undersell them. The effect is the same in the market as if there are viable competitors. Free Market does not require multiple providers but efficiciency is maintained because there is no outside force preventing competition. Hence, there are not monopoly prices. Watch MSFT's attempt to sell by subscription only. It is a major attempt to raise prices stiffly. I suspect Linux and Lindows, etc. will find new vitality. Either the new policy will not stand or MSFT will lose much of their "monopoly."
Apparently they're not "free" to work with Linux. They face the threat of retribution from MS, down to MS re-interpreting existing contracts and MS deliberately with-holding technical info that they're already contracted to give Intel.
When a company the size of MS -- with the history of illegal behavior -- threatens you, how many companies in the world can afford to ignore that?
Or, if MS had been allowed to continue past tactics, the monopoly could destroy the new companies offering competing products by use of threats, coercion, fraud, purposeful breach of contract and a wide variety of other means.
A monopoly -- especially one with $40 billion cash -- can defend it's monopoly status very effectively if the law is not enforced.
Like I said, they are.
They face the threat of retribution from MS, down to MS re-interpreting existing contracts and MS deliberately with-holding technical info that they're already contracted to give Intel.
It happens all the time in any line of business, usually when one partner annoys another partner.
When a company the size of MS -- with the history of illegal behavior -- threatens you, how many companies in the world can afford to ignore that?
I could. But, then again, I'm not the sort to go about bribing donating to the President's political party to buy myself a custom-designed prosecution.
I still think Bill Gates et al should have done a license check on the Feds and the states suing them. Government agencies are the biggest software thieves in the universe.
Microsoft's lawyers countered in court that Red Hat failed to popularize Linux because of its shortcomings, not because of any interference from Microsoft
Baloney. Everyone's afraid of the Big Bad Wolf; 'specially those who've signed a contract with him!
So you have no comment on the substance of this article?
Do you see no coercion here at all?
You are an MS 'strategic partner', if I remember correctly?
Yet, the MS 'strategic partners' argue that everyone can just ignore MS's threats.
Somehow, I agree with you.
Nope. You, on the other hand, are an Induhvidual.
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