The Never Ending Story of Micro$oft's Illegal Tactics?

Rivals Say Microsoft Flouts Deal,
Firms Complain About Charges, Terms of Licensing Program

Microsoft Corp. is trying to license key pieces of its technology at inflated rates and under onerous conditions, according to competitors who charge that the software giant is thwarting its antitrust settlement with the federal government.

The actions are discouraging rivals from participating in the licensing program, which is an important element of the agreement that Microsoft struck with the Justice Department and several states 18 months ago.

The software giant's major competitors were hoping the program would allow their systems to better interact with Microsoft's dominant Windows operating system, which resides on 95 percent of the world's personal computers. But none of those top rivals has signed up, and so far only four other companies are participating.

The low number of licensees concerns the Justice Department, which says it is devoting extensive resources to evaluating the program. But several companies say they fear the department is not forcefully pushing Microsoft to comply with the terms of the deal.

Microsoft insists that it is complying with the antitrust settlement, that its licensing terms are reasonable, and that it is open to negotiation with companies that want to license the technology.

"We are interested in listening to industry feedback and government feedback and to making changes to the program that will encourage greater adoption of the licensing program," said Mary Snapp, a Microsoft lawyer.

In the world of server systems, computers and software that power networks of other computers, Microsoft's biggest rivals are International Business Machines Corp., Sun Microsystems Inc., Novell Inc. and providers of the Linux operating system such as Red Hat.

After federal courts found that Microsoft used a variety of illegal tactics to squelch software competition in the mid-1990s, the Justice Department negotiated the deal, that it said would restore competition and prevent future anti-competitive conduct.

Portions of the agreement require Microsoft to reveal more of its computer code to other software developers to ensure that their programs will work properly with Windows. One unusual provision, however, allows Microsoft to license some of the code -- known as communication protocols -- to outside companies on "reasonable" and "non-discriminatory" terms. The protocols are specifically designed to help non-Microsoft server systems interact with Windows at individual workstations.

The goal was to prevent Microsoft from using its Windows dominance to strong-arm corporate customers into choosing Microsoft server systems, one of its fastest-growing lines of business. But Microsoft was allowed to charge for the protocols because servers were not part of the antitrust case.

Two of the firms that signed on, EMC Corp. and Network Appliance Inc., are data-storage companies with long working relationships with Microsoft.

Among the terms: Companies must put up $100,000 just to see the technical information about the 133 protocols, which helps a potential licensee determine if it wants or needs any of them. But if the company chooses not to license, it gets back only $50,000.

Officials from the rival companies argue that not only is this unfair, but some of the protocols are already in the public domain -- a charge Microsoft denies. Moreover, the rivals say, Microsoft is not providing sufficient information about the protocols before a decision to license must be made.

At the urging of the Justice Department, Microsoft will now allow engineers from potential licensees to visit its headquarters to examine more technical data. But the rivals say the company is requiring the engineers to sign such strict confidentiality agreements that their ability to work on related products for their employers would be hampered.

"Basically, I'd have to shoot the engineers when they came back," said one irate company executive.

Microsoft requires companies that license the protocols to be audited -- at their own expense, by a third-party auditor selected by Microsoft -- to ensure that they are only using them for appropriate purposes. This raises the possibility of the auditor learning about the company's new product and its source code, but companies say they have no information on how much the auditor could then pass on to Microsoft.

"Microsoft's implementation of the communications protocol licensing program has been and continues to be fraught with delay and commercially unreasonable terms that prevent a server manufacturer from bringing to market a competitive general purpose server under Microsoft's license," said Lee Patch, corporate counsel for Sun Microsystems, which has a separate civil antitrust suit against Microsoft.

Asked by The Washington Post to review the license terms, several software licensing experts said that although the terms often are within the realm of general industry practice, they are aggressive and should be approached with caution.

"You have to start from the position that there's nothing industry standard about deals with Microsoft," said Mark Ostrau, a Silicon Valley patent lawyer. "Typically . . . legal agreements with monopolists have a different bargain balance than deals in a competitive market."

Douglas Curry, who helped found Open Channel Software, which assists academic and other institutions license software they develop, said that the initial fees would be prohibitive for small software developers.

And at the higher end, Patch of Sun Microsystems said that the royalty rates for his company's most expensive servers could exceed $200,000 per unit.

Other firms agree.

"There is something fundamentally wrong with requiring Novell to pay large sums of money to access information that the court determined Microsoft illegally withheld," said Ryan Richards, a Novell vice president and deputy general counsel. "Microsoft breaks the law and Novell pays for the remedy."

Mike Pettit, president of ProComp, an industry trade group made up of Microsoft rivals that supported the antitrust case and criticized the settlement, said the Justice Department needs to do more.

"Sadly, DOJ seems too intimidated by Microsoft to force them to do anything the company finds inconvenient in the least," Pettit said.

Justice Department officials say they have roughly eight lawyers focused on enforcing the Microsoft settlement, and are paying special attention to the licensing program. They noted that originally Microsoft demanded confidentiality from companies before they could even see the terms of the license.

"We have made progress with Microsoft," one official said, adding that the department is following up on complaints from other firms. "We have gotten them to make changes."

Officials said that the federal judge overseeing the settlement expects the department to work on issues with Microsoft before going to her for intervention. But they said they would not hesitate to do so if necessary, and that the protocol terms remains a work in progress.

They also agreed that the fact that there are only four licensees to date is a concern. "We believe that part of the test is that folks are taking advantage of" the license, said one official.

Microsoft said it is open to negotiation with any potential licensee.

"We have worked hard in developing an unprecedented program and establishing reasonable rates," said spokesman Jim Desler. "But the intellectual property in these protocols is the result [of] years of research and billions of dollars invested in it. We believe the rates are very reasonable."

Source: WashingtonPost.Com

 

LoL if i was smart enough id make unversal system based on all operating systems from linux to mac to windows

and id build the company on an non extriditional country to avoid legal issues then id charge 30 dollars for it and flood all countrys with the new os mawhaaaaaaaaa

i know it would never happend but a guy can dream lol

its kinda like dimonds there only more rare when you control the market and have a monoply on it

but in reality there so many that if let lose and flood every country with it you cant stop it and the value drops lol

isnt there an issue on how long a patent can last anyways?

isnt os an invention like the vcr

every company now can make vcr's

wonder why no one can take windows os apart and build on it ect ect

 

Doesn't surprise me. M$ is not afraid of the Government and is not concerned with doing the right thing.

 

yeah i think they become to powerful use mant tactics like the mob but its all in cyber space really strange