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 Interne