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How did Microsoft and its executives get so rich so fast? It wasn't through
"innovation" (even Microsoft execs can't come up with a genuine Microsoft
innovation). It wasn't by giving credit where credit was due. It wasn't by
giving others the best deal, or giving them the best product.
A few hundred million a year well spent on PR has most of the world
believing it was exactly these things that made them rich. In reality,
it was an intense, single minded determination to make the most possible money
by marketing and popularizing innovations, without regard, or compensation, to
those who originated or who owned these innovations. In the process, they made
an incredible number of enemies - so many enemies the hundreds of millions for
PR is stretched a bit thin lately.
The story of Microsoft is not one of rags to riches. Bill Gates was the son
of a very wealthy Seattle attorney, which is why he had the money to found
Microsoft, how he got involved with IBM, and why he was able to leverage a
little luck into an empire. "To get rich, start rich" - advice to the
ambitious.
When the "personal computer" was born, the world of software was much
different from today. On larger computers, software was simply included. What
wasn't included was developed by the owner. Software was seldom sold - since
all software was based on the ideas and software of others, it was considered
impossible to own it. Software was developed by those who could, passed around
and shared.
Enter Bill Gates and Paul Allen. Microsoft's first product was a BASIC
programming language interpreter for the 8080 based Altair computer. The way
this product was developed set the tone for the Microsoft of today.
- Someone else's intellectual property was used without compensation
(Dartmouth BASIC, donated to the public domain).
- Development was done by "borrowing" time on an expensive timeshare system -
time that was being paid for by someone else.
- The product was announced and advertised before real work was even begun (to
discourage competition).
- The product missed promised delivery after promised delivery and delivered
versions were riddled with bugs.
- This product, based on the ideas of others and developed on equipment not
owned by Gates or Allen, was declared Microsoft's property to be sold at the
highest price the traffic would bear.
- At least as much effort was put into promoting the product and disparaging
other people's products as was put into development.
- When people passed around his product (largely appropriated by him from the
public domain), Bill Gates screamed "Piracy!". This use of the term
"Software Piracy" may be Gates' only true innovation.
When IBM was designing the IBM PC, they needed two things: an operating
system to run it, and a programming language so people could get it to
do something. The logical thing for IBM to do was use CP/M as the operating
system, since it was the business standard at the time. CP/M was written by
Gary Kildall and published by Digital Research Corp.
Bill Gates' mother, a wealthy society matron who, as director of a prominent
charity, associated with high IBM executives, urged these executives to talk to
her son about his BASIC language interpreter. Since IBM was going to the West
Coast to talk to Digital Research about CP/M, they agreed to talk to Bill.
Negotiations at Digital Research were handled by Gary Kildall's wife (who
was the appropriate officer to handle negotiations) and did not go smoothly.
IBM's people were upset at having to negotiate with a woman (this was the
"Old IBM", remember). DR's lawyers declared the contract so one-sided it
could not be signed without significant changes. DR, as the dominant operating
system provider for small computers, had plenty at risk.
Alternate story - (there is some supporting evidence). While
CP/M-86 was the logical choice for the IBM PC, it was considered unacceptable
because Gary Kildall had had an affair with an IBM executive's wife, making
IBM very anxious to find an alternative.
Popular story - (no supporting evidence). Gary Kildall was out
flying his airplane and didn't bother showing up for the meeting with IBM.
This seems to have been made up by IBM or Microsoft to cover up the real
story.
While they were talking to Bill Gates about BASIC, IBM asked if he could
also provide an operating system. Bill Gates answered "yes" and signed the
contract. He had no product, no market and nothing at risk, so what the hell.
Renegotiate later.
Microsoft purchased QDOS (Quick and Dirty Operating System), a ripoff of
CP/M (proven in court) from Seattle Computers for next to nothing and set out
to finish it up. Unfortunately, Microsoft didn't have the skills required for
operating systems, so IBM had to do much of the finish work just to get the PC
out the door.
Having almost no investment in DOS (Digital Research, Seattle Computers
and IBM had done nearly all the work), no production costs (IBM did the
production) and competing with companies that had a lot invested in their
product, Bill Gates decided to sell at a price lower than others could
reasonably match to drive competitors out of the business.
From this point on, Microsoft had a monopoly, which Bill Gates has worked
tirelessly to deepen, extend and leverage.
When IBM created the PC AT, they also created a new operating system for it,
much more advanced than DOS. Bill Gates threatened IBM that he would withdraw
all licensing for DOS if the AT came out with any operating system other than
DOS. Since the PC XT was nearly all of IBM's PC business, and it was entirely
dependent on DOS, IBM backed down. For the first time, but not the last,
Microsoft used its monopoly position to deprive the public of a superior
product.
Note: refer to well researched book "Big Blues" for background on the
above.
(top)
Microsoft has almost no assets, a few buildings and some obsolete computer
code called "Windows", code for a few Windows dependent applications, and a
bunch of software patents related to Windows. Its market valuation (stock
price per share multiplied by number of shares) is higher than IBM or General
Electric. Both these companies have assets up the kazoo. Can you say
"bubble"? I knew you could. A lot more on the Microsoft stock market problem
is provided by analyst
Bill Parish
[ UPDATE: 09-01-00 - Microsoft stock is still below 50% of its peak
at 57. Even the sendoff of Windows XP to manufacturing didn't get a rise out
of it. ]
[ UPDATE: 10-10-00 - Microsoft stock is now below 50% of its peak,
and is continuing down ]
The market valuation of Microsoft is based on expectations of growth and
profitability continuing to exceed expectations, and on the "greater fool"
principle (no matter how foolish you were to pay that much, a greater fool will
pay you more). These expectations are entirely unrealistic, but Microsoft is
determined to keep them going as long as possible - especially since the wealth
of Bill Gates, Paul Allen, Steve Balmer and many other Microsofties is based on
this same unrealistic valuation.
[ UPDATE: 10-10-00 - Paul Allen has sold out of Microsoft almost
completely to preserve his wealth, and has resigned from the Board of
Directors, as is appropriate for a person with little stock in the company.
Bill Gates has also been selling out as fast as he has been able, considering
his prominence in the company. ]
The imperative for high growth and high profit to support the valuation
bubble has Microsoft attempting to leverage their monopoly into other areas.
Having a monopoly is not against the law, but leveraging one to take over other
markets is, and that's why Microsoft is in trouble with the
Department of Justice.
"Microsoft is debt free and awash in cash". In a conventional sense,
yes. Microsoft has not borrowed to grow its business - what it has done is
issue vast amounts of stock options to its officers and employees to
keep them working at very low rates of pay.
The problem is, should Microsoft's stock begin to slide seriously, as it
eventually must, those holding options would have every reason to exercise them
as soon as possible. Once some employees exercise their options, they will hold
Microsoft stock, which, loosing value, obviously must be sold immediately,
further depressing the stock and causing other options holds to panic. This
activity among insiders will result in panic among other investors. A major
bloodbath will ensue, and fortunes will be decimated overnight.
Once their options were exercised, key Microsoft employees would no longer
have any incentive to stay with the company, since the rising value of their
options was the main reason to put up with low pay and strenuous working
conditions.
[ UPDATE: - 10-11-00 - With their stock sliding rather than growing,
the options ploy for recruitment and retention is no longer viable. Microsoft
has restructured their compensation program to bring them to "low middle"
instead of "low" on the industry scale. This will significantly increase
their labor costs. ]
Should Microsoft try to prevent an options panic by revaluing stock options,
they would incur the wrath of all other investors who would be given no such
protection, so a mass sell-off would certainly ensue anyway, with further
pressure on the options.
[ UPDATE: - 10-11-00 - When Microsoft's stock valuation hit 1/3 of
its high, the company had to do something about stock options. To avoid
angering investors, rather than revalue the options Microsoft issued matching
options, holding off the problem for the momemt but doubling their long term
exposure ]
Once the stock has crashed, Microsoft will lose the confidence of corporate
America. In fact corporate management will start to wonder about future
viability, and Microsoft's marketing advantage will be seriously damaged.
Windows, already a cost problem and obsolete in many ways, will suffer severely.
(top)
Key to Microsoft's success is its public image. Whatever reality may be, it
is critical for Microsoft to keep the public on its side. To this end they
employ a number of PR (Public Relations) firms, most prominently Waggener
Edstrom. Microsoft pays Waggener Edstrom about a quarter of a billion $$ a
year (that's billion with a B) and other PR firms many millions more to keep
Bill Gate's image polished and Microsoft shining in the public eye.
Humans are pack animals, and packs can't have a lot of leaders, so most
people are genetically disposed to admire and follow a rich and powerful
leader. Microsoft's PR campaigns have been highly successful. Even with
evidence of its true personality pouring off the TV screen and printed page,
the American public remains faithful to the image.
So how was this achieved? Fortunately, we don't have to guess.
Pam Edstrom is a principal of Waggener Edstrom. She has a daughter, Jenifer.
Jenifer wrote a book, Barbarians Lead by Bill Gates detailing her
mother's work. This book is not on Microsoft's recommended reading list.
Astro-Turf - Another PR firm, Edelman Public
Relations Worldwide, was much in the news in April 1998. Microsoft, concerned
about image damage from the Department of Justice investigation,
had Edelman put together a program to fake spontaneous "grass roots" support
for Microsoft. Prominent public and industry personalities were to be
paid to submit Microsoft prepared letters and columns to newspapers
and magazines as their own. This is known as an "astro-turf" campaign in
honor of it's fake grass roots.
The Los Angeles Times obtained a set of Microsoft / Edelman planning
documents and published an expose. Microsoft immediately denied everything.
When it became obvious nobody believed them, they claimed it was just a
proposal and they had not acted on it. Faced with the fact that the main
kick-off had already been held with PR people flown in from all over the
country, Microsoft responded that they "had a right" to tell their story.
In other words, Microsoft feels they have a right to pay people to deceive
the public. For more information see "Links"
[k1,k2,k3]
Microsoft has apparently made good on it's claimed "right" to go ahead with
this campaign. Since the LA Times article, many letters and columns displaying
an unusual sameness in subject, wording and lack of substantiation have been
published in many newspapers and magazines.
Above and beyond all this is Microsoft's massive advertising budget,
one of the largest on the planet - an advertising budget that makes the
editors of most industry magazines willing conduits for the
Microsoft public relations story.
Beyond paid PR, there is a considerable effort using Microsoft
employees who "participate" in on-line discussion groups, usually without
admitting they are Microsoft employees.
The most famous "participation" case was the "Barkto incident". A person
calling himself Steve Barkto appeared in OS/2 discussion groups claiming to be
a big IBM customer in Oklahoma who had adopted OS/2. Barkto had nothing good
to say about OS/2 or IBM, and many of the things he said were outright lies.
His posting was traced back to an account that was paid for by the credit card
of Rick Segal, a high Microsoft executive.
Years ago, on-line postings by Microsoft "shills" were easy to spot. Not
only did they spout the party line precisely, but their grammar and spelling
were always excellent - highly unusual for newsgroup posts. They learn -
today's shills use some of the worst spelling seen on the net and are often
almost incoherent. pro Microsoft "Shill fests" often follow magazine articles
embarrassing to Microsoft but verified to be true. If you can't deny it,
bring out the shills!
The most prominent MS shill today is Michael Merlin, who claims to post
from Paris France (his variable command of English has aroused suspicion he is
more than one person). Michael denounces as a lie any statement critical of
Microsoft, and claims all witnesses who testified against Microsoft in the
DOJ case were lying. He will not answer any question as to his financial
relationship with Microsoft (and he has been asked many times).
(top)
Prominent InfoWorld columnist Nick Petreley, who is also a bible student, wrote
a column in 1997 based on the passage "When the devil speaks lies, he speaks
his native tongue". According to Mr. Petreley, Microsoft is not the devil,
but, "Should Microsoft ever meet up with the devil, they won't need a
translator." He gave plenty of examples. Unfortunately, practically
any statement from Microsoft, whether about the company, its products
or the products of others, must be presumed to be, at the least, a
misrepresentation of fact.
A recent Microsoft's distortion is to imply they invented XML, which they
most certainly did not. They submitted some improvements to the XML DTD
(data definition section) and the W3C committe accepted them with little
change. The claim is probably a face saving move since XML is so central
to Microsoft's .NET initiative, but it is untrue just the same.
Microsoft has long depended on the PR firm Waggener Edstrom to cover up and
smooth over. WagEd has done a magnificent job of creating a public image
completely unrelated to reality, and truly deserves the hundreds of millions
Microsoft has paid them. The reason the image is now crumbling is simple.
Microsoft is in court. WagEd is not part of Microsoft. They can be
subpoenaed. Brought to court they might tell the truth to avoid a perjury
conviction. Microsoft is forced to do its own PR on some issues, and isn't
at all good at it.
Watching the Justice Department directly contrast Bill Gates' testimony
against his own email has introduced the public to what we in the industry have
long known. Here's another lovely example. Microsoft denounced Wendy Goldwin
Rholm's book The Secret Microsoft Files as "pure fiction" - then, in
court, accused Caldera of leaking confidential documents to Goldwin Rholm
(obtained for the Caldera vs Microsoft court battle). So which is it, all
lies or leaked truth?
(top)
http://www.infosatellite.com/news/2001/12/h081201microsoft_softwarepiracy.html
It isn't at all unusual for a large and active corporation to have a few
lawsuits against it. What is different about Microsoft is the nature of the
suits, their number, and that they are found clearly guilty on just about
every one that goes to trial. A fair number they just buy out of to avoid
the embarrassement of yet another loss.
Microsoft has so many actions against it, we can only cover the most
important. Most of Microsoft's (alleged) victims don't have the resources to
sue, especially since Microsoft may have already used their own technology to
destroy them. Of those who do sue Microsoft, some of the most obvious cases
are simply paid off under a nondisclosure agreement, so we never hear of them.
Others get nowhere because the victim doesn't have the money to be effective
against Microsoft's huge legal department.
By 2003 monetary judgements and pay-offs had spawned a mini industry
engaged in suing Microsoft for patent infringement. As the quantity increased
the quality decreased, so Microsoft has been winning some of them.
- 19 Dec 2003 - Mythic sues over game title - Mythic
runs an on-line multi-player role playing game based on Norse, Arthurian and
Celtic mytholigy. Microsoft is setting up an on-line multi-player role playing
game based on Norse mythology titled Mythica. Mythic asked Microsoft to change
the name and they refused (A16). Microsoft has used
this trick before - name an imitative product close enough to a successful
product to create confusion, then overwhelm that product with massive
marketing. In the case of case of Palm PC vs. Palm Pilot
they were forced to back off.
- 2 Oct 2003 - Los Angeles - a class-action lawsuit
has been filed against Microsoft for myriad security problems and remedies
too complex for the public to understand. A new California privacy protection
law made this lawsuit possible despite Microsoft's licenses, which disclaim
responsibility for anything and everything. It remains to be seen if this
usage of the law will fly.
- 18 Dec 2003 - Real Network Sues Microsoft - This
is a major antitrust action and long been expected. During the DoJ antitrust
trial Microsoft rushed out an unfinished and defective abomination called
"Windows Me" to "integrate" Windows Media Player before the courts could
prevent it. This was a direct attack against Real Networks
(A9, A10, A11).
Microsoft executives themselves described the action as exactly the way
they attacked Netscape except "starting earlier". Microsoft's actions
against Netscape were ruled illegal by the court, a verdict upheld
unanimously on appeal, but the newly installed Bush/Ashcroft DoJ declined
to apply any meaningful remedy.
- 14 Oct 2003 - E-Data Sues - I suspect this music
download technology action (which also involves Tiscali and OD2) involving
1985 patents (A2) hopes to capitalize on Microsoft's
stunning loss to Eolis on streaming media technology.
- 14 Oct 2003 - Israel Ministry of Commerce
has suspended all contracts with Microsoft for monopoly abuse
(A1). This ban extends through 2004, so there will
be no upgrades to Windows 2003 or Office 2003 at least through that period.
The ministry is investigating OpenOffice. as an alternative. This application
of Israel's antitrust law was forced by groups protesting the fact that
Microsoft refuses to provide "right to left" language support for the Apple
version of of its monopoly Microsoft Office product. This support is needed
for Hebrew, Arabic and Urdu.
- Oct 2002 - SPX sued Microsoft over the "whitboard"
feature of NetMeeting, which they claimed infringed their patent. Microsoft
has since removed the whiteboard feature from the latest version with the
explanation, "We regret that we are no longer able to offer Whiteboard in
this version of NetMeeting" but still claims they do not infringe the SPX
patent.
Conclusion: 14-Nov-2003, the jury awarded SPX $62 Million
(A8).
- 19 Jun 2002 - Burst.com, a publisher of
multimedia distribution and playback software, has filed suit against
Microsoft for patent infringement, antitrust, unfair business practices,
trade secrets violations and breach of contract. It's the same old story.
Microsoft sees useful technology. Microsoft and originator enter
license negotiations. Microsoft gets good inside look at technology. License
negotiations suddenly end. Microsoft issues similar product infringing on
patents and copyrights. Microsoft moves to kill originator quickly to
reduce or eliminate settlement costs. Here's the
anouncement from Burst.
- 25 Mar 2002 - Network Commerce has been given a
court date for it's suit against Microsoft for infringing its pattents on a
method of selling software, digital music and digital audio over the Internet.
InfoWorld Article
- 7 Mar 2002 - Sun Microsystems filed a private
antitrust suit over Microsoft's efforts to kill Java as a multiplatform
system. This action was long expected. With Microsoft now convicted for
abusing a monopoly, and the charges upheld on appeal, Sun needs only show
damages. Microsoft can be penalized tripple damages under the law.
Register Article -
InfoWorld Article
- 17 Feb 2002 - Be has filed a private antitrust
suit against Microsoft claiming that Microsoft leveraged its Windows monopoly
power to totally destroy Be's ability to field a competing (and highly
superior) operating system. Microsoft's licensing to OEM's states that if
Windows is on a hard disk, no other operating system may be on that hard disk.
This prevents "dual boot" or selective install configurations, the only way
a competing system could be commercially distributed. Several OEMs had agreed
to include BeOS on their systems, but Microsoft reminded them that if they
did they would lose their license to distribute Windows. Be was eventually
forced to liquidate, and sold its assets to Palm, but retained the right to
sue Microsoft. This is considered by many to be a very strong and clear cut
case. Tripple damages may apply.
InfoWorld Article
- 22 Jan 2002 - AOL / Netscape has filed a
private antitrust suit against Microsoft for leveraging it's monopoly to
destroy Netscape's Web browser market. Since Microsoft has been found guilty,
and guilt upheld on appeal, of precisely this action, chances of Netscape
getting some satisfaction are considered good. Tripple damages may apply.
InfoWorld Article
- 6 Sep 2001 - South Korea ISP Daum Communications
filed for an injunction against Windows XP based on antitrust charges.
The complaint charges that Microsoft's inclusion of Microsoft Instant
Messaging in Windows XP unfairly competes against other companies that offer
Instant Messaging services. Similar charges are expected in Europe, and
possibly in the United States.
- 2 Jul 2001 - Eastman Kodak considers anti-trust
action against Microsoft. After years of working with Microsoft on a
standard for digital cameras, Kodak found Microsoft had completely hijacked
the photo software in Windows XP, loading its own software instead of Kodak's
and redirecting photo orders and charging for every photo ordered through
Windows. Kodak's threats were apparently effective, Microsoft has promised
changes and this action is on hold pending release of Windows XP when those
changes can be confirmed.
Article:
eCommerce Times Article:
InfoWorld.
- 27 Apr 2001 - Intertrust Technology Sues for
Patenet Infringement. Microsoft intends to take over the digital music
distribution business with Microsoft Media Player (permanently embedded into
Windows XP). They offer the music moguls a secure method which prevents
copying of copyrighted works, but that technology appears to belong to
Intertrust. Article.
- 26 Feb 2001 - FTC Charges False and Misleading
Advertising (again). This time it's an advertisement comparing a new
Windows CE device to an older model Palm Pilot. They didn't bother to mention
the Windows device was using extra cost wireless add-ons, and didn't make
clear that current model Palm Pilots come with this wireless capability
built in. More in our News Item.
- 14 Feb 2001 - Department of Justice Opens New
Investigation. Microsoft recently "invested" $135 million in Corel,
one of it's few remaining competitors. In return they got a written agreement
to support .NET with all their products. While not part of the (written)
agreement, Corel backed off from Linux and said it would not try to win
new WordPerfect users away from Microsoft. More in our
News Item.
- NOV 2000 - WebTV Settles With FTC - Microsoft's
WebTV division is being required by the Federal Trade Commission to launch
a "consumer education" campaign to counter false and misleading advertising.
They must also reimburse some former subscribers to their services. WebTV was
acquired by Microsoft a couple years ago amid great fear they would leverage
it to monopolize the interactive television market. So far they haven't come
up with a product anyone wants.
- OCT 2000 - Racial Discrimination Suite Filed -
Monique Donaldson's suit claims Microsoft lacks racial equality guidlines and
allows managers to apply their own prejudices, resulting in self perpetuation
of a white male management structure. Donaldson's lawyers are seeking class
action status for the lawsuit.
Article.
[ UPDATE: Nov-00 - class action status has been established with
13 plaintiffs and requested damages have been upped to $5 billion. The same
judge Thomas Penfield Jackson who found Microsoft guilty of antitrust
violations presides. It must be getting pretty hard to find a judge who
hasn't already found Microsoft guilty of something.
Article
]
- SEP 2000 - Employee Fired by e-Mail - sues, wins
big. Judge Russell Peterson says, "An inference may reasonably be drawn that
the conduct of Microsoft was designed to ensure that the applicant did not
receive his 1999 stock options". Stock options are an important aspect of
employment at Microsoft, compensating for low pay, thus preventing Michael
Canizales from exercising his options is a denial of just compensation. The
award may be as high as $9 million. Details at
CNet.
- JUN 2000 - Hyperphrase Sues Over Patent -
Hyperphrase claimed the "Smart Tags" feature of Microsoft Office 2000
violated several of its patents for database search
(A15). On 25-Sep-2003 this case was settled by
summary judgement in Microsoft's favor. The judge ruled Hyperphrase's patents
differed to much from the action of Smart Tags.
- MAR 2000 - Europe Launches Second Anti-trust
Investigation of Microsoft - With one anti-trust investigation on hold
pending conclusion of the U.S. Department of Justice's case against Microsoft,
Europe has started another investigation into anti-competitive aspects of
Windows 2000. If you read our article
"Adopting Windows 2000" you will see they have plenty of material to work
with. More at
The Register.
- JAN 2000 - Over 100 Class Action Suits Filed -
The sharks smell blood in the water. Lawyers are now rushing to take cases
against Microsoft they wouldn't have touched with a laser pointer at 30 paces
a few months ago. If there is no settlement with the DOJ and judge Jackson
issues a Finding of Law, these will all go ahead with their basis (monopoly
power) considered already proven.
[ UPDATE: - 9-2000 - Several of these class action suits (about 140
now) have been dropped on a technicality (the injured did not buy directly
from Microsoft), but California does not have that exception and judge has
approved a suit to go to trial. ]
- 3-FEB-1999 - Eolas Sues Microsoft Over Patent -
Eolas sought an injunction against shipments of Microsoft Internet Explorer
(no embeded within Windows) and damages for a browser plug-in method for
which it was awarded a patent (A13).
On 12-Aug-2003 a jury awarded Eolas $521 million in damages. Microsoft
promised to appeal and started modifying Internet Explorer rather than
license the technology (A12, A4).
This is considered a bad judgement by the industry because of "prior art"
and the U.S. Patent and Trademark Office has agreed to reexamin the patent
(A14).
- DEC 17, 1998 - Blue Mountain Arts Sues Microsoft - .
The leading publisher of on-line Internet greeting cards has filed suit
against Microsoft for unfair trade practices. The suit claims Microsoft set
up a competing greeting card site, then distributed trial versions of the
Internet Explorer Web browser that divert Blue Mountain greetings into a trash
folder instead of delivering them.
Microsoft responded that this feature of IE, when turned on by the user,
also diverts Microsoft greeting cards into the trash folder. Microsoft also
claims they offered to help Blue Mountain develop a way around this problem,
but Blue Mountain did not respond.
We suspect Microsoft may be right on this one (not every suit against
Microsoft has merit), but it does point out the power Microsoft will gain
over other Internet companies if they succeed in establishing an Internet
Explorer monopoly.
[ Woops! 12-22-98 - the judge didn't agree
with our opinion and slapped an injunction on Microsoft. Well, he knows a
lot more about the case than we do, so we will have to presume the case does
have merit. ]
- DEC 1998 - Mouse Designer Sues Microsoft.
Goldtouch Technologies has sued Microsoft for $1 billion in punitive damages
and compensatory damages for patent infringement, theft of trade secrets and
fraud. Gouldtouch meet with Microsoft in 1997 in hopes the industry giant
would license and market its ergonomic mouse design. Instead, the suit claims,
Microsoft carefully examined the product, then imitated it and marketed the
imitation as the IntelliMouse Pro. This is not the first time
Microsoft has been accused of this trick.
(Top)
- DEC 1998 - Court Denies Microsoft Access to
Professors' Research. Professors Michael Cusumano and David Yoffie wrote a
book Competing on Internet Time: lessons from Netscape and its Battle with
Microsoft. Microsoft subpoenaed the research notes and confidential
interview tapes on which the book was based. In a major freedom of the press
decision, Microsoft's subpoena was denied, and the denial upheld on appeal.
(Top)
- 1998 - Ed Curry vs. Microsoft - not filed yet
because Curry, his business destroyed by Microsoft, hasn't found a lawyer
willing to take the case. Curry was Microsoft's security consultant, charged
with interfacing with the government on matters concerning security
certification for Windows NT. According to Curry, he refused to lie to the
government, so Microsoft took revenge and is now unable to get consulting work
because Microsoft intimidates prospective employers.
[ UPDATE - Nov 1999 - This case will not be
brought because Ed Curry (in his 50s) died of a stroke leaving his family
in dire financial straits. Stress is thought to be a contributing factor.
]
- 1998 - Department of Justice antitrust action
against Microsoft - going to trial now. Originally brought based on
Microsoft's leveraging its monopoly to crush Netscape, it continues to broaden.
The key to this action is whether or not Microsoft has a monopoly. If they
are shown to have a monopoly, then it will be relatively easy to show they have
leveraged that monopoly illegally.
Pundits in the press and in academia have one thing to say to Microsoft:
"settle now". In the words of one prominent antitrust scholar, "If Microsoft
looses this case, the repercussions could be stunning".
Microsoft, realizing judge Jackson is competent on technology matters,
sassed the judge in his own courtroom, a technique they have used in the past
to provoke an angry response, which they then use to get the judge removed on
grounds of "prejudice". Judge Jackson remained cool as a cucumber, so
Microsoft is now stuck with a judge who is technologically competent and ill
disposed to their tricks (they fooled him last time - it isn't going to happen
again).
[ UPDATE: Finding of Fact - Guilty! - NOV 1999 -
Judge Thomas Penfield Jackson concluded that Microsoft did have a monopoly and
used it improperly to leverage other products. The judge then appointed a
mediator, judge Richard Posner, and urged both sides to settle the case
(Jackson really doesn't want to have to hand down a final verdict). ]
[ UPDATE: Finding of Law - Guilty! - 3 APR 2000 -
After negotiations finally failed, Judge Thomas Penfield Jackson handed down
a final verdict in his Finding of Law. Nearly all charges by the Department
of Justice were upheld. A couple of minor items were set aside as
"not proven", which means they can be brought up again. ]
[ UPDATE: Appeals Court Gets Case - 26 SEP 2000 - The Department of
Justice had requested the case be expedited directly to the Supreme Court,
but the Supremes decided to send it to the DC Court of Appeals first.
Microsoft had campaigned strongly for the DC court which they feel is pro
Microsoft. In an unusual move, the entire court will hear the case. ]
[ UPDATE: Microsoft Loses Appeal - 29 JUN 2001 - Microsoft suffered
a stunning defeat in the DC Court of Appeals (which everyone had presumend
would let them off). For analysis, see our article
Appeals Court: "Guilty!". ]
[ UPDATE: Justice asks for Acceleration - 13 JUL 2001 - The
Department of Justice has asked the Court of Appeals to waive the 52 day
period for Microsoft to ask for a rehearing of the case. They base this on
the fact that the verdict was by all 7 judges and was unanimous, so the
court is certain not to allow a rehearing. This indicates Justice intends to
attack the Windows XP release. ]
- 1998 - Attorneys General of 20 states sue Microsoft. These suits
have been partially rolled into the Department of Justice case, but in a way
that does not preclude the states bringing additional charges upon conclusion
of Justice's case. (Top)
- 1998 - Sun Microsystems sues Microsoft - the Java case - being tried
now. Microsoft, recognizing that Sun's Java environment could
make Windows irrelevant, determined to corrupt and pervert it. To that end they
needed to license the language from Sun. Sun, wishing to promote Java to the
greatest extent possible, felt licensing it to Microsoft would be greatly
to their advantage, although Gosling, its primary creator, felt dealing with
Microsoft at all was too dangerous.
Sun wrote terms into the license designed to prevent Microsoft from
corrupting and perverting Java. Sun's claim is that Microsoft clearly and
immediately violated these terms and continues to do so.
[ NEWS FLASH! 17 NOV 1998 - Judge Ronald Whyte handed Microsoft an
injunction requiring them to make their Java compliant or remove it entirely
within 90 days. 19 NOV 1998 - Microsoft has stated they will bring their Java
into compliance with Sun's requirements. ]
[ UPDATE: - Jan 2000 - The Java injunction against Microsoft was
renewed. This will make the injunction permanent, because Microsoft's license
will expire soon. Microsoft, of course, declared victory. ]
[ CONCLUSION: - 24-Jan-01 - Microsoft
settles with Sun. Faced with all but certain loss in court, Microsoft
will pay $20 million and is banned from all things Java for eternity.
Microsoft declared victory. ]
- 1997 - Caldera sues Microsoft - being tried
now. When Microsoft and IBM brought out DOS, Digital Research sued,
claiming DOS included copyrighted Digital Research code. DR's Gary Kildall was
able, using a secret code, to pop up a DR copyright notice on the PC IBM had
brought to court. Case won.
Aside from monetary damages, DR won the right to clone DOS, which they
eventually did with DR-DOS. Microsoft, unwilling to tolerate the slightest
crack in their monopoly, fought DR-DOS with every means at their disposal,
including unethical and probably illegal means. Caldera, current owner of
Digital Research's products, has sued over the illegal part. The judge on the
case considers Caldera's case so strong he has allowed them to expand it.
Repercussions for Microsoft, should they lose this case, could be serious,
as it directly attacks some of their favorite business practices.
[ CONCLUSION: - 11-Jan-2000 - Microsoft Buys Out -
Realizing they were going to lose big time, and how much of their dirty
laundry Caldera was going to air out, Microsoft paid them off and demanded a
gag order on the case. Microsoft then made a loud public announcement implying
the cost was a mere $150 million. While the true figure is secret, analysts
believe it was somewhere between $350 and $500 million. ]
[ UPDATE: - Some Case Documents Released - A
judge in Utah released, over strong protest from Microsoft, a large number of
documents from the Caldera case to a newspaper that sued for them under the
Freedom of Information act. More documents may be released later. ]
[ UPDATE: - 21-Feb-2001 - link to the
"dirty laundry list" with the
case details and some of the evidence (it looks like an ftp index, but the
.html files will display when selected and the pdfs will download). ] -
(Top)
- 1998 - AT&T sues Microsoft - over code for
Windows NT. Wishing to expand the influence of NT software, Microsoft had
licensed Windows NT code to AT&T so they could create Unix modules allowing NT
software to run on Unix. Microsoft decided this was no longer desirable and
refused to upgrade AT&T's code to current versions, destroying AT&T's
investment in the product line.
[ CONCLUSION: Microsoft Buys Out - Apparently AT&T was too powerful
an adversary to be steamrolled in the usual Microsoft manner, so they paid off
to get out of the case. Gag order part of the deal as usual. ]
- 1998 - Bristol Technologies sues Microsoft -
going to trial now. Same as the AT&T case, except Bristol is much
smaller, so Microsoft intends to crush them rather than pay them off.
[ UPDATE: - The jury gave Bristol a partial victory,
and awarded them damages of $1.00. Apparently the jurors figured anyone stupid
enough to make a deal with Microsoft deserves what they get, a very reasonable
approach. Bristol is considering an appeal. ]
[ UPDATE: - Sep 2000 - Not so fast there! Seems the Judge didn't agree
with the jury, felt they may have mininterpreted their instructions. Judge
has accused Microsoft of untrue and deceptive testimony, and fined them $1
million. Case may be reopened for further action. Find more at
The Register
Article-1 and
Article-2. ]
[ UPDATE: - Nov 2000 - Another $3.7 million awarded to Bristol.
Case could be retried for even more damages.
Article
]
[ CONCLUSION: - 20 Feb 2001 - Microsoft buys out yet again -
and yes, they bought a gag order again, so the depth of their defeat cannot
be known (except through leaks). Since Microsoft's original victory was
ascribed entirely to a bad jury instruction, the judge made it plain Bristol
could go another round. Facing almost certain defeat, Microsoft pulled out
the 'ol wallet. More at
The Register
]
- 1997 - Borland sues Microsoft. Borland is
Microsoft's primary competitor in programming tools for the Windows environment,
and Borland's tools are widely considered of higher quality and more
innovative than Microsoft's.
Tired of sabotaging Borland's products by continuously changing Windows and
demanding concessions for certain necessary licenses, Microsoft started raiding
Borland for its key development personnel, offering signing bonuses exceeding
a million dollars. Upon hiring, some of these persons were simply sent on
extended vacation.
[ CONCLUSION: Microsoft Buys Out Facing a nearly certain loss,
Microsoft paid off rather go to trial. As always, Microsoft demanded a gag
order on the settlement. ]
- 1998 - Microsoft Loses Suit to SCO. The case was tried in Europe, and
since the settlement was worldwide, SCO dropped actions within the United States.
An old AT&T contract forced SCO to include obsolete Microsoft code in its
Unix operating system and pay a substantial royalty, making SCO's product less
competitive.
- 1998 - Microsoft sued by Temp Workers -
workers won. In a landmark "abuse of temps" judgment, Microsoft has to
pay back benefits. More action is pending. Meanwhile, Microsoft is
resorting to even sleazier tricks to avoid paying benefits (temps are forced to
quit after a set time, then hired back a week later).
[ CONCLUSION: - Dec-00 - Microsoft agrees to pay $96 million to
settle "permatemp" claims. ]
- 1998 - Microsoft Investigated by Japan - In a
major antitrust action, the Japanese government raided Microsoft offices and
removed all filing cabinets and hard disks for investigation.
[ CONCLUSION: - NOV 1998 - Japan's investigation found
Microsoft had used unfair trade practices and has admonished Microsoft, but
will not bring the issue to trial as Microsoft has discontinued the bundling
practices subject to the investigation. ]
- 1998 - Microsoft Investigated by European Union - ongoing.
This is basically the same sort of action as Japan's - less the confiscation of
records. (Index)
- 1998 - Department of Justice Investigates Microsoft
for Attempting Illegal Collusion - ongoing. Charges may be filed
based on Netscape's claim that Microsoft attempted to coerce them into a
collusion deal to divide up the Internet.
"It was scary, just like a visit from the 'Godfather'" says Netscape's
Andresen.
It appears just such a deal may have been made with Sybase to divide up the
low end SQL database market with Microsoft taking Windows, and Sybase getting
everything else. Evidence is insufficient to bring charges at this time.
(Top)
- 1998 - Department of Justice Investigates Microsoft - ongoing.
The current antitrust action is far from all the irons Justice has in the
Microsoft fire. Charges on other matters may be brought at any time.
(Top)
- 1998 - 3Com sues Microsoft - Palm Pilot vs. Palm
PC. Microsoft bailed out of this one rather than face yet another loss.
It involved one of their favorite tricks: name a copycat product almost
identically with the dominant product, then promote the hell out of the (often
not yet existent) Microsoft product until the public thinks of Microsoft
whenever they hear the name of the competitor's product.
(Top)
- 1998 - Microsoft Investigated by Ralph Nader - ongoing. Ralph Nader
has determined that Microsoft uses predatory business practices which will
eventually work to the disadvantage of consumers. Nader's organization has
issued a detailed report on Microsoft's business practices which is now being
used as a reference by other investigators.
- 1998 - Microsoft Investigated by Congress.
Jessie Helms asked hard questions and Bill Gates gave evasive answers in
Congressional hearings. Gates repeatedly denied, despite compelling evidence
to the contrary, that Microsoft has a monopoly in desktop operating systems.
The reason - it would be tantamount to admitting Microsoft is violating
antitrust laws.
- 1998 - Spyglass Sues Microsoft - Microsoft Buys
Out. Microsoft, upon "discovering" the Internet, needed a Web browser.
They licensed one from Spyglass, and promised to pay royalties as a percentage
of each sale. The Spyglass browser was enhanced and renamed "Internet
Explorer". Microsoft then gave it away free - screwing Spyglass out of its
royalties. Spyglass sued for deception and Microsoft bought out of the suit
for a one-time fee.
- 1998 - Italy Sues Microsoft - Yet Another Anti-Trust
Action. We don't know anything about this one yet, except that it is
happening.
- 1998 - Microsoft Faces Charges in Brazil
We don't know much about this one yet, but Microsoft has stated, "We aren't
doing anything wrong and we will be vindicated"
- 1997 - Cookie Jar Reserve - Former internal
audit chief, Charles Pancerzewski, sued Microsoft for forcing him to resign
when he brought up the matter of Microsft using a "cookie jar reserve" to
Microsoft executives. This tactic is used to smooth earnings reports and
violates GAAP (Generally Accespted Accounting Practices) and U.S. securities
law. This case was settled out of court with a substantial payment to Mr.
Pancerzewski, and as always, Microsoft got the records sealed to prevent
public disclosure.
Article
- - 1995 - Syn'x Relief sues Microsoft for Software
Piracy. A number of pioneering 3D animation features developed by French
company Syn'x Relief for their product Character. They were negotiating
a license for several features to a developer named SoftImage, which was
acquired by Microsoft. Negotiations were broken off when SoftImage made
unreasonable demands. These features are unambiguous and unique in the
industry, and Microsoft promised to remove them all from the SoftImage
product. Microsoft did not remove any of them and Syn'x Relief found they
had no recourse but to sue.
[CONCLUSION - 8 Dec 2001] - Microsoft was found guilty of software
piracy and fined. They promised to appeal to keep this in the courts until
Syn'x Relief gives up. -
Article
- - 1995- Department of Justice sues over Intuit buyout.
Microsoft's Balmer declared they intended to charge "vigorish" (a booky's cut)
on every electronic financial transaction made. To this end, they set out to
buy Intuit, a company which has a near monopoly on on-line banking transactions
for their Quicken customers. Intuit's management was more than happy to
sell.
Since this would give Microsoft a monopoly on personal finance software
(91%) and on-line financial transactions, competitors asked for relief from
the goverenment. Microsoft showed up in court loaded for bear, with more
lawyers than everyone else combined. The first thing they did was subpoena
all their competitor's marketing plans. It looked like they had a good chance
of getting them - when the case suddenly came to an end.
[ CONCLUSION: Microsoft found they had neglected to respond to a
request for information in a timely manner. This placed them at the mercy of
the court. Figuring the court was real short of mercy at this point, they cut
and ran. Bill Gates got up at a news conference and told the media
"This case would distract us from our work", and the Intuit buyout was
dropped. ]
- 1994 - Stac sues Microsoft - Wins. In one of the few
cases where a victimized company had the resources to sue Microsoft, Stac
proved in court that Microsoft had stolen their technology. Microsoft counter
sued over a minor point and also won, but millions of dollars went Stac's way.
Microsoft then coerced Stac into licensing their technology on terms favorable
to Microsoft and Stac is no longer in the disk compression software business.
(Top)
- 1982 - Digital Research sues Microsoft and IBM - Wins -
. It was obvious MS-DOS and its PC-DOS variant were simply rip-
offs of Digital Research's CP/M operating system. It remained only to prove it
contained DR code. DR's Gary Kildall sat down at an IBM PC supplied by IBM and,
using a secret code, got it to pop up a Digital Research copyright notice.
It's case won, Digital Research received monetary compensation and the right
to clone MS-DOS. This is why Microsoft never sued DR over DR-DOS, but used
every other means to destroy it. The settlement was under a strict non-
disclosure agreement, so few even know DR sued, never mind that they won.
Digital Research was purchased by Novel and destroyed by neglect and
mismanagement. The products now belong to Caldera, which has filed suit
against Microsoft over predatory practices used to destroy DR-DOS's market.
(Top)
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