This week, the US Department of Justice (DOJ) revealed that in January federal investigators began looking into Microsoft's investment in Corel, seeking to discover whether Microsoft forged the alliance to reduce competition in the office-productivity software market. Although Microsoft's Office suite dominates the market, Corel sells a rival package called WordPerfect Office, which also runs on the Linux OS.
"We are looking at the transaction," the DOJ confirmed, although the department declined to comment further about the investigation. Microsoft said that the company is cooperating with the probe. "We received a subpoena dealing with the Corel issue," said Microsoft spokesman Jim Cullinan. "We are complying and cooperating with the government to provide them with any information they need and request. This is a very narrow legal request, and we believe there are no legal issues here that should be of any concern, but we are working to address any concerns the government may have."
The investigation's timing is interesting, because Microsoft is entering the appellate phase of its wider antitrust trial, and a new Republican administration now controls the Justice Department. Soon after Corel consummated the alliance with Microsoft, the company--which had championed the open-source Linux OS, proclaiming itself a Linux powerhouse--abruptly announced that it would stop selling its version of Linux. Corel reportedly will continue selling Linux versions of its applications, such as WordPerfect and CorelDRAW, so it's unclear whether the Microsoft investment affected Corel's business decisions regarding Linux. The government also is reportedly interested in an agreement between the two companies that requires Corel to develop a Linux version of Microsoft's .NET software at no cost.
Corel isn't the first competitor Microsoft has bailed out. In 1998, Microsoft invested $150 million in Apple and promised to continue developing Office products for Apple's Macintosh platform, which was then failing. Critics have pointed to this and other similar deals as evidence that Microsoft has artificially created the impression of competition to escape its antitrust woes.