Microsoft Remedy Hearings: Computer Executives Slam Microsoft

Attorneys cross-examined executives from a Microsoft competitor and a Microsoft partner in court yesterday. The executives answered questions about Microsoft and the "chilling effect" the company has had on their businesses. Michael Tiemann, Red Hat's chief technology officer (CTO), told Judge Colleen Kollar-Kotelly that Microsoft's refusal to create a Linux version of Microsoft Office has unfairly hampered the open-source Windows competitor; Gateway Group Counsel Anthony Fama explained that Microsoft's recent settlement with the US government did nothing to curb its predatory behavior.

Anyone might expect a Linux-distributor representative to have problems with Microsoft, but Tiemann's complaints border on the bizarre. Tiemann says that Microsoft's refusal to make a version of Microsoft Office for Linux has caused problems for Red Hat and other Linux companies. He noted that Red Hat has to use Windows machines in its offices so its workers have access to Office. "Office is the albatross around Red Hat's neck," Tiemann said.

When Microsoft's lawyers asked Tiemann why Red Hat hadn't just created its own office-productivity suite or worked to improve Sun's Linux-compatible StarOffice product, he said that such efforts would be fruitless because PC makers refuse to bundle OSs other than Windows on their systems, out of fear of reprisal from Microsoft. Gateway's Fama bolstered this assertion; his written testimony explained that Gateway's problems with its Windows license--always a sore spot for the company because Microsoft had charged Gateway higher prices than other PC makers--became worse after the new, settlement-induced licensing terms kicked in late last year. "Gateway's desire to accommodate consumer demand and choice is often in tension with Microsoft's interests," Fama said. "However, Microsoft can and has exercised its clout to financially disadvantage OEMs like Gateway who do not always execute in harmony with Microsoft's business plans."

Under the new Windows licensing terms, "Microsoft retains incredible power over Gateway and, presumably, other \[PC makers\]," Fama said, because Microsoft can now simply cancel Gateway's license, without notice, after only two minor infractions. Previously, Gateway had a "three-strike provision," and the strikes applied to major infractions. "Microsoft licenses its software products through a web of interlocking agreements," Fama noted, "\[and\] it would not be surprising if a \[PC maker\] often was not in compliance." Fama says Gateway received four infraction notices in June 1997 alone. In addition, the new uniform Windows licensing provision favors large PC makers such as Dell and Compaq, which had already been receiving favorable treatment because of their close relationships with Microsoft, he said. Most alarming, however, is the news that Gateway must continue to pay a Windows license fee for every PC it sells, regardless of whether it ships with a copy of Windows. "\[Since the settlement,\] Microsoft has gained additional control over Gateway in the guise of a remedy," Fama said.

Microsoft tried to throw out portions of Fama's testimony, but Kollar-Kotelly, who had earlier warned that she wouldn't consider hearsay testimony and testimony that was beyond the scope of the case, declined the challenge.

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