Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Valley Girl who wrote (38611)	2/26/2000 12:51:00 PM
From: The Duke of URL©	Read Replies (3) \| Respond to of 74651

Crime #1: bullying boxmakers by forcing them to pay per-unit prices for the MSFT OS on all boxes built, even if some of these shipped with a different OS. Threatening to withhold the OS or favourable pricing on the OS if boxmakers didn't toe the line, i.e. if they started building Linux boxes or network appliances that didn't use an MSFT OS. My assessment: if this isn't illegal, it ought to be. Mind you it's OK if you're not a monopoly, which MSFT had not been officially ruled to be until recently. Reasonable remedy: injunctions restraining the scope of business arrangements between MSFT and boxmakers. -------------------------------------- First, violation of anti-trust law is not in and of itself a crime. Second, box makers are not "consumers", they are not protected under the anti-trust laws. Third, software developers are not "consumers", they are competitors. Fourth, A "copyright" or "patent" IS a legal monopoly. Anti-Trust laws do not "trump" copyright laws. The best 'recent' example of this is Xerox. Fifth, a manufacturer can charge different rates to different of its distributors depending on a number of factors, such as size of the order, effeciency of the distributor, and a number of other valid business reasons. From the microsoft brief: "Plaintiffs [DOJ] rely on Image Technical Services, Inc. v. Eastman Kodak Co., 125 F.3d 1195 (9th Cir. 1997), cert. denied, 523 U.S. 1094 (1998), and Data General Corp. v. Grumman Systems Support Corp., 36 F.3d 1147 (1st Cir. 1994), to support their contention that Microsoft's exercise of its intellectual property rights may violate the antitrust laws. (Pls. Reply at 28.) The antitrust laws, however, do not negate the rights of copyright holders. See Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1362 (Fed. Cir. 1999). In Kodak, the court found "no reported case in which a court has imposed antitrust liability for a unilateral refusal to sell or license a patent or copyright." 125 F.3d at 1216." The DOJ's case, politely put, is polemic legerdemain. Duke I will post more from Lessig's Amicus Brief when I get some time.

To: Valley Girl who wrote (38611)	2/26/2000 12:51:00 PM
From: denni	Respond to of 74651

well said! microsoft will lose at this level. pj is a stupid, lazy jerk. microsoft will win on appeal. bought more at 92. the bottom is 90. my best guess.

To: Valley Girl who wrote (38611)	2/26/2000 1:23:00 PM
From: PMS Witch	Read Replies (2) \| Respond to of 74651

I do not in posession of any legal training beyond what I've picked up as a Microsoft shareholder who has endured this and previous courtroom dramas over the years. Unlike your liquor store bandit, the crime, if any, is not clearly defined. I think we're witnessing a bit of a fishing expedition as a few people in the DOJ see a potentially career enhancing opportunity. The prosecution must prove that the crime exists and that Microsoft is guilty. The difficulty is that the 'wrong' is very hard to define. Example: The per-box basis of OS licensing. These contracts were not viewed as illegal when signed. They were one way of dealing with the potential theft of Microsoft's property, as common in China, and it seemed to work. I think of a monopoly as similar to a gun: It's OK to have one, but not to misuse it. Microsoft earned their monopoly: They didn't buy it, which I think is prohibited. I don't get the tying issue. Over time, many software packages include features and functionality previously available only by purchasing additional programs. (I remember buying a spelling checker.) Today's Windows98 comes with games, editor, paint, calculator, music, terminal, backup, defrag, ... all which one needed to purchase separately not too long ago. This 'including' direction has been long established in this industry and I see nothing wrong with Microsoft continuing this trend to include browsers. As for the overcharging, how should software be priced? If we look at utility/cost, codesize/cost, development_effort/cost, the price of Windows seems to be falling instead of rising. Does anyone want to go back to DOS 1.1, even if it only costs $60? I don't have much optimism that Microsoft will be treated fairly by 'the system', but I do think they have the resources and agility to prosper in spite of the stumbling blocks ahead. Obviously, we're in for some tough times as this case continues. If Microsoft has committed crimes, they should admit their guilt, accept their punishment, and mend their ways. If Microsoft has not committed crimes, they should defend themselves with the focus and determination they're famous for and not take the expedient road of capitulation, because if they do, they will only invite more parasites. Cheers, PW.

To: Valley Girl who wrote (38611)	2/26/2000 1:28:00 PM
From: JBTFD	Respond to of 74651

Great question, Valley Girl ! I must say my understanding of the "crimes" matches what you've put there. I would also like to ask if anyone has any sense of what the DOJ may want in order to settle. I'm very interested to hear the responses to your question. Thanks, Mark

To: Valley Girl who wrote (38611)	2/26/2000 1:44:00 PM
From: blankmind	Respond to of 74651

Why I'm betting MSFT wins this case: - Even when the Clintonistas know something is unconsitutional, they do it anyway. As proof just look at: 1. claim for White House Attorney-client priveleges; which the lying Clintonistas lost 2. claim that Secret Service can't testify; which the lying Clintonistas lost 3. Export Tax called a "clean harbor tax." - The Clintonistas know full well that the Constitution states that the Gov't can't tax exports. So the Clintonistas & the Democrat Congress back in '93 passed a "clean harbor tax" on outbound ships. The US Supreme Court declared it unconstitutional. But why did it have to go that high? 4. Or how 'bout the white school teacher who was fired to increase black representation? This case was settled out of court; but it was clearly unconstitutional & the Clintonistas sided with the School Board anyway. Finally, MSFT has never been found to have harmed consumers. Nor did they gain prominence by buying up the competition. Instead, they have a monopoly based on customer loyalty. As Duke of Earl pointed out, it's not a matter of anti-trust law when you hurt the competition - which happens every day. - my point is that DOJ's case against MSFT is a sick joke costing taxpayers $40 million. Oh, how I can't wait for the sick, lying, degenerate Democrats to leave the White House.

To: Valley Girl who wrote (38611)	2/26/2000 1:58:00 PM
From: rudedog	Read Replies (2) \| Respond to of 74651

VG - re: Crime #1: bullying boxmakers by forcing them to pay per-unit prices for the MSFT OS on all boxes built, even if some of these shipped with a different OS. Threatening to withhold the OS or favourable pricing on the OS if boxmakers didn't toe the line, i.e. if they started building Linux boxes or network appliances that didn't use an MSFT OS. My assessment: if this isn't illegal, it ought to be. Mind you it's OK if you're not a monopoly, which MSFT had not been officially ruled to be until recently. Reasonable remedy: injunctions restraining the scope of business arrangements between MSFT and boxmakers. I am aware of a number of actual contracts regarding sale of licenses to OEMs, as I was on the other side of the table in several discussions in '96 and '97. The structure was a lot different than the one suggested in the popular press. MSFT offered a range of buying options for OEMs based strictly on volume, running from programs known as "DSP" and "MOLP" which gave a 20% to 30% discount under "list price" on quantities as small as 5 licenses, up to the more substantial discounts (in the 50% range) offered to the big OEMs who sold in the millions. There was an additional business justification for the larger OEM discounts which I have not seen in the trial transcripts - the smaller buyers (such as those buying under "MOLP") have no responsibility for support - the end customer gets to call MSFT directly. The OEMs have to provide first-line support themselves, and only escalate for "level 3" problems - those that are not pilot error or a configuration issue, but an actual problem with MSFT software. The additional 20% discount seems like scant compensation for the expense of running a complete support team, but it is a business tradeoff - any OEM who wanted to take the lower discount in exchange for MSFT doing support had that choice at any time. The "per system" pricing model was also much discussed and not much understood. This was not a mandatory program, and was never the exclusive way that OEMs licensed MSFT OS products. It was an additional discount opportunity, based directly on the costs that MSFT incurred when they had to track which OEM products went out with a MSFT OS. MSFT said "here's another way you can track royalties due - ship MSFT OS on every box, or at least pay for it that way, and you will only need to report number of systems shipped. We'll give you an additional discount because we know that not EVERY system ships with a MSFT OS". Given that maybe 95% of desktops shipped with Windows at that time, with a tiny fraction shipping OS/2 or something else, that was probably a reasonable choice for many OEMs, since they got an additional 3% or so in discount. The reduced internal costs of tracking would have been a benefit also. For OEMs like DELL who shipped pretty much nothing but Windows, it was just free money. The policy had the additional benefit to MSFT that since OEMs had already paid for the OS, they might as well provide it with the systems. CPQ routinely shipped a Windows CD even with systems that had OS/2. This had the additional benefit that OEMs could ship utilities and configuration applications that needed Windows to run, without violating any license restrictions. For example, the CPQ disk array configuration utility, which has its own boot disks and operates completely outside of the OS, is used for OS/2, SCO, Solaris for X86, Linux, Unixware, and anything else that runs on a CPQ box. Should CPQ be required to write a bootable version of that application for every OS just so the customer can configure the disks? What about common "look and feel"? The fact that CPQ had a license for every system shipped made their work easier and reduced cost to the customer. Also the notion that MSFT would withhold the OS is more bunkum. The only discussion about that in the trial was not around the OS itself but around the Netscape browser, and was actually even narrower than that - the CPQ consumer division had done a deal with MSFT around a "bundle" for two of their product lines, where they got favorable pricing in exchange for featuring the MSFT browser. This is conceptually no different than the deals currently being done by AOL and others, where the manufacturer gets a discount for featuring AOL as the prefered ISP. According to testimony from CPQ executives, when the CPQ executive in charge of those products decided, after the licensing deal with CPQ was cut, to instead feature the Netscape browser, MSFT said that was not the deal, and they could not ship products until they cut a new deal, since they were in violation of the terms of the original agreement. CPQ could have shipped under their blanket agreement, but without the additional discount on the OS that they had gotten from the "bundle"... and in fact no shipments were delayed. The MSFT letter which informed CPQ that they would be shipping in violation of their agreement if they featured the Netscape browser was taken out of context, as best I can determine. Most of the OEMs used the press around this set of events to get more favorable terms from MSFT, and at the same time MSFT abandoned "per system" licensing, so the actual practice is years in the past already. This strikes me as an example of the government getting into a price discount discussion between MSFT and its customers when there was no problem to begin with.