IP: NYTimes.com Article: Microsoft Said to Enhance PC Influence in Settlement

[Dave Farber <dave () farber net>]

Microsoft Said to Enhance PC Influence in Settlement

March 26, 2002 

By REUTERS


 

WASHINGTON, March 25 (Reuters) - The government's proposed
antitrust settlement with Microsoft (news/quote) has
allowed the company to impose onerous new licensing terms
on computer makers, a lawyer with Gateway Inc. (news/quote)
testified today. 

The lawyer, Anthony Fama, who is Gateway's group counsel,
also told Judge Colleen Kollar-Kotelly of Federal District
Court here that new uniform Microsoft discounts, based on
volume, appeared to be structured in a way that continues
to favor cooperative computer makers.

Mr. Fama was called as a witness by nine states seeking
tougher sanctions against Microsoft than the Justice
Department has proposed.

He said the new licensing terms for Microsoft's dominant
Windows desktop computer operating system had worsened
provisions that Gateway had already found objectionable in
previous agreements.

"Microsoft has gained additional control over Gateway in
the guise of a remedy," Mr. Fama said in written testimony.


The settlement reached in November between Microsoft and
the Justice Department aims to give computer makers greater
freedom to feature rival software and requires standard
licensing and pricing of Windows to reduce the ability of
Microsoft to influence computer makers' software choices.

Microsoft adopted the terms of the settlement in December,
even though Judge Kollar-Kotelly is still weighing whether
to endorse the pact under a separate proceeding.

The judge denied a Microsoft motion today to throw out
parts of Mr. Fama's testimony. Microsoft had argued that,
like many of the states' previous witnesses, Mr. Fama was
discussing issues beyond the scope of the case.

Microsoft also issued a statement saying that "avoiding
special concessions was precisely the point" of the
settlement agreement.

But Mr. Fama said the volume discounts under the settlement
gave the highest advantage to Dell Computer (news/quote)
and Compaq Computer (news/quote). These companies, he said,
were found "more compliant" with Microsoft in the original
trial court's findings of fact.

Mr. Fama testified after Michael Tiemann, chief technology
officer for Red Hat Inc., who said last week that attempts
to preinstall the Linux operating system on computers had
foundered because the computer makers feared that Microsoft
would retaliate. 

Microsoft spent much of today arguing that Red Hat had
failed to popularize Linux because of Red Hat's own
shortcomings, rather than interference from Microsoft.

Red Hat spent little money on research and development and
dedicated few of its employees to winning over software
developers to write programs for Linux, said Stephanie
Wheeler, a Microsoft lawyer.

Mr. Fama of Gateway said Microsoft had "incredible power"
over computer makers and could still intimidate computer
makers under the proposed settlement.

Nine states, including California, Connecticut and
Massachusetts, as well as the District of Columbia, are
seeking remedies stricter than those accepted by the
Justice Department and Microsoft. The hearings on their
request are expected to last several weeks.

http://www.nytimes.com/2002/03/26/technology/26SOFT.html?ex=1018169195&ei=1&;
en=8d4fa26f3fc85f7c



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