Microsoft has another bad day in court
Microsoft these days is striving to make its programs more compatible and open. Licensing fees have gone down, standards revealed, and generally a higher standard of openness is encouraged. While Microsoft might publicly claim otherwise, much of this change was forced by multiple painful rounds in antitrust court.
Microsoft was hit recently with $1.4B USD and $690M USD fines from the European Union's business court, for employing anticompetitive processes in the form of what the European Union sees as intentionally inflated licensing fees. The European Union currently has several open investigations against Microsoft.
The U.S. Department of Justice, which scored a win against Microsoft in an epic 1999 antitrust legal battle, recently extended its supervision of Microsoft and is considering new investigations.
What exactly happened to make Microsoft such a target? First, the company has an extremely high profile as the undisputed operating system king for over a decade. Further, in the past Microsoft frequently leveraged its position, according to Department of Justice, to promote its new software products for use with its operating system, while pushing others out of it. Whether its moves were willful oversight, or intentional maliciousness, they worked -- Microsoft slowly crushed its competitors in the word processing, internet browsers, spreadsheet and presentation software.
In the field of document authoring, Microsoft Word is almost synonymous with the phrase word processor. Unlike the browser market, in which Firefox has been able to eek out a significant marketshare, no true competitors stand before Microsoft Word. This, however, was not always the case. In 1990, Novell's Word Perfect software was the marketshare leader, owning over 50 percent of the market. However, as Windows rose to dominance, Word Perfect's fortunes plummeted as it fell to 10 percent, pushed out, largely, by Microsoft Word. While some point to the downfall being due to Novell's flounderings, others point to the numerous compatibility and performance issues that cropped up in Windows.
On these grounds Novell launched a major private antitrust battle against Microsoft. The suit was cleared to proceed, but an appeal by Microsoft brought it before the U.S. Supreme Court. In a decision without Justice John Roberts, who owns Microsoft stock, the court decided without comment to leave intact the lower court's ruling that Novell can sue Microsoft under antitrust laws.
Microsoft was furious at the decision. The company argues that Novell is not eligible for antitrust damages as it did not compete directly with its Windows Operating system, a key component of the lawsuit. A Microsoft spokesman stated outside the courtroom, "We believe the facts will show that Novell's claims, which
are 12 to 14 years old, are without merit."
However, Novell points out clearly that Microsoft withheld technical information which the company needed to adapt Word Perfect to run well in Windows 95. While this claim is scoffed at by Microsoft, in a 1994 corporate email obtained by Novell, then-Microsoft CEO Bill Gates states that they must delay giving Novell the compatibility information for Word Perfect to give Microsoft Word "a real
advantage". He goes on to state that without the delay "we can't compete' with "WordPerfect/Novell".
In a later 1997 email between Microsoft executive Jeff Raikes and billonaire investor Warren Buffet, Raikes states, "If we own the key franchises built on top of the
operating system we dramatically widen the `moat' that protects
the operating-system business [from competitors]."
Microsoft has always had to pay over $5B USD in similar claims to Sun Microsystems, IBM, and Real Networks, in a series of cases following the precedent set by the 1999 government antitrust ruling. It also currently is facing a class action suit based on its "Windows Vista Capable" sticker campaign used to sell computers that could barely run Windows Vista, a campaign corporate email admitted was a bad decision made based on pressure from Intel to sell chipsets.
This new case by Novell, however, if successful promises to broaden the scope of companies that can seek damages against Microsoft to outside the OS market, a relatively new development, according to legal analysts. Novell says that Wordperfect's value fell from $1.2 billion
in May 1994 to $170 million in 1996, approximate $1B USD in loss. Novell is seeking three times this in damages from Microsoft, according to the filings.
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