The State of Iowa vs Microsoft

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The State of Iowa has filed a class action, anti-competitive lawsuit against Microsoft. The opening comments were made on Friday, the 2nd of December. The following quote is from Groklaw, a site focused on legal issues in IT that was started due to the SCO suit against IBM claiming that IBM was guilty of violating SCO's patents. (That suit is now 3 years old and within the last couple of weeks the judge has basically thrown out almost all of SCO's claims due to lack of evidence that SCO claims they have, but which they have failed to produce in 3 years of litigation.)

Other very interesting quotes from the article include the following one that is a direct quote from an internal MS memo by Jim Allchin, co-president of Microsoft's Platforms & Services Division. It gives some very interesting insight into how MS routinely does business.

The following quote from the article tells a little about case. It is followed by something that I, as a somewhat knowledgable computer user, find very hard to believe was accidental.

This entire article can be found at the link to Groklaw found in the first paragraph of this post.

 

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More from the ongoing case. This is from opening statements given on last Thursday. I think some people here will find this interesting as the evidence presented shows that top MS executives, knowing they are, or will be in the immediate future, involved in a lawsuit issue directives that order MS employees to break the law by destroying relevant evidence, and at the same time follow that practice themselves.

There is also some information on what MS calls EDGI. MS represents this program to the public as a charitable program but the evidence shows this program was designed from the ground up to fight Linux. Also mentioned is BEOS, a very good multimedia OS crushed by MS a few years ago, that had things in it that still are not available in Windows. In other words when MS crushed BEOS using anti-competitive business tactics we the consumers have lost out for years on multimedia features that should have been available to us in the marketplace. In other words, Windows Media Center is still missing features that BEOS had available before it went out of business in 2001 because of MS's dealings with OEM's. Think about it. BEOS had everything, and more, 5 years ago that Media Center has today. Just think what could have been had MS not strong-armed OEM's into not using or even mentioning anything related to BEOS. Just how much have you been cheated out of? Think about how multimedia capabilities have grown in the last 5 years, and then realize just what could be now if BEOS not been illegally crushed. You, the consumer, lost big time....

It looks as if this is going to be a very interesting trial. This attorney has thoroughly researched MS's business tactics and is going to show an overall picture of how MS does business. What's also very interesting is that the judge has allowed the plaintiffs to use evidence already proven in court previously to show overall business strategies and is not going to allow MS to dispute the facts proven when it was convicted of being a monopoly.

The final bit I'm going to use from the Groklaw report from the trial is the following taken from a memo from Jim Allchin to Steve Ballmer and Bill Gates.

 

I'm not gonna begin to dispute with the ethics of M$ lawyers and some execs... their track record proves their intent.

I should state that to be fair and balanced, Apple had more to do with BeOS being unsuccessful than MSFT ever did.

Sidenote: As of a year or two ago, MCE2005 is far simpler and easier and complete than any Linux derivative was. I've tried MythTV, SageTV, and some other debacle, and -- it wasn't even that I'm a relative Linux n00b -- the stuff didn't work, and the fixes that I found didn't either. I *will* revisit them sometime soon, because they seem to have matured properly, and...well... free is *always* good.

 

So Jim Allchin, Steve Balmer and Bill Gates are just some MS execs? That's like saying Ken Lay, Andrew Fastow, and Jeffrey Skilling were just some execs at Enron....

Funny how Bill has an assistant dedicated to making sure all of his email is deleted.

 

The .pdf in the following link is something that is very interesting. It's a very long, but very good, read. It's the testimony/report given under oath by one, Edward Roeder, to the US Department of Justice on MS's political lobbying activities. I'll post his own words about his qualifications for researching this subject and reporting on it. You can all decide for yourself as to his qualifications and whether or not he is qualified to give an accurate, thorough report.

http://www.usdoj.gov/atr/cases/ms_tuncom/major/mtc-00030610d.htm

 

The following quote comes from the documentation on Groklaw about the anti-competitive actions MS took towards BeOS.

Now, tell me, Fortch, what it is that Apple did that was more harmful to BeOS's cause than BeOS being locked out of having their OS installed by OEM's so that consumers could actually find a computer with the OS installed on it.

I'll be very interested in your answer as before BeOS could even actually compete with Apple they had to be able to get their product into the marketplace.

 

The obvious, of course. The OEM wanted to sell computers, period.

BeOS started on the PowerPC, and they desparately wanted to be acquired by Apple -- until 1996, when Apple went with NeXT. Aside from that, and a $4 million investment, BeOs was just hemhorraging money like crazy, and didn't strike anyone as a particularly great investment. Look at their track record -- they were looking for their 'spot' in the industry forever. Sure, they did some things right, but why do we always assume the underdog deserves success?

The 6 P's of business -- Proper Planning Prevents Piss Poor Performance. Any reason why the dotcom bubble burst? One good reason -- poor management. Talented techies are not necessarily good managers, and this was obvious with BeOS. Business is always about product -- if it's genuinely a good product, it can sell itself. Eventually, it will surface, and with good marketing and management, it'll trend. Maybe it's really just a niche product?

Or maybe there's more to business than just products? It *is* a business, after all.

Everything I've read about BeOS doomed them even before the MSFT accusations. As to the OEM's, are they gonna sell more computers with Windows 98, or BeOS? It's great to be visionary, but it don't pay the bills. You think Dell got where it is today without MSFT? I don't even know why I bother with this reply -- you never acknowledge any points, and just always look at an issue from 1 side. I guess I just love playing devil's advocate

The *real* Why BeOS Lost story. Take it from an informed third party, then, who really wanted BeOS instead of NeXT.

 

What does your OEM point here have to do with anything? Sure MS has many more resources. Sure the OEM's were selling more PC's with Windows on them. That's a given. A very obvious one, but one that is nothing but a straw man and you know it. I'm disappointed in you that you would even try to make it and I'll explain why below.

The reason the OEM's didn't put BeOS on their PC's was not because they weren't making money off of selling PC's with the MS OS. The reason they didn't was because MS threatened to not let them sell an PC's with Windows on them if they did sell PC's with BeOS. MS basically threatened to run them out of business by denying them access to the marketplace if they installed BeOS. That's illegal and immoral business practices, especially when practiced by a company that has a monopoly on desktop computers. I'd think anyone with a sense of right and wrong would recognize it as completely wrong and denounce any business that engages in such a practice. For some reason, by the arguments you give, you seem to think such practices have little, if any, moral, legal, or business significance. I find that pretty incredible.

I also find it pretty incredible that you don't think being excluded from the marketplace was much of a barrier to BeOS being successful. I'll bet you would if someone did exactly the same thing to you, because you can have the worlds best business plan and you will fail if a much larger competitor successfully pressures all your outlets to to not sell your product. You'll hemorrhage money and file for bankruptcy. It's a guarantee.

So, tell me with a straight face that being locked out of the market place wouldn't ruin a business of yours even if you had a very fine business plan to start with.

 

**long post deleted**

Forget it. Keep seeing the issue through a fish-eye lens. When you feel unbiased enough to discuss the issue openly, using all points-of-view, then we'll talk. Until then, we'll agree to disagree.

 

Im curious as to when the actions listed in any of the above posts by any of the above mentioned companies became ANYTHING new in in the cesspool of ethics that is corporate america?

exclusivity contracts
anti competition
internal memos with strong language (Ooo thats new)
i mean come on, where is any of this new??

Thats the way things work in a capitalist country

 

Fortch,

If your position was valid you would have an easy time answering the scenario I gave you. You would think it was an absolutely valid, legal, and ethical business practice for a competitor of yours to deny you the opportunity to market your product where it could reach the masses, and that denying you market access couldn't be the fatal factor in taking down your business.

It's really very easy to answer. You either believe that a competitor should be able to legally crush you by denying you access to the market or you don't. Why the problem answering? Why accuse me of myopia when you won't answer a simple scenario?

Show me how a business can survive if it cannot get market visibility. You've been arguing right along here that what MS did wasn't fatal to Be, so explain how you would succeed when you couldn't market your product.

 

Here's some more info on this issue, and it specifically concerns BeOS. The article, the title of which is the title of this post, was written by Scott Hacker in 2001.

He shows exactly how MS crushed BeOS. You can find the entire article here. There is much more there than the two portions which I will post here.

The "Windows License" for hardware vendors, MS claims it is a trade secret. I wonder why. Anyone just happen to think it's because MS knows they would be convicted of abusing their monopoly?

 

I guess I have a very hard time understanding how anyone can just say "So?" when they see and basically acknowledge what has happened. I guess this comes from the idea that businesses have to screw over/rip off their customers to make money.

These practices mean that you, and I mean everyone personally, are getting ripped off. If someone has to cheat to compete, there is something wrong with their product, their goals, and their ethics. There is something deeply wrong with their attitudes towards their fellow man too. Anyone doing this basically has the attitude of a thief, only they do their stealing on a much larger scale. They don't rip us off one person at a time, they steal from all of us on an ongoing basis.

Who pays for their activities in the end? Every damn one of us. No one gets away from paying for it. We pay for it with inferior, overpriced products due to lack of open competition. We pay for it with ridiculous laws that stifle competition, stifle the ability of the little guy to enter the market and compete. We pay for it with the lack of innovation and quality in the products we use every day. We pay for it through the ability of the extremely large corporations ability to conspire and send our jobs out of the countries we live in. We pay for it through lower wage scales as a result of outsourcing. We also pay for it through the fact that the generations coming up look at the dishonesty as acceptable, and so the vicious circle feeds on itself.

The ways we pay for the things in Phoenix's post are incalculable. We all, as individuals, pay every day for these practices. They put many people into grinding poverty. The lack of opportunity pushes many others towards crime.

So what if the practices are commonplace? Even if a person doesn't value all things just, merciful, and honorable they should still fight these things for nothing more than their own self interest. Just accepting these practices is nothing more than quiet, personal acquiescence to being ripped off.

 

Im getting ripped off? you mean im being charged far more for things than they cost to produce? thats just economics

or are you saying im paying more for stuff than its worth? if it wasnt worth it i wouldnt buy it

so now we have gone from MS vs Iowa state (hardly a poor outfit) to how this practice causes people to live in poverty? I really have a hard time understanding where you pull some of this from freddy

I'm sorry mate but I'm just not buying it, people talk with there wallet, if they didnt think Office/Windows/Other products that cost money that you seem to have beef with was worth it they would not buy it, but they do. and continue to do so.

 

You're missing the overall point. Dishonest business practices set artificial, arbitrary, pricing structures. If you can keep competition out of the market you can charge more for your product than you could if you had a dozen competitors. That's plain and simple common sense. Will your pricing structure work in the artificial environment you produce that has no competition? Yes. People will think that's what things should cost because that is the only reality they know.

After Linux entered the server market what has happened to MS's effective pricing structure in having to compete with Linux? Their effective price, the one they actually sell at when competing for business has gone down significantly. If Linux hadn't entered the market place MS would still be charging the same, or more, than they did before Linux entered the marketplace. And what's more, people would be purchasing it and thinking that's just what things should cost them. (an artificial reality)

The same thing would happen on the desktop if competitors were out there undercutting MS's prices to get people to buy their product. That's what BeOS was aiming at. They were going to start giving their product away to the OEM's at first just to get their product on new machines to gain public awareness. That's exactly what I would have done too. If I knew I had a superior product I'd just give it away at first so people could see it, try it, compare it. Once demand arose, and it would for a superior product, then I could start actually charging the OEM's for their licenses and the OEM's would start doing single installs of my product. The competition would force MS to have lowered their prices. That's what MS feared, and that's why they crushed BeOS at startup.

I'm afraid you just do not realize that what you are accepting as a "real" marketplace is in effect an artificial environment created through the application of the unethical practices that you listed. It has had the effect of keeping prices higher than they should be.

Take a look at the hardware environment. There is more than one supplier for everything, and hardware prices have fallen, not stayed the same or risen. That's the result of competition. MS has none and so can price it's desktop product as high as it thinks people will possibly pay. People have nothing to gauge what the real value is, because there is nothing to compare it to, and thus think they are paying a "reasonable" price because that's what they are used to paying. But what they(you) are used to paying is an artificial construct, not upon the reality that would exist if MS had actually allowed open competition.

I'm amazed that a guy as smart as you are, and you are definitely one of the smarter guys around, cannot understand this.... This is very basic economics.

This happens every time dishonest practices are used in business practices. The market becomes artificial in many ways, and it is twisted to suit the needs of the few, not the public. Thus the public is ripped off on a daily basis and do not seem to realize it. Dishonesty costs all of us, all the time, in every purchase we make.

 

I will give an example of the lack of public awareness.

I ate breakfast the other day at a restaurant. I was sitting there reading the O'rielly book "Learning Bash". The restaurant owner, who also happens to wait tables, came by and saw what I was reading. She recognized that it was computer related, but that was it. She had no clue as to "bash" is. (This is a woman in her 60's. A grandmother.)

I explained to her what bash is, and that it's a part of Linux. She asked, "What's Linux?". I told her it's an alternative OS to Windows. She said she had never heard of it. She wasn't even aware that there are any alternatives to Windows. Then she said something that amazed me. She said she was absolutely bored with Windows.

I told her I would bring my laptop in and show her a Linux install, and this woman lit up like a Christmas tree. She got excited about seeing something new, something different.

I stopped by yesterday but she was busy during the time I could spend there. However, she made sure to tell me that she was very interested and wanted to see what I had. I told her I'd drop again and hopefully she would be free then.

Would she be checking out any alternatives to Windows if they were available in the places she knows to look: the store? Yup. Would she give a Windows competitor a chance? Yup.

See? This is a consumer cheated out of the opportunity to make a choice, and she's not alone. People simply don't know there are alternatives. MS has made sure are none in the marketplaces where everyday people will look to find choices.

 

Cheated? what because linux vendors cant get there act together and release a consumer related and viable distro? I think not
I recall a few years back linspire was purchasable at walmart, albiet i think most of the problems around that distro resulted from its blatent bastardisation of MS IP

I can hardly see how you can blame anyone for lack of consumer awareness
Unfortunatly I dont see that many Linux distros that are both consumer friendly and commercially viable, all the commercial outfits concentrate on there enterprise offerings and not the desktop

 

Yeah, you're being cheated.

Why do the commercial outfits concentrate on the enterprise level? Because of how MS locks them out of the desktop. The only reason Linux has stayed on the desktop is because it's free. Microsoft can't stop, at least not yet, people from installing it on their own. But even then they have to pay the MS tax because it's next to impossible to buy a computer without Windows pre-installed.

I just love how you completely ignore the fact that it's next to impossible for an average user to find an OS besides a MS one on a pre-built computer. You have to do a whole lot of research to find one, and you have to know that it exists and what you are looking for in the first place. The average citizen doesn't have a chance of finding an alternative. Why? Because MS has made it impossible for the OEM's to introduce other systems in a way that makes sense and is profitable for them. Every place the user goes to find a system all they find displayed are MS systems. Nothing else exists as far as they know, and that's the way MS planned things. They have crushed every startup that came along using their "trade secret".

Linux has nothing to do with the principles or issues at stake here. It's just another in the line of competitors that have arisen over the years. Fortunately Linux is not dependent upon showing a profit to survive. If it was, MS would have crushed it at its conception, and eliminated it as an option for anyone, just as they did with BeOS, Go, and a host of other competitors that were dependent on showing a profit to survive.

 

Actually mate your flat out wrong

'I' am most definatly not being cheated
I dont feel I pay too much for windows
I dont feel it's worth less than I pay
I would happily pay a bit more for it based on my usage pattern and benefits it affords me

I have so far not found another desktop OS capable of half of what windows does for ME (read: not for everyone)

I used BeOS
I used an Amiga for years
I used OS/2
I used Mac OS 8/9/X
I used as many linux flavours as I care to remember

to tell me I am being cheated is a tad arrogant if you ask me, your not really in a position to tell majority of users that they are being 'cheated' just because you feel that you are
I think YOUR being cheated, and i'm happy you are intelligent enough to know that! you obviously don't find the same value in some products as I do, and thats fair enough.

I think I will follow fortch and bail out of this thread until something a little more rounded comes of it, i've clearly made my point

 

...because Dell, HP, Toshiba, Sony, etc. have chosen to market computers with Windows over computers with Linux. Why? They sell more of them. It's their bread and butter. They simply build and market what sells. MS doesn't prevent them from creating or marketing Linux-based systems. You're right that they're hard to find... but they exist.

Similarly, CompUSA, BestBuy and Circuit City aren't going to waste (in their opinion) valuable shelf space for Linux-based PCs... for the same reasons that the computer manufacturers don't aggressively push their Linux-based systems. Everyone knows Windows, everyone has used Windows, and thus, the Windows PCs sell, so the stores display them and market them. I have no idea whether they've even tried to put Linux boxes out on the shelf; that's a decision made by their marketing gurus... not by Microsoft forcing them to keep Linux off the shelf.

Perhaps you should try convincing the manufacturers and storefront vendors to provide more exposure to Linux-based systems. I think it'd be great if they did. But if I personally had to make the decision whether to push Windows or Linux, regardless of how well they perform, I'd have to choose what currently sells the best... and that'd be the Windows-based systems.

Sure, you can present a valid argument that Windows only sells the best because there's no visible alternative. But, as stated above, that's not Microsoft's fault for being successful at getting their products visible. Phoenix is quite correct in that if Linux vendors could get their act together and aggressively market a distro, then Granny would know that there was even an alternative out there. We geeks know... but we look for stuff like that. If Linux vendors want Linux to be successful, and take over a share of the desktop market, they'll find ways to make Linux visible to the public. Right now, it's not. Can't throw the blame at Microsoft for that.