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Be Sues Microsoft for Violations of Antitrust Laws
Posted by
timothy
on Tue Feb 19, 2002 05:35 PM
from the timing-timing dept.
from the timing-timing dept.
Eugenia writes: "While Be, Inc had the information for over 3 years that Microsoft 'through a series of illegal exclusionary and anticompetitive acts designed to maintain its monopoly in the Intel-compatible PC operating system market and created exclusive dealing arrangements with PC OEMs prohibiting the sale of PCs with multiple preinstalled operating systems' they filed a suit against Microsoft only today. Today Be employes a single person in a tiny office in Mountain View. Great ..."
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Be Sues Microsoft for Violations of Antitrust Laws
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Re:About 20-40 billion smackers? (Score:4, Interesting)
This would be compelling if it were truthful.
The reality is that people would like alternatives to using Microsoft, but Microsoft has done everything it can to prevent Dell, HP, Compaq and others from presenting options to their customers.
The other OSes aren't getting to play on a level playing field. BeOS was a very slick OS, it had all the features that most users would want and was very user-friendly. And it never had a chance, because people weren't exposed to it. They didn't have the marketing dollars to promote it to the average computer user and they couldn't get it on PCs made by the big PC manufacturers because Microsoft did everything they could to prevent it.
I'm sure that there are people who would still buy Windows if Dell offered BeOS computers -- but the number of people who would have chosen BeOS would probably surprise you -- had they ever been offered and promoted.
If you're technically apt enough to build your own computer, you can go with an alternative OS. But the customers who want to buy a premade computer from a major manufacturer don't get a choice. Many PC manufacturers have shown interest in having a product line that doesn't include Windows -- and they've been slapped down with exclusive licensing agreements and price dis-incentives from M$ for trying to offer non M$ products.
That's why M$ should be punished. Harshly.
Re:About 20-40 billion smackers? (Score:4, Informative)
Still nobody took Be up on it. Even adding a free operating system to their PC's would have incurred so many penalties from Microsoft that no PC vendor wanted to take the hit.
Re:About 20-40 billion smackers? (Score:4, Insightful)
Let me be the first to say that this is a pointless remark. Exposure, sure as h*ll can be free. More power to the companies that can make use of free exposure for their products.
But companies like Microsoft force feed it to you with rhetoric that causes the average consumer to become dizzy enough to buy their products for fear of the uncertain.
As a card carrying member of the 'John Q. Public Consumer Guild', I've wised up to the flashy and pushy advertisements for products. I've learned to look past all that and try to understand how the product really works. There will be more consumers like me in the near future. Pretty soon flashy advertising won't work anymore. Then Microsoft will have to stand on their own merits.
BeOS may have been a day late and dollar short, but they did set a precidence that all consumers may not be aware of now, but will be soon. Then you'll see future 'BeOS' getting a fair chance due to free exposure.
Maybe someday a new advertising concept of some sort will come out and will be licensed as GPL or BSD-like to offer the free chance these companies need on a fair playfield.
Re:a single employee? (Score:4, Funny)
One Employee? (Score:4, Funny)
Re:One Employee? (Score:5, Funny)
There's this going for it... (Score:5, Funny)
At least they won't have any problem demonstrating irreparable harm.
Very Fashionable (Score:3, Interesting)
Re:Very Fashionable (Score:4, Interesting)
Novell invented MS-DOS networking. If not for Novell, there would have been no usable networks in the Wintel world (here come the Vines flames!) and the Wintel sales juggernaut would have been slowed down quite a bit.
Long-timers can remember MS-Office 97 Service Pack 2, or, The Service Pack That Ate Novell. That innocuous SP broke all the Windows networking conventions (which Novell had invented!!) and rendered Netware uninstallable on W95 for about 4 months until a patch was developed. I am sure that Microsoft had no such intent when it released that patch. Very sure.We'll see.
sPh
Re:Very Fashionable (Score:4, Insightful)
Remember - it's not illegal if you're not a monopoly, and it's not illegal to be a monopoly. It's just that certain things *become* illegal when you're a legally defined monoply. Most monopolies like utilities (power, water, phone, cable), just kowtow to heavy regulation and limited profits to maintain their monopoly.
--
Evan
Why now? (Score:5, Insightful)
Sounds like you're wondering why they'd do so *now* of all times, when they can't do anything.
Easy: Nothing to lose. The company has nothing left. Normally it is unwise to sue MS. They'll just drag it on and you won't get a significant gain (i.e. Apple's suit), even if you do win. But now, the worst the spending can do is bankrupt them: which is basically where they stand now anyway. OTOH, the damages they could land could put Be back on its feet.
Sounds like the smartest option left to them.
Re:Why now? (Score:5, Interesting)
If they feel that the company is worth more being liquidated (which is typical with software companies, which Be has been for the last few years) as opposed to rebuilt, then they will make that decision and recover whatever they can. Since Be has sold it's assets to Palm and auctioned off eveyrthing else, I think that the debt holders have already been making the calls.
As far as a lawsuit goes, it seems to be a good idea. You lose and get $0 or you win and get $2 Billion of computers that were going to be put in public schools with WindowsME (wait.. different lawsuit).
The potential gains from a lawsuit will go to the debt holders. I would be surprised if the stockholders see any of it.
Since Be has already sold it's IP to Palm, there is 0% chance that they would ever go back into OS business and frankly, everybody else is gone.
The debt holders will reap the rewards of the lawsuit. This is how it is done. I do wonder who is paying for the attornies, since I doubt the debt holders would do that. It's probably a contigency case that somebody else already mentioned.
I worked at a distressed securities hedge fund in Manhattan for a few years, although, I mainly stuck to IT activities.
paying the venture folks (Score:3, Insightful)
Re:What a surprise... (Score:5, Interesting)
Be is one of the few companies that genuinely do have a case, me thinks. With browsers the situation is bit convoluted (no one ever made money selling browsers). With BeOS, Be had snowball's chance in hell getting h/w manufacturer's to pre-install the OS because of Microsoft's strong arm tactics. Consumers didn't get to choose... perhaps they wouldn't have wanted BeOS in any case, but MS didn't want to take a chance. Of course MS didn't just fight BeOS but all potential competitors... Be just happens to be the one that had closest match on intel hardware (for 'normal' consumers).
Oh and yes, these tactics were hardly "tiny little thing" that Microsoft "didn't even know it was doing"... the whole industry has known about this for years now... but big names (Dell, Gateway et al) have been too scared of Don Bill to publicly complain (and/or greedy and content with status quo... they just sell hardware, OS is just a tax they have to pay)
need to prove Intel/Microsoft collusion (Score:5, Insightful)
But Dell has been able to sell Linux (which apparently they dropped, but don't worry, HP is now selling them). And other PC companies have been able to do the same (albeit in limited numbers).
To prove that it was impossible for OEM's to sell PC's with alternate OS's, you would need to demonstrate some sort of collusion between Microsoft and Intel, making it difficult for developers to produce alternate OS's on Intel CPU's. That clearly has not happened. The x86 Intel platform certainly didn't hinder kernel development, and Intel has been relatively open about publishing specs.
Good luck Be. Truly, I feel your pain.
Robert Nagle Idiotprogrammer [idiotprogrammer.com]
Austin, Texas, idiotprogrammer, Technical writer
Re:need to prove Intel/Microsoft collusion (Score:5, Insightful)
The question wasn't whether anyone could have sold machines with non-MS OSs; clearly they could because some did. It's rather whether or not you could run a business exclusively selling machines with non-MS OSs. When the basic requirement to sell Windows pre-installed on your machines at all is to purchase a Windows license for every machine you sell regardless of whether or not it's actually installed, and when you're forbidden under the terms of the OEM agreement to sell machines with some other OS installed next to Windows, it simply does not make economic sense to offer more than one pre-installed OS. In that case, which OS are you going to choose? If you don't choose Windows, you're in a situation analagous to that of the liquor store owner who chooses not to sell Bud, but with a vengeance. Instead of locking out 50% of the market (or whatever Budweiser's market share is) you're locking out 99%. That's just foolish. It's a formula for going out of business. If it was a workable buisness model, VA Software would still be VA Linux.
Maybe, just maybe, if you're Dell or HP you have enough muscle to get MS to strike the offending clauses from its standard OEM contract. But for Joe's OEM and Bait Shop around the corner here, it would be impossible. To sell any other OS than Windows would be financial suicide.
Re:need to prove Intel/Microsoft collusion (Score:5, Interesting)
taco
Re:need to prove Intel/Microsoft collusion (Score:5, Interesting)
Microsoft's agreements with OEMs (the agreements themselves were trade secrets, by the way) forbad creating multiple-boot machines. Be's business strategy was to be a "helper OS": used for things that Be did best without losing access to Microsoft Apps. It's pretty much the same strategy Microsoft used in weaning people from DOS to Windows 3.0. Microsoft's OEM agreements prevented this kind of arrangement. Realistically, given the amount of software on the market, it also prevented desktop competition.
For an OEM, on a thin margin, that's pretty much like putting a gun to your head. It's also illegal as Hell for a monopolist to do.
Be is in a pretty good position, here, I think. Microsoft has already been established as a monopolist and the OEM agreements very clearly represented an illegal abuse of their monopoly power.
If I'm not mistaken, and I may be, this suit will be in a class of Federal suit whereby the loser pays. If so, Microsoft will be responsible for all legal fees if they lose.
I wouldn't be completly surprised if some enterprising law firm adds up the merits of this case and agrees to go for a big score here, matching MS blow for blow.
Re:need to prove Intel/Microsoft collusion (Score:4, Insightful)
No, they do it because if they didn't do it, they would be out of the PC OEM business, because Windows has a monopoly on the PC desktop market.
Silly example: if I was the only person on earth who could provide you with food, you would be free to "not deal with me at all", by starving, right? So therefore any contract I asked you to sign, no matter how draconian, would be a "mutual agreement between two consenting parties"?
No, it's a gun to the head, and anyone who tells you otherwise hadn't thought the situation through.
Re:need to prove Intel/Microsoft collusion (Score:4, Informative)
I used to work for a small OEM and yes, MS could hurt them too. This small OEM had bussiness sales and most of those companies wanted computers with windows. If our OEM could not provide them with it (ie if MS cut them off) then they would have gone to an OEM that could provide it.
I have the "Microsoft Windows NT Server and Windows NT Workstation OEM Preinstallation Kit" booklet right here in front of me. I'll quote you some of the more juicy bits:
"To comply with the terms of your OEM license agreement, you must conform to the requirements and restrictions described in the sections that follow."
"You must preinstall Windows NT using one of the two methods described in this book; you may not preinstall Windows NT using any other method."
"You must preinstall Windows NT on the hard drive of every computer that you ship to a user."
"You cannot ship only a compact disc containing the Windows NT operating system; Windows NT must also be preinstalled on the computer's hard drive."
"You can install ONLY the Windows NT 4.0 operating system on a computer. You cannot include an additional operating system (such as Windows NT 3.51, windows 95 or Windows 3.1) unless you have a seperate legal agreement with Microsoft."
There are some of the restrictions word for word. There are a bunch of other things like the computer has to boot directly into windows, which rules out lilo. You also can't modify/delete almost anything including the IE start or search pages.
As A Long Time BeOS User... (Score:4, Interesting)
Microsoft hit BeOS hard with the release of Windows Me. You see, BeOS PE needed a way to exit Windows without shutting down. This was possible in Win 95 and Win 98, but removed in Win Me.
Microsoft never gave a reason for this, and it is assumed that MS made this change to restrict other OSes from running along side of Windows.
Microsoft's strong-arm tactics in OEM licensing also hit Be hard. Many companies were going to start shipping BeOS machines, but they noticed a clause in their license that would require the purchase of a Windows license, even though Windows would not be used. This would be very costly, so the OEM BeOS idea failed.
Some have said that the size of Be will hurt them. I diagree. Think from the jury's point of view.
You see one large company against one man. That one man used to be a large company, but the other large company killed it.
It is just this kind of tale that will help Be the most in the courtroom.
Be vs. Me confusion (Score:4, Funny)
According to legal opinion in Redmond, "Lindows" may confuse consumers into thinking they're getting "Windows". So switching the first letter of your product name with that of another player is bad, right?
Well, "Be" only had two letters to begin with, and MS went and took one of them for their shiny new consumer OS! It's like the David and Bathsheba of the software world. Truly shocking.
Re:it was the boot loader (Score:4, Interesting)
Good. I'm glad. (Score:4, Interesting)
More to follow me thinks. (Score:4, Insightful)
Ode to my BeBox (Score:5, Funny)
and the blissful memories fade
visions of objects and mime-types
and the neat little scripts that i made
Hope for the future has past
from my elegant blue Beth
to various *n*x machines
what little hope I have left
For as much as gnu's full of bounty
and the empire looks to fall from it's hill
I remember a time that was simpler
only a BeBox my wish could fulfill
The Reason Why Be Didn't Make It (Score:3, Interesting)
The place for #3 in any market is always small, but obtainable. Linux now owns this space in the desktop OS market (with Apple being #2). Be failed to really develop themselves and build what is known as "mind share". How many people have even HEARD of Be? Not many.
As entertaining as it might be to generate conspiracy theories that somehow the big evil M$ "kept them down", there are other more down-to-earth reasons why Be has always been doomed.
Linux squashed Be. This is because Linux caught onto a market wave as it was happening (the open source movement).. Be tried to catch on to this as well but it was too little too late.
You knew it would happen. (Score:5, Informative)
They tried to get the DoJ to use this in the antitrust trial, but the DoJ said that their case was for illigal tying, not for exclusionary agreements. DoJ urged Be to go to trial separately.
When BeOS was purchased not too long ago, they reserved the right to sue MS based on the judgement of the court in the DoJ trial. Since it appears that the DoJ sold out, Be is finally doing what they should have done earlier.
Better late than never. Good luck, Be!
The Death of a Thousand Cuts Begins (Score:5, Interesting)
Re:Unpopular opinion follows (Score:5, Informative)
Signing exclusive agreements is NOT illegal!
This has been covered extensively in the antitrust decision (which, BTW, was upheld unanimously by 9 appelate judges). The exclusive agreements are illegal when you have a monopoly in that particular market. Microsoft has a monopoly in the OS market. (*) Therefore, the exclusive agreemets are illegal. End of story. You'd do well to actually get a clue before spouting nonsense.
(*) Oh, and before some moron decides to beat the "MS is not a monopoly" horse, I will not argue with that. I'll merely point out that the district judge and 9 appellate judges disagree with you. And they probably understand the laws a bit better than you.
BE is going to win or lose (Score:5, Insightful)
I think people are missing the brilliance of this tactic. Yes, Be is no more. It has ceased to Be. (haha) However, they are illustrating the WHOLE POINT of suing by being out of business.
What better way to illustrate a Monopoly that prohibited vendors from bundling competing products, therby limiting the market and competition to any Microsoft monopoly, than to be a competing product driven out of business by the same monopoly?
Now, as long as they can afford the legal fee's, they may actually have a chance at illsutrating WHY MS should be broken up, and WHY MS IS a monopoly in the truest sense of the word.
You could see this suit coming.... (Score:4, Informative)
Boot Loader lockout workaround (hint hint OEMs...) (Score:4, Interesting)
Then just put a little icon on the Linux desktops. "Tire of using a floppy to boot linux?" Curious users will click it, and it will Druid them right through installing a multiOS bootloader on their harddrive. Probably LILO or GRUB. And voila, you're done.
Of course, most OEMs aren't too bright when it comes to getting around license restrictions. The legal departments tend to jump onto the MS bandwagon pretty quickly since it's been their bread and butter for so long.
Re:Boot Loader lockout workaround (hint hint OEMs. (Score:4, Interesting)
The OEM Licensing agreement you are refering to is considered a trade secret. NOBODY but the legal teams at the OEMS are allowed to read it. Your idea assumes that the licensing agreement doesn't explicitly exclude the "loophole" you described.
Okay, giving your idea the benefit of the doubt, Microsoft's OEM licensing agreements are contingent on the whim of Microsoft. If an OEM, and I'm not talking about Joe OEM, I'm talking about the big names, Gateway, Compaq, Dell, even look at Microsoft crosseyed, Microsoft may yoink their OEM license agreement, which would subsequently mean immediate death to said OEM. They can't afford to sell computers if they aquire Windows at a retail price. This means that Microsoft has a lot of leverage outside of their exclusionary licensing agreement that does not leave a lot of room for OEMs to be "creative".
This topic is what Be's complaint [beincorporated.com] is about. When Compaq announced that they were going to market a Internet Applicance running Be's BeIA, well, read this quote from Be's complaint [beincorporated.com]:
Microsoft used monopoly illegaly (tried and convicted by the highest appeals court). Their control over OEMs extends past their written contracts.
Re:Boot Loader lockout workaround (hint hint OEMs. (Score:4, Informative)
And guess what? It didn't work.
The fact is, sticking in a floppy and a sheet of paper is vastly inferior to having the software appear in front of the user when they boot.
So, you can get around the letter of the license agreement with this tactic, but you can't get the same market leverage. And it's market leverage that pays the bills, not a "clever" legal trick.
The registers coverage (Score:3, Informative)
http://www.theregister.co.uk/content/4/21410.html [theregister.co.uk] The register's summary of this Byte article:
http://www.byte.com/documents/s=1115/byt20010824s
daniel teske
Had the information for 3 years... (Score:3, Insightful)
If you read the press statement, it's for "for the destruction of Be's business". It would have been fairly hard for Be to sue Microsoft for destruction of their business three years before Microsoft had finally destroyed their business.
When you're trying desperately to stay afloat and keep your shareholders on board, the last thing you do is publicly sue someone for having irreparably harmed you. Admitting that you're sunk simply guarantees you'll lose whatever remaining chances you have.
Kind of funny seeing this on /. (Score:5, Insightful)
"Be wasn't free, it wasn't open source. Who wants to use that crap anyway?" was the response of the
Now the slashdot masses want to complain that Microsoft killed Be?
This is hilarious.
Time to Gamble (Score:3, Interesting)
BG: Nextwave was the company who bought the spectrum many of the cellular companies are deploying new services on. Well they didn't pay their bills and the FCC took back the spectrum and reauctioned it. Nextwave sued the FCC for taking it away and it dragged through court for about three years and Nextwave won. Now their worth a TON of money because, the Cingulars and Verizon's of the world already have service. Guess who the FCC has to buy from to get the spectrum back.
Now let's apply this to the current situation. Be is currently worth about 4.4 million total right now in stock. Since the company doesn't really have any debt anymore roughly $1.5 million with most of that in current liabilities so the company is close to $3 million total.
Roughly 130 million computers (got this off a CNN article correct if wrong) were sold last year. Now watch this. Judge finds that Be was killed by Microsoft. Take the previous two years of sales will say 225 million PCs. Judge says 150 million (round ball) were shipped by OEMs and Be considering its size would not be have penetrated no more then 2% of the market. That means they could have put their OS on 3 million computers. Ok, let's now say Be charged $25 for each copy (below MS because they are trying to gain market share and they will be considered an inferior product to most of the marketplace). Now we have at least a verdict of $75 million or roughly a 17x the current stock price. Of course Be is a penny stock at 12 cents and they very well could lose the case but if you got money that you would take to Vegas it might be worth a shot.
BTW, we haven't even talked about the chance for punitive damages and if MS lost the case and decided to settle you could be looking at handsome pay day.
HT
Silly Slashdotters :-) (Score:3, Insightful)
Be, Inc did negotiate a preload deal, with a big vendor. The product actually did ship in limited quantities, after it got Microsoft'ed.
Be, Inc. and Hitachi created the Prius 1, and neat little desktop for the Japanese market. It was going to be a dual boot, Windows 98, BeOS box, with the 2 operating systems side by side. Before it shipped however, Microsoft evidently went in an played hardball, forcing the preload to be modified in such a way that the BeOS bootloader couldn't be displayed until after Windows was running, and even then it was buried in a menu in the programs folder of the start menu. Now considering that most users don't even know how to get to the calculator, this is pretty much a death knell. The deal fell apart a couple months later.
Now I'm not an insider to either company, but I've been around the industry and I've had enough exposure to make an educated guess about what happened. It probably went something like this.
1. Be makes press release announcing deal and is queitly nearing deals with at least one major US Vendor, probably Gateway or Compaq.
2. MS low level staffer tasked with watching the press wire sees the announcement and shuffles it into the channel for 'handling'
3. Hitachi and Be spend a month or so working out the technical details and prepare the machine for shipping.
4. The press release finally gets to the upper management at MS and the marketing and account relations machine goes into action. Considering Hitachi's size and volume in the the Pacific Rim, Steve Ballmer gets on a the phone with Hitachi's president and explains the 'hidden' costs of this preload deal. Namely no more discounts on MS Office, and discounted price of Windows just tripled. And oh yeah, if you reread your contract the we signed with you, Windows boot process cannot be alter in these methods. You are going to have to do it our way.
5. Hitachi cannot fight this in a market that is operating on increasingly tight margins.
6. MS sends out a private reminder of the preload agreement's fine print regarding bootloaders and dual booting non Windows Operating Systems. This effectively closes the US Vendor deals and seals Be's fate.
7. Be begins the 'Focus Shift', attempting to invade the only market left open to them.
8. Be discovers that the market that appeared open to them has a couple of entrenched players, and one entering the market that has assets and marketing to kill them.
9. Be runs low on cash and begins the liquidation process.
10. Part of the exit strategy is to liquidate all assets and IP, then using the entity, sue the snot out of MS.
11. This would pave the way for Palm or whomever to then invade the x86 market once again.
On a side note, as brilliant as Apple's Mac OS X is, all the furor about bringing to x86 presents the exact same stumbling blocks, and make it therefore a 'Bad Idea' (tm).
Andy Satori
dru@druware.com
So why prosecute murderers? (Score:3, Flamebait)
Re:get over it (Score:3, Insightful)
1)You can't blame Microsoft for running a business for profits
2)You can't blame vendors for wanting to sell to largest majority
3)MS is simply giving the consumers what they want
etc. etc.
LISTEN: It doesn't matter if you are anti-MS, a VB Developer or Linus himself - Microsoft is a monopoly. It "earned" it's position in the marketplace through illegal practices.
It broke the law. It didn't do this yesterday, or a couple days ago, it's been doing it for years, ever since it came to be. All of the above arguments for "get off Microsoft's back" are invalid by means of history. The current industry landscape wasn't anyone's choice - it's the result of a crime.
"vendors install MS because they know people will buy it"
No, vendors install MS because MS has a monopoly on the OS market, giving them LITTLE CHOICE. This isn't conspiracy theory, it's fact.
Let Be sue Microsoft. We all should be suing Microsoft. How many hours of productivity have we lost to operating system which stole the industry? How much money have we given Microsoft without having a choice of where to spend it?
This isn't a "Microsoft sucks" thing - it's a "Microsoft broke the law" thing. Just because the Bush administration asked the DOJ to back down doesn't mean it wasn't illegal. They were still found guilty.
Thanks to this, we have Windows. We have an OS based on business, not technology. We the government buying it droves, which not only makes our national security at risk, but has actually caused battleships to "crash" (Anyone else remember the "smartship" that had to be dragged back to dock thanks to NT?)
Nobody should be letting Microsoft off early, especially Windows users. Imagine how much better Windows would be if they had a little competition to keep them busy?
inky