Journal: Microsoft: You Need Permission to Sell Our Software

I was surprised at the reaction to this article received. The article described Microsoft's efforts to block K-Mart's sale of Bluelight.com to United Online.

Many people posted that this was a troll or even FUD. They unfortunately missed several points.

Microsoft used its dominance in a field to force contract terms on K-Mart. When K-Mart attempted to sell a business unit to a United Online, a competitor to Microsoft's MSN, Microsoft attempted to block the sale through enforcement of those contract terms. No one can force Microsoft to transfer or sell any licenses to United Online in the event the sale went through. Therefore, Microsoft has the ability to render the business unit as worthless for sale, furthermore Microsoft could refuse to renew licenses at any time. In a case where a business is completely dependent on Microsoft products, Microsoft can easily destroy it.

There are certainly two issues here:
Issue 1 (The Big Picture Issue): Companies who spend capital on millions of dollars of software licenses are doing so without obtaining an asset in return. Software in this situation is leased and not purchased. Companies therefore need to understand how to correctly expense this software and also need to have a plan in place to react to the situation where software leases are not renewed by the manufacturer.

Issue 2 (The Microsoft Issue): When a company dominates a field controls on how it offers its products must be enacted. Without these controls the dominant company can use contract terms forced upon subservient companies to control or destroy these subservient companies. Comparisons of Microsoft licensing issues to those of other software vendors are irrelevant unless those software vendors also dominate their business sectors.