Four states that were on Microsoft’s side on the matter of extending the U.S. antitrust agreement have switched sides and are now siding with the software giant’s opponents. New York, Maryland, Louisiana and Florida have joined the “California group” in supporting an extension on oversight of Microsoft (ironically, the pro-Microsoft group was referred to previously as the “New York group”).
Also, the European Commission and Microsoft have come to an agreement on Microsoft’s actions regaring the 2004 ruling on MS’s anticompetitive practices. Under the agreement, competitors will be able to access and use Microsoft’s interoperability information, royalties for that use will be reduced to merely $14,348, and royalties for use of product of such will be reduced to 0.4% (from 5.95%).
VNUNet talks about a patent reform law being considered in the U.S. Senate, and inventors who are protesting against it, saying it will stifle creativity. The bill, which Microsoft and Cisco are supporting due to their fights against patent trolls, is designed to limit the damages for patent infringement and make it easier to challenge patents that may have been issued erroneously.
We’ve said it before, patent trolls are ruining the industry, and something needs to be done. I don’t want to see real inventors lose out on what they deserve, but we need to make it so that a firm that sells no product and bought the patent from its original creator can’t sue those who are actually doing the innovating. Either you should need to have invented it yourself, or you should need to be using the patent, in order to be able to fight for it, and everyone else should go to hell.
The European Union’s Court of First Instance has rejected Microsoft’s appeal in the long-running European Commission antitrust trial. As a result, Microsoft will have to fulfill the entire 2004 verdict, including a $690 million fine, as well as 80% of the Commission’s legal fees. According to Joe Wilcox, Microsoft’s appeal options are limited and not likely to yield any real results. Microsoft will also have to disclose server protocol information to its competitors, and will likely be forced to extend disclosure concessions to U.S. governments as well.
The 2004 ruling is also the one that established Windows “N” versions, which ship without Windows Media Player and have not sold at all. EC commissioner Neelie Kroes, who has spearheaded this entire case, seems to think that the court’s ruling affirms the decision to require “N”, even though consumers voted with their wallets that the decision was a waste of time.
Anonymous Microsoft employees are venting to Wilcox, saying that the decision sets a dangerous precedent, discourages innovation, that the Commission was influenced by lobbying groups fronting for Microsoft’s competitors, and that the case is based on what Microsoft did ten years ago and has no reason to exist today.
Another one of those patent companies (that does nothing but sue companies that produce useful products over patents it owns and uses for nothing) has sued Microsoft and 18 other companies over the playlist functionality in media players like Windows Media Player. Premier International Associates just wrapped up a settlement on a suit with Apple (probably with a clause that relates to the new Microsoft suit), and they’ve moved onto bigger prey.
Interestingly, manyof the other defendents are computer makers, being sued for shipping computers with Media Player. Why exactly would they be responsible for anything in Windows? Shouldn’t they only be responsible for products created and sold by themselves?
I’ve been gone for three days and am catching up, so expect a bunch of quick, short posts.
Ars writes about how a federal judge has allowed Google to file a brief in Microsoft’s case to put an end to five year’s of government oversight. Google’s brief says that Microsoft’s antitrust decree should be extended because the company has failed to comply to Google’s satisfaction in regards to Windows Vista’s search functionality.
With the DoJ and 17 states’ attorneys siding with Microsoft on the matter, Google doesn’t seem to have much hope of pressing the issue in terms of Microsoft’s compliance with the consent decree. While Judge Kollar-Kotelly’s decision is largely procedural, it is another cog in the wheel of a dispute that will likely extend beyond the November expiration of complete DoJ oversight. Google has indicated in the past that it won’t give up the fight until it has run out of angles to pursue.
Microsoft has settled its patent dispute with Eolas, ending eight years of litigation. The dispute was over the patent that makes Eolas such a successful patent troll, one for invoking external applications in a web browser, one that Eolas won once over Microsoft with a $521 million judgement that was never fulfilled.
Microsoft altered Internet Explorer to avoid Eolas’ patent (which is why you have to click to activate an ActiveX) control, plus Microsoft may have found a way to beat Eolas back in May of this year. According to Wikipedia, Microsoft was awarded a patent with almost the same wording as Eolas’, prompting the Patent Office to open arguments that Microsoft owned Eolas’ patent.
The circumstances of the case almost guarantee Microsoft paid less to settle this than the $521 million 2003 judgement. I would not be surprised if Eolas, eager to avoid losing its big patent, settled for considerably less. Microsoft will only say it paid $60-72 a share, but no one knows how many shares exist.
Microsoft’s 2002 consent decree that settled the federal antitrust case against the company is expiring at the end of the year, and the federal government and various state governments are trying to decide what to do next.
The federal Justice Department and a number of states, including Maryland, Wisconsin, Ohio and Louisiana, call the 2002 decree a success and that it accomplished its goals. Other states, including California, Connecticut, Iowa, Kansas, Minnesota, Massachusetts and D.C., say that it was ineffective, and that it should be extended from a five-year decree to a ten-year one.
Their argument is that Microsoft still has high market share, which must mean it is still an evil monopoly.
Specifically, in the market at the heart of the antitrust case–that is, for Intel-compatible PC operating systems–Microsoft’s share has remained fairly constant, from 93 percent in 1991 to 92 percent in 2006, the filing said. In the Web browser arena, Redmond has seen its market share slip from 95 percent in 2002 to 85 percent in 2006, which the California group attorneys argue is “still well above monopoly levels.” And on the server operating system front, Microsoft has actually seen its market share climb from 55 percent in 2002 to 72 percent in 2006, the filing argues.
If you remember the antitrust case from when it was going on, you’ll know the “market share” argument, by itself, was never good enough, and that Microsoft was screwed on its business practice, not its sucess. The goal of the consent decree was to curb Microsoft’s evil ways, and it has succeeded more often than not. Microsoft has suffered the last five years, as:
The company was too afraid to develop Internet Explorer, and let Firefox swoop in and embaress them.
The company lost a lot of its fight, and let Mac OS X release version after version while it couldn’t get Vista out the door.
The company stayed out of the music player game and certain other industries it could have made an impact in, partially because it was afraid that would be termed a monopolistic practice.
The company has refrained from using lock-in in its products, even as its competitors are free to do so.
Microsoft has sat back and watched Google dominate swaths of the online marketplace, and did not engineer Windows Vista to illegally defeat Google.
Ask anyone at Microsoft if the government held them back these five years, and they’ll tell you how many ways the company has been hamstrung by it. Yes, Windows is still very, very popular, but Mac OS is growing like crazy, Apple and Google are juggernauts, Microsoft is struggling in a number of industries and many of Microsoft’s other competitors have been screwing up to much to even compete with them. Market share proves nothing.
Microsoft has told Xbux, a company which connects extreme sports figures connect with promoters and sponsors, to change its name or face its wrath. While Xbux contends that its name is different enough from Xbox and in a different industry, Microsoft is concerned that the brand could cause confusion.
I am going to have to side with Microsoft on this one. Xbux and Xbox run in the same circles, targeting a similar audience, albeit for different purposes. Xbux could wind up playing a part in video games, putting together video game sponsorships, which could cause a lot of confusion. It’s a terrible name, anyway (as is Xbox), and it’s not like they’ve been around long enough or are popular enough that they can’t afford to just change it.
I’d better tell my financial advisor to withdraw my investment in Pintendo Mii, a company that makes voodoo dolls.
InformationWeek is talking about Microsoft’s giving in to Google’s plea to the Justice Department and analysts who say Microsoft is now being hindered and its ability to innovate will suffer. Microsoft gave in due to fear of endless litigation, not because it was wrong (and despite that, Google is still demanding more), and that means Microsoft is now no longer able to produce the best product it can because of this fear.
Microsoft was a very bad company ten years ago, no one denies that, but right now it is a company struggling to make good software, with tens of thousands of jobs and billions of dollars of the economy resting on it. Microsoft does produce good software, no doubt about that, but Google has now forced the company to pull back on a feature that improves its operating system because Microsoft must apparently ensure that its competitors are able to innovate.
It’s a bad precedent, not just for Microsoft, but for the entire software industry. It says that Microsoft can’t innovate if it stops other companies from competing of competitively innovating, that Microsoft can’t add new features to Windows if similar products exist elsewhere. It means Microsoft can’t fix problems in their operating system if utility makers have fixed them, even if Microsoft does a better job. It means Microsoft can’t add features that Mac OS X has, if they already exist in any other company’s product line.
It’s a shame, but Microsoft is held to a different standard. At what point do the sins of the past stop hurting Microsoft like this? Will anyone in the federal government come out and fight for Microsoft? Probably not. Microsoft will just have to work as hard as it can, then cower in fear everytime a Google comes out and does this.
Does anyone think this is good for the industry?
Keith Hylton, professor of law at Boston University and author of a textbook on antitrust law, sees Microsoft’s decision to cooperate primarily as a calculated compromise to avoid costly litigation. “Google is a deep-pocketed firm and is capable of going into court and sticking it out as long as Microsoft is willing to keep litigating,” he said. “And there are still a few state attorneys general who want to bring a case, too.”
While a compromise may benefit Microsoft in the short term, “there’s a long-term cost,” Hylton said. “Microsoft’s Vista search function is an improvement on its own product. And if you say to a dominant firm like Microsoft, when you make an improvement to your product, you have to now protect the interests of rival firms, that’s going to reduce the incentives to make those improvements.”
“Traditional antitrust law hasn’t imposed a duty on firms to protect their rivals when they innovate on their own products,” said Hylton, acknowledging that what a company calls “innovation” may really be anticompetitive behavior.
Information Week has an article on the ongoing fight over H-1B visas, which allow foreign workers to take jobs in the U.S.. At issue is that companies like Microsoft, which rely heavily on these workers due to a shortage of skilled tech workers in this country, can’t get enough visas due to a cap imposed by an illegal immigrant-paranoid federal government. In fact, the article reveals, almost half of Microsoft’s entire U.S.workforce is made up of visa or green card workers!
Ccongress is working to reform the system, which caps H-1B visas too low, so low that enough applications are received on the first day of the fiscal year to fill all the slots. The bill that Congress is currently debating would raise the cap from 65,000 to 115,000, which would only extend the application rush from one day to two. Under an earlier plan, the cap would have been raised, but skilled workers with degrees from U.S. universities would be exempt from the cap, and 20,000 skilled workers with foreign degrees would get visas, in addition.
The new system would also take the emphasis away from companies telling the government which workers they value the most, to a beuracratic agency using a point system to determine who is most deserving. The point system could wind up valuing unskilled workers with close family ties over highly skilled workers, software engineers competing with cab drivers.
The biggest complaint about H-1B visas is companies that bring people here just to hire them back out to U.S. clients at below-market wages. “If there’s abuse or fraud, let’s go over that, let’s target those actions to employers abusing the system or engaging in fraud,” says Krumholtz. “Why apply those restrictions to legitimate employers?” Hoffman says those enforcement changes could make H-1B hiring too costly, and that would drive U.S. companies to do exactly what Americans don’t want: to send work offshore rather than bring people here to do the work.
Other proposed restrictions include requiring that an H-1B visa applicant’s educational degree matches the job. So an individual applying for a U.S-based job as a software engineer would need a software engineering degree. “What if that person has a Ph.D. in mathematics?” asks Krumholtz.
It’s ridiculous that companies like Microsoft and Google (see an earlier InsideGoogle article) should be lumped into a debate meant to curb the flood of illegal immigrants. There needs to be a seperate system for large tech companies suffering from a lack of skilled engineers, since it is a known problem, that allows them to hire at will seperate from any caps. That would end the debate and solve most of the problem.
The Federal Trade Commission is running a probe of Microsoft’s six billion dollar purchase of online ad company aQuantive, saying it is part of the normal regulatory process. They are also investigating Yahoo’s $680 million deal for Right Media, and have already been investigating Google’s DoubleClick deal, all of which makes sense. After all, with numbers that high, you expect them to at least take a look and make sure the market is being protected.
Late last month, the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) sent a joint letter to the FTC and the U.S. Department of Justice requesting that these types of deals be investigated.
It’s strange how all of a sudden mega-billion dollar deals are happening; there’s a reason for it, all starting with the DoubleClick negotiations, but it’s worrying the rest of the ad industry. In some industries, there’s massive consolidation over a number of years, changing an open industry into a clash of the titans, with little room for smaller players. Witness what happened with almost every content industry.
The ad agencies, of which there are tons, are worried that Microsoft, Yahoo and Google, and anyone else who wants a big chunk of the online ad market, will eventually buy a big regular ad agency, starting a tidal wave of acquisitions, mergers and consolidation that changes the entire industry and compresses it in a way nobody wants.
Google’s complaint to the Justice Department regarding Windows Vista’s search feature has resulted in a victory for them as Microsoft capitulates. Microsoft, seeking to avoid any more antitrust litigation, announced it would be changing the way Vista search works in Vista’s first service pack, letting users and computer manufacturers choose desktop search providers, and if they chose one other than Microsoft’s, shut off Vista’s own search indexing.
Under the changes, if users choose a desktop search other than Vista’s, the Start Menu and system search features would be powered by that search program, not Microsoft’s. In addition, search fields within Windows Explorer would still be powered by Vista to search the current folder, but would include a button linking to the desktop search provider for wider and more advanced search.
Google Desktop does not currently use the Vista Start Menu, so it would either have to be programmed to display search results in the Start Menu, or typing in there would launch a web browser window in order to show search results. If Google does not go with the first example, most Vista users would argue that launching a browser is a degradation of the feature as it exists in the regular unaltered version of Vista.
In addition, Google pays PC makers to pre-install Google Desktop. Google most famously paid Dell a billion dollars to pre-install Google Desktop, which means all Dell users would get a version of Vista with different features than those advertised by Microsoft, and in some ways, less elegant implementations.
This is the price you pay for being evil in the 1990s. Microsoft is afraid of going through what happened with its earlier antitrust battles, which ultimately came thisclose to splitting up the company, that it cowers at the idea of future ones. There are the battles Microsoft doesn’t have the stomach to fight.
Luckily, most users will get Vista as intended, although many will be saddled with a very different experience, especially Dell customers. Still, PC makers have conditioned their users to be used to getting shafted with “craplets”, so they probably won’t notice the difference. If Google thinks this change is going to be enough to get Google Desktop to beat Windows Sidebar and Vista’s search, they haven’t been paying attention to their users.
Microsoft has filed suit against Immersion, the company with all the force feedback patents, saying that Immersion’s deal with Sony violates Microsoft’s settlement with them in 2003. Immersion had sued everybody using vibrating game controllers in 2002, in order to make money off its patent, and Microsoft had settled for $26 million the next year, but Microsoft’s agreement included a clause that if Immersion settled with Sony, Microsoft would get a huge payment.
“In particular, it provides that if Immersion settles the Sony Lawsuit … for an amount up to $100,000,000, Immersion shall pay Microsoft the sum of $15,000,000. If Immersion settles the Sony Lawsuit for an amount between $100,000,000 and $150,000,000, Immersion shall pay Microsoft an additional amount equal to 25% of the amount of the settlement in excess of $100,000,000. If Immersion Settles the Sony Lawsuit for an amount in excess of $150,000,000, Immersion shall pay Microsoft an additional amount equal to 17.5% of the amount of the settlement in excess of $150,000,000.”
Here’s where the new dispute arises: On March 1, nearly four years after the Microsoft settlement, Sony and Immersion announced that they had “agreed to conclude their patent litigation at the U.S. Court of Appeals for the Federal Circuit and have entered into a new business agreement to explore the inclusion of Immersion technology in PlayStation format products.”
According to the text of the agreement, filed by Immersion with the SEC, Sony agreed to pay $22.5 million under the deal. Microsoft’s suit cites an additional option for non-PlayStation games that, if exercised, would require Sony to pay another $10 million, plus a royalty of 25 cents for each game sold. Also, Immersion’s SEC filings say it received “funds totaling $97.3 million in satisfaction of the judgment” against Sony in the case, plus interest and other costs.
So, Immersion should have had to pay Microsoft maybe $27.5 million, plus about six cents per future game sold. As a way of weaseling out of losing all that money, Immersion called their settlement with Sony a “business agreement”, the sort of lie that companies like Microsoft don’t get fooled by. Microsoft’s burden of proof in this lawsuit will come down to proving that the “business agreement” was a settlement of the lawsuit, and that shouldn’t be too hard.
It’s no secret that the explosion three years ago of desktop search applications was due to Microsoft’s development and delay of WinFS, the file system designed for Longhorn that would enable, among other things, instant searching of the hard drive. Microsoft announced this revolutionary new file system, Apple announced Spotlight. Then, when Longhorn was massively delayed, everybody and his grandmother announced a desktop search program. Yahoo did it, Ask did it, Google Desktop did it, even Microsoft’s own MSN Search did it.
All of which makes it hypocritical that Google is now pushing the Justice Department with a complaint that Vista’s desktop search discourages the use of Google’s. The Bush administration asked the Justice Department to reject the complaint, which seems to have encouraged several states to consider legal action (great work, idiots).
Bradford L. Smith, the general counsel at Microsoft, said that the company was unaware of Mr. Barnettâ€™s memo. He said that Microsoft had not violated the consent decree and that it had already made modifications to Vista in response to concerns raised by Google and other companies.
He said that the new operating system was carefully designed to work well with rival software products and that an independent technical committee that works for the Justice Department and the states had spent years examining Vista for possible anticompetitive problems before it went on sale.
He said that even though the consent decree did not oblige Microsoft to make changes to Vista in response to Googleâ€™s complaint, Microsoft lawyers and engineers had been working closely with both state and federal officials in recent days in search of an accommodation.
Google’s complaint is that Windows Vista’s indexing service cannot be turned off, and that running Google Desktop Search and Vista at the same time is prohibitive to users, which discourages people from using the software. Google wants Microsoft to make it possible to turn off Vista’s search feature. The problem is:
Vista’s search provides innovative operating system features that Google cannot replace, including instant search in folders and the start menu
Google pays well over a billion dollars (yeah, I know!) to make computer manufacturers pre-install Google Desktop. This means that on those computers (including all Dells), Windows Vista would come with features disabled. This is more than just choosing between Word or WordPerfect, this is like turning off the clock because your TV also has a clock, but not even realizing your clock also has a radio.
Google created its software to take advantage of a delay. They knew when they created it that Vista was coming. They knew this was going to happen. They also knowingly copied features Microsoft had already unveiled. If anything, Microsoft could sue them!
Google created their software to fix what was essentially a bug or limitation of Windows XP. Is Microsoft not allowed to fix their own bugs? Of course not.
The point is, Google doesn’t have much of a case, but Microsoft is pretty unpopular with the courts, so they could lose anyway. And the Bush Administration isn’t doing them any favors with their “support”.
(via Greg Linden)
One company, Media Rights Technologies, is trying to drum up some publicity for itself by filing a Cease & Desist order against Microsoft, Apple, Adobe, and Real, ordering the companies to stop producing little things like Windows Vista, the iPod, iTunes, Adobe Flash and RealPlayer. MRT claims that the DMCA’s clause against products designed to infringe on DRM should also apply to products that do not have sufficient DRM, and that since those companies aren’t use MRT’s copy protection software, they should not be allowed to sell their products at all.
It’s such a ridiculous claim, that I haven’t seen anyone actually coming out in support of them. The DMCA doesn’t want software to circumvent DRM, and these products honor that by only dealing with stuff that is not copy protected, or stuff that is licensed with their DRM. MRT is arguing that stuff that doesn’t have DRM should be protected anyway! Crazy people. They just want to get their name in the media, and they’ve certainly succeeded at that.
A judge approved a February ruling against Microsoft, ordering the company to pay $1.53 billion to Alcatel-Lucent to end a degital music patent lawsuit. A jury had decided that Windows Media Player infringed on Lucent’s patents, and the judge just decided that Microsoft has to pay it. Microsoft has a hearing on June 20 to get this week’s Supreme Court ruling to get the judgement to only apply to U.S. sales of Windows, which would probably knock over $800 million off the judgement.
Another patent lawsuit against Microsoft by Lucent starts May 21.
In 2003, Lucent filed 15 patent claims against Gateway and Dell for technology developed by Bell Labs, its research arm.
In April 2003, Microsoft added itself to the list of defendants, saying the patents were closely tied to its Windows operating system.
A judge threw out two of the 2003 patent claims and scheduled six separate trials to consider the remaining disputes. The PC makers are still defendants.
In the latest trial, Microsoft disputed that Alcatel-Lucentâ€™s patents govern its MP3 encoding and decoding tools, and said it licensed the MP3 software used by its Windows Media Player from Fraunhofer-Gesellschaft, a German company.
A lawsuit over two patents for computer user-interface technology brought by Lucent against Microsoft, Dell and Gateway, is due to go to trial May 21, Ambrus said.
The United States Supreme Court yesterday, in the case of Microsoft Corp. v. AT&T Corp, ruled in favor of Microsoft, that Microsoft did not violate patent law by exporting Windows, which contains technology in an AT&T digital encoding patent, to foreign countries.
The law says that patented products can be shipped and sold overseas, but their components cannot be sent to foreign countries to be assembled there. AT&T argued that because Microsoft ships a master disk to OEM computer makers, which is then installed on computer systems, it was assembling the product. Microsoft argued that software code is intangible information, and thus cannot be considered a “component”.
The Court ruled in favor of Microsoft, determining that only a copy of Windows, not the operating system itself, can infringe as a “component”. Also, only installed copies of Windows can infringe, and only once installed they could be considered “components”, and the physical CD-ROM components are not components of the final computers (since they are removed after installation, and leave no physical “components” in the machine).
In other words, they are saying that only physical copies of software, not software code, would be considered exported and then infringing, and that is not the case here. Microsoft ships the CDs, not the code, and thus no component of theirs is a component in the computer. In the end, software is like blueprints or schematics, and thus not infringing component, but rather instructions on how to do something.
Justice Ginsburg delivered the majority opinion, which you can read here. Justice Stevens dissented, saying that software code caused infringing actions to occur, thus making Microsoft liable. Justice Roberts stayed out of it.
The AP says the decision could save Microsoft billions of dollars because of the way it interprets patent laws with regard to software. As Todd Bishop explains, 42 of 43 patent cases Microsoft is currently involved in deal with products sold outside the United States, so this ruling saves them from about 60% of their potential liability.
As a reminder, the issue was whether the company should have been required to pay U.S. patent royalties to AT&T on copies of Windows installed and sold outside the United States. Out of about 45 patent cases pending against Microsoft, about 42 or 43 of them claim damages for products replicated outside the country, Smith said. Here’s how he explained the situation:
“It’s a decision of obvious importance to Microsoft. Sixty percent, roughly, of our software is distributed outside the United States. Virtually everyone who sues us for patent infringement has been claiming the past few years damages on the basis of worldwide distribution. These were phenomena that were important in both the large verdicts, for example, in the Eolas case and the Alcatel-Lucent case. The decision from the Supreme Court … should effectively reduce the patent liability exposure that we face in these and other cases by something on the order of 60 percent. That obviously adds up to quite a large dollar number when you do the math involved.”