Flavour Of The Month: Billed for controversies

Flavour Of The Month:Billed for controversies

Suits, patent-issues, acquisitions, open source, monopoly charges….if there’s any business-cum-tech tycoon who has bitten almost the complete buffet of controversies, it’s Bill Gates

Pratima Harigunani

Monday, July 07, 2008

There is a maxim Hollywood seems to believe in: create hits or create controversies. The rise of Bill Gates and the ubiquitous name that grew out of a garage has all the ingredients of a Hollywood flick.

He created enough hits that Redmond became synonymous with Microsoft; at times as he took sharp corners, he went wide off the track and hit the chicane. Either way, as the maxim goes, Gates always stayed in the limelight.

Toast to trust

The antitrust trial against Microsoft in the 1990s cemented Gates place in the supreme league of controversial powers. It almost vindicated the power that his desktop operating system now commands in the new economy era.

This was the beginning of a series of legal blows against Microsoft's anticompetitive practices. In this case, Gates stood against the United States Department of Justice (DOJ) and about 20 US states.

Through various cases and allegations that followed, Microsoft defended its position on the basis of constraints of emerging technologies that would throw up unknown threats. Nevertheless, Microsoft, on and off, kept hogging the spotlight in this anti-trust fight, and Gates almost personified and evangelized this fight as its leader.

There have been reported nuggets of Gates’s ‘blatant-or-brave’ attitude, as one finds in his opting out of testifying in one case in the court and then the Government using his video excerpts that were tagged as evasive and argumentative.

From the 1990s through the last decade to the recent months, the cloud of lawsuits on Microsoft and Gates around anti-trust, anti-competitive and monopolistic practices refuses to die. Microsoft continues to face monopoly-related legal proceedings.

The European Union's competition watchdog very recently slapped the company with a record $1.35 billion antitrust fine and the European Commission said that Microsoft is not living up to the terms of the 2004 antitrust order that compels the firm to make its products more interoperable with those made by rivals.

The fine was in addition to the more than $1 billion in penalties the EU originally imposed on Microsoft following the 2004 order.

In 2004, the US also fined Gates about $800,000, for violating antitrust regulations of a different nature altogether, due to his May 2002 acquisition of more than $50 million in voting stock in ICOS, a drug maker. Gates also faced Federal Trade Commission’s warnings in a similar case of his personal investment trust purchase in Republic Services Corp.

When rivals revolt

Gates not only had the regulators to thank for the trips to the courts, but also his contemporaries and competition who kept springing up in action and reaction citing Microsoft’s approach to business as anti-competitive, a rhetoric that eventually also acquired the tone of Microsoft being anti-open source.

Novell (now in a different equation with Microsoft after the two signed a deal in 2006) had sued Microsoft in 2004, accusing the software maker of "deliberately targeted and destroyed" its WordPerfect word processor and Quattro spreadsheet franchises because they are compatible with non-Windows operating systems.

The two firms later worked out a settlement. Gates not only had the products and technology as baits for lawsuits, but also employees and talent issues with its competition, that took to courts often.

Archrival Google, for instance, had a legal tussle with Microsoft over a research engineer Kai-Fu Lee. The issue sprung from an apparent violation of a non-compete-employment agreement he signed with Microsoft. Google countersued this.

Crossgain had a similar tale with Microsoft when its CEO Tod Nielsen, who had left Microsoft, became involved in a legal entangle as he joined this business launched by Microsoft alumnae with the aim to create a service that runs a company's big software programs over the Web.

Crossgain’s stance was that it chose to develop its service using products from Microsoft rivals Sun Microsystems Inc. and Oracle Corp, and hence it rubbed the previous employer the wrong way. And so, Crossgain's employees were accused of violating non-compete restrictions contained in their employment agreements with Microsoft, which apparently led to wiping of about 28 per cent of Crossgain's workforce.

Pat a patent

Competition seldom took a relief or let Bill take one whenever it came to technologies that were worth the buck. Suits concerning patents became a non-surprise gradually for the industry.

In 1997, for instance, Sun filed a lawsuit against Microsoft's release of Internet Explorer (IE) 4.0 and its 2.0 release of the SDK for Java (SDKJ), with the US District Court charging Microsoft with trademark infringement, false advertising, breach of contract, unfair competition, interference with prospective economic advantage, and inducing breach of contract.

Microsoft also settled an eight-year-old web browser plug-in patent dispute with Eolas after Microsoft was slapped with about $500 million patent infringement judgement. Talk of the classic Netscape (AOL) brawl, or the recent unsolicited Yahoo! acquisition bid.

Talk of the charges of deliberate non-interoperability on Microsoft’s products that have come from all quarters -- rivals, developer communities, open source armies or regulators.

Talk of class action suits for overcharged products. Or talk of the arm-twisting tactics with acquisitions to continue its market dominance.

The controversial halo around Gates was always there. But some excerpts from a reported piece of a speech delivered by Gates to the National Press Club, do remind us of the unperturbed and oft-called brazen celebrity spark that has seemed to take it all in stride: “It would have been the ultimate paradox if we hadn't put browser support into the operating system. And customers would have been the losers if we hadn't supported Internet standards fully in Windows.

It's unfortunate that the government is listening to the alliance of IBM, Sun, AOL and Oracle and ignoring all the ways our efforts to help consumers have moved forward. You really have to ask yourself the question: Who is the U.S. government representing -- a handful of competitors or the consumers? Continuing to evolve the Internet technologies in Windows is great for consumers and great for thousands of software companies. Ironically, that's why we find ourselves in court today. When we first included browsing in Windows -- way back with the very first release of Windows 95 to OEMs -- people didn't use it much.

People only started using our browser technologies when we won reviews. We kept improving our technologies, and many consumers decided our technology was better. That's the way competition is supposed to work. The government's case undermines the fundamental principle that has made our industry such an economic and consumer success story. Just like every other company, Microsoft must have the freedom to innovate and to improve our products.”

He also said…“When you look at the AOL-Netscape deal, it's hard to believe the government can still push their case with a straight face. The AOL deal shows the high tech market changing more quickly than any other industry on earth. Three of our biggest competitors have banded together to compete against Microsoft, and yet amazingly, the government is still trying to slow Microsoft down.

As we saw in the IBM case in the '70s and '80s, advances in the technology marketplace move a lot faster than government regulation and anti-trust lawsuits. A key point, which is central to this case, is whether browser technology should be free. This is one of the great ironies of this case -- the government is trying to increase the price consumers pay for browsing.

We recognized a long time ago -- before Netscape ever shipped its first browser -- that browsing is a natural part of an operating system. In fact, I shared that view with Jim Clark (of Netscape). By integrating, customers get a single, simple interface to access all types of information. And it makes it easy for software developers to tap the power of the Internet in their own applications. …. Why did AOL pay $4 billion for Netscape, even though Netscape's browser is free? What does this say about the government's claim that Netscape can't distribute its browser?

We might have thought that Gates was the one supposed to answer questions in the witness box, but he had his share of questions too. And even as he has stepped down, Gates will still hog the limelight.

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