Microsoft quits trade group

Embittered over a decision by the Software and Information Industry Association (SIIA) to side with the government in the antitrust trial and other issues, Microsoft quit the group, effective today. Bob Herbold, the software maker's chief operating officer, also resigned his board position.

In a controversial move last month, SIIA filed a "friend of court" brief on behalf of the government--and, therefore, opposing Microsoft. Sources close to the trade group said that of the 19 board members, 10 abstained from voting, seven voted for submitting the brief and two others--including Herbold--opposed the action.

In a letter from Herbold to SIIA president Ken Wasch, the COO wrote Microsoft believes "SIIA is no longer playing an effective leadership role on the issues where the software and information industries share a united interest."

SIIA's "lack of support for the industry's common needs" compelled "Microsoft to focus our support on other organizations that we believe are more effective," Herbold wrote.

Microsoft instead will bolster its relationship with other Washington-based trade groups, such as the Information Technology Association of America, Computing Technology Industry Association and Business Software Alliance. Microsoft has a longstanding relationship with the latter group fighting software piracy.

"All of these associations and coalitions focus on the common interests of their members and apply themselves toward their policy goals in a sustained way and with accountability to and participation from their respective members," Herbold wrote. "We think that their efforts get results and are good investments."

Microsoft has been a SIIA member for 14 years. The trade group has 1,200 members.

Wasch said the "development was not unexpected," given that other than the antitrust case, the software maker had "withdrawn from participating in SIIA's core services."

In his letter, Herbold took the position that SIIA, and not Microsoft, had been unresponsive. Herbold said that since joining the group's board a year ago, he had encouraged the organization to focus on matters important to all members.

"But a year later, it appears to me that the organization is both in a weaker position than ever before and shows no sign of addressing these fundamental needs," Herbold wrote.

Had Microsoft not pulled out, its membership would have been up for renewal in September.

Wasch likened Microsoft's tactics to a "schoolyard bully. Since the SIIA board of directors refused to play by Microsoft's rules, Microsoft has, in effect, taken its ball and gone home."

While Herbold did not specifically refer to the antitrust case, Microsoft spokesperson Jim Cullinan later made the software maker's position clear.

"SIIA has clearly been distracted by attacking one of its members and focusing on the antitrust trial," he said. "With membership dwindling, attendance at their events drastically going down and companies like Intel leaving the SIIA, clearly they are not providing leadership."

"Our relationship with Microsoft is a complicated one, much like the relationship between the United States and China," Wasch said. "We have disagreements on important issues, but we were disengaged on other issues. They obviously decided this one issue overshadowed everything else."

Wasch said Microsoft paid maximum dues of $125,000 a year. SIIA's yearly budget is $8 million.

The drama unfolding around SIIA may be repeated as the antitrust case reaches its final stages. While settlement negotiations continue in Chicago, U.S. District Judge Thomas Penfield Jackson is drafting his ruling, which many legal experts predict will go against Microsoft.

Following the ruling, which could come at any time, the judge will hold hearings to decide how to address Microsoft's alleged misbehavior. Those hearings could polarize high-tech companies either to oppose or support breaking up Microsoft. The government is expected to ask the judge to breakup Microsoft, depending on how many counts he rules against the software maker.