NetAction report takes MS to task

A day before a national meeting convenes to discuss Microsoft's (MSFT) business practices, a consumer rights group has released a scathing report that accuses the software giant of spending at least $4 billion in an attempt to dominate the Internet. Microsoft called the study "biased."

According to a white paper released today by NetAction, Microsoft is attempting to extend its PC operating system monopoly to software and content that will drive the Internet.

"Microsoft is using both its control of the desktop and its inroads into the server market to leverage control of emerging Internet standards and commerce," the report stated. "If unchecked, there is a very real possibility of Microsoft becoming an unprecedented financial and technological colossus bestriding more markets and industries than any monopolist has ever aspired to dominate."

Anyone who could control the Internet and the content passing over it could indeed yield awesome power. Recent earnings reports from electronic vendors such as Amazon.com (AMZN), Onsale (ONSL), and E*Trade (EGRP) show electronic sales increasing by more than 31 percent during the last quarter. Analysts predict that online delivery of goods and services will explode--reaching $35 billion by 2000, according to some.

Microsoft spokesman Mark Murry said he had not read the entire NetAction report, but took strong exception with its general outline. "We do not believe that any single company will ever represent more than a tiny fraction of the Internet," he said, adding that he questioned the motives of the group that issued the report.

"It's very clear that NetAction is working very closely with Microsoft's competitors, so we think most readers will take all of this with a healthy dose of salt," said Murray. "This is typical of what we've seen from NetAction in the past, where they selectively use data and apply a very biased, anti-Microsoft view point."

The report brings no new facts to light. Instead, it methodically catalogues the acquisitions and investments Microsoft has made over the last few years. From buyouts of Java developers Colusa and Dimension X to investments in television cable, video and audio streaming, and Web-site design, Microsoft's goal, the report alleges, is to "assure that companies that might have supported a broad range of different systems, including Microsoft competitors, have instead developed breakthrough technology in line with Microsoft's goals and strategies for dominance."

The report also cites Microsoft's alleged attempts to balkanize Java, Sun Microsystems' Internet programming language, as well as the software giant's attempts to use the rapid rise of NT in workstations to stamp out competition from Netscape for Web servers. It also criticizes Microsoft for "paying ISPs...to bundle Internet Explorer with their services."

The report comes a day before consumer rights advocate Ralph Nader convenes a national conference in Washington, D.C., to discuss the monopolistic implications of Microsoft's business practices. Speakers at the conference include two of Microsoft's fiercest competitors, Netscape Communications general counsel Roberta Katz and Sun's chief executive, Scott McNealy. Also scheduled to appear is longtime Microsoft critic Gary Reback.

A professional group known as the Association of Windows NT Systems Professionals opposes the conference and is planning a "town meeting" in the nation's capital to coincide with it.