As the federal antitrust lawsuit against Microsoft barrels forward, a prominent high-tech trade association today released a list of competition principles that strike at the heart of the case and have angered the software giant.
The Software Publishers Association (SPA) hasn't officially responded to the Justice Department's accusations that Microsoft violated a 1995 consent decree by requiring computer makers to bundle its Internet Explorer browser as a condition of licensing its Windows 95 operating system. But the new guidelines echo some of its smaller members' and the government's complaints regarding Microsoft, as reported yesterday by CNET's NEWS.COM.
The SPA's guidelines come one day after New York State's attorney general said he and ten other state prosecutors subpoenaed Microsoft for evidence of potentially illegal bundling of Windows and Internet software. In addition, the Senate Judiciary Committee and regulatory agencies from Japan and the European Union also are looking into Microsoft's business practices. (See related story)
The SPA says it set out to develop the principles to define its role in the fair competition debate, which focuses on its largest member. The trade group has been sought for advice by lawmakers in the past, and it states that the new principles are intended to "guide government officials" in antitrust enforcement.
Hitting home with Microsoft foes, the SPA principles state: "Operating systems should not be used to unfairly favor its own products and services, or its favored partners, over those competing vendors. The operating system vendor should not include its own services or products as part of the operating system or user interface unless it gives the same ability to integrate products and services into the operating system to competing vendors."
The SPA went on to state that "the tying of certain applications to the sale of other applications has the effect of restraining competition among independent software vendors for the 'virtual shelf space' of [PC makers]." Dominant operating systems also should not "favor Internet content" that it owns or licenses, according to the guidelines.
The principles say that healthy competition is reliant on equal access to retail customers. On the other hand, pre-announcing products that do not exist yet, so-called vaporware, stifles competition.
Today, a handful of Microsoft supporters who also belong to the SPA called the group's action "inappropriate" and "divisive." Microsoft fired back yesterday, as well, calling the SPA's process "short-sighted" and the publication of the principles "self-destructive." Microsoft also quipped that it is undecided on whether it will renew its SPA membership, which expires in August.
Prior to developing the principles, the 1,200-member group surveyed its domestic members. Of the 164 that responded, anticompetitive activity was a top concern. As reported in January, the issue also took the spotlight at two scheduled meetings in Santa Clara, California. The SPA's Government Affairs Committee even met with Joel Klein, the Justice Department's lead attorney in the lawsuit against Microsoft.
"It's unfortunate that a handful of Microsoft's competitors are trying to use the SPA to drive a wedge into the software industry. This whole process has been such an obvious attack on Microsoft," said Mark Murray, a Microsoft spokesman.
"I think the primary impact of this is that the SPA will be discredited, and that it will weaken their ability to serve as a legitimate voice," he added.
At least four other members of the SPA--which are Microsoft developers or bundle its products--also spoke out against the principles today. Sheridan Software Systems of New York, ChiliSoft, Visio Corporation, and Mabry Software of Washington State signed a joint statement that called on the SPA to retract its principles and stick to neutral issues such as fighting software piracy. ChiliSoft also is withdrawing its membership, the developer application company said.
"The published principles are a thinly veiled slap at a single SPA member: Microsoft," Ted Johnson, executive vice president of Visio, said in a statement. "The principles presume behavior on the part of Microsoft which has not been proven and which I do not believe has occurred. The SPA should be representing the views of its membership on genuinely important industry issues like encryption and piracy, not positioning itself as judge and jury against one of its most successful members."
The SPA knew its principles would be searched for hidden meaning regarding the Microsoft case, but the group contends it wasn't targeting the company.
"The principles are not intended to prescribe remedies that might be applied by federal and state antitrust enforcers to any particular company or set of circumstances," SPA president Ken Wasch said in a statement. "Nor are these principles a call for general regulation of our industry. Rather, the principles reflect an industry consensus of how some business practices promote or impair strong competition."
Responding to the four companies' accusation that only a small group of members wanted the SPA to take a stance on competition issues, Kirk Loevner, chairman of the board at the SPA, contended that the principles represent a majority interest.
"The survey was sent out to the full [domestic] membership. It was a fair process to those who wanted to respond," Loevner, who is president of the Internet Shopping Network, said today. "We also have a Government Affairs committee and the board, which is elected by members--both were very involved in debating this issue and Microsoft was present."
For a group with no regulatory power, the SPA's opinion is expected to hold some weight. The group has been invited to testify before the Senate Judiciary Committee when it holds hearings on issues of competition in the high-tech industry this year.
Moreover, the new principles amend the organization's existing guidelines, which were presented to the Federal Trade Commission during a hearing two years ago. During the hearing, the SPA advised the government to carefully scrutinize companies that allegedly impede others from getting space on retail store shelves. The SPA also took the position that owners of dominant operating systems should release essential technical information to other developers. Both points remain in the new eight-point plan.
The remaining SPA competition principles include: