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SPA meets over antitrust

Amid Microsoft's legal battle with the Justice Department, the trade group discusses fair play in the cutthroat software industry.

Amid Microsoft's legal battle with the Justice Department, an influential technology trade group today took the first step in defining what constitutes fair play in the cutthroat software industry.

During one of its regularly scheduled board meetings in Santa Clara, California, the Software Publishers Association (SPA) discussed behind closed doors the results of a survey on antitrust concerns sent to all of its domestic members. The 15-member board also heard the outcome of a talk the SPA's Government Affairs Committee had with Justice's lead antitrust attorney, Joel Klein, on Tuesday.

Then the board voted to complete a policy position paper within about four weeks, which will contain seven guiding principles on the issue of fair competition and antitrust. Per a special invitation to the meeting, Microsoft's director of government affairs, Jack Krumholtz, also was given a chance to speak on behalf of the software giant, which is a member of the group.

"It was our decision to invite Microsoft because they have been a dissenting opinion on SPA's involvement in areas of competition. We wanted to make sure board members heard that dissenting opinion directly," Ken Wasch, SPA's president, said today.

"During the meeting we asked the [SPA] Government Affairs Committee to complete work on the draft for principles of competition and submit them for review by the SPA board of directors," he added. "These principles will guide SPA's public policy activity in this area."

The SPA has been working hard to define its role in the current debate on fair competition in the industry. The topic is foremost in the minds of the SPA's 1,200 members, who have closely watched the government and Microsoft argue before a federal judge this week. The hearing centers on whether the software giant violated a court order by continuing to require computer makers to bundle its Internet Explorer browser with its Windows operating system.

The trade group is not expected to take an official stance on U.S. vs. Microsoft per se, but will amend its existing "principles" on competition that were presented to the Federal Trade Commission during a hearing two years ago. Any position the SPA takes will have to be carefully weighed with the impact it will have on its members, especially its largest one: Microsoft.

"We haven't approved any new positions. There were a series of principles that were discussed in the committee meeting that relate to issues of [PC-manufacturer] bundling, equal access to content, and promoting innovations," Wasch said.

At the FTC hearings two years ago, 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.

Now the SPA is discussing the issues at the heart of the Microsoft case. "One of the most important issues facing the industry is related to competition," Wasch said. "Microsoft is a key player in that discussion.

"We went to our members and said, 'What do you want to see us do on issues of competition?' But for a trade association that represents 1,200 members, which includes Microsoft as its larger member, there are enormous institutional risks inherent in getting involved in the competition fray," he added.

Klein apparently sparked a lively debate about competition during the group's government affairs committee meeting, which was attended by Microsoft, Novell, IBM, and about 25 representatives from other high-tech companies. The committee has a total of 18 members including Netscape Communications, Apple Computer, and Oracle Corporation.

The committee members, however, only reflect a small fraction of the SPA compared to the 164 members who responded to its private poll about antitrust issues.

"We have some members who are strongly urging the SPA to become an aggressive [mediator] on issues of competition and fair play," Wasch said. "We have other members who think that the SPA's mediation on the issue--regardless of the merits--would be institutional suicide."

A Microsoft spokesperson could not be reached for comment.

The SPA's dilemma reflects how many companies react to Microsoft.

Don Lobley, founder and chairman of one of the SPA's smaller members, the 11-person Arlington Software Corporation of Montreal, explained the predicament. His company developed a program targeted at government agencies for managing the procurement of equipment.

"Our application does nowhere near what Microsoft does now. But we see down the line that our [spreadsheet program] could be. Once that happens, Microsoft is going to be right there--and that scares us," Lobley said. "We spent two years and $4 million developing our software. Companies could hold off buying from us if they even heard a rumor that Microsoft was working on something similar," he added. "I'd like to see that issue of 'vaporware' addressed by the SPA."

Announcing "vaporware" means pitching a product months or years in advance to deter the market from buying a similar product that will be out sooner. Critics of the tactic say such companies often haven't started the research and development process when they announce that the product is on its way.

For a group with no regulatory power, the SPA's opinion will hold some weight. The group is expected to testify before the Senate Judiciary Committee when it holds hearings on issues of competition in the high-tech industry this year.

The SPA also will be waiting when the dust settles from the Justice Department's case.

"Klein is in the hot seat because of this current high-profile litigation against Microsoft, and we are the largest trade association representing the software industry," Wasch said. "Any resolution of the current litigation, or new antirust litigation that may be brought, is likely to affect the market dynamics of the computer software industry."