Evidence needed to snag Microsoft

WASHINGTON--If you want to catch Microsoft, you've got to squeal.

That was the advice given today by former Federal Trade Commissioner Christine Varney and Samuel Goodhope, special assistant to the attorney general for the state of Texas.

The current and former regulators took to the podium for the second half of a two-day conference examining the software giant's business practices headed by consumer advocate Ralph Nader.

Both Varney and Goodhope appealed to audience members to come forward with evidence of Microsoft's alleged anticompetitive practices, such as prejudicial pricing and intimidation of licensees.

"There is this great whispering campaign across the country of all the bad things Microsoft has done. We don't bring cases based on rumor and innuendo. If you believe Microsoft is violating the law, then come forward with the evidence," said Varney, who opened her speech this morning by admitting that Netscape, a Microsoft competitor and critic, is a client.

Varney, now at the Washington, D.C. law firm Hogan & Hartson, was an FTC commissioner at a time when it launched three investigations into Microsoft's business practices, none of which gained the quorum of votes needed to go forward. The Justice Department ultimately took over the investigations.

"There are a lot of allegations of Microsoft engaging in predatory behavior, but it's very different when a guy tells you stories at a cocktail party the night before, and you show up the next morning at 9:00 a.m. saying, 'I'm from the federal government.' He doesn't want to talk to you [anymore]," Varney said.

Goodhope, whose agency represents one of a handful of states that have launched antitrust investigations into Microsoft's tactcs, also weighed in with a request for help.

"We can't do it ourselves," Goodhope said. "Quite frankly, [software developers] complain a lot, but you've got to come forward."

Goodhope declined to discuss his agency's current investigation of Microsoft, but in his appeal to audience members, he hinted that the department was in need of more concrete evidence.

Texas and Massachusetts began their investigations late last year. Other states that have launched investigations include Connecticut, New York, California, and Oregon.

The pressure from the state agencies comes at a time when Microsoft faces an antitrust investigation by the Justice Department, which recently brought enforcement action against the software giant for alleged violations of a 1995 consent decree. Justice's actions center on Microsoft's licensing practices for its Windows operating system, specifically on allegations that it required computer makers to install the Internet Explorer Web browser.

One speaker at the conference, attorney Lloyd Constantine with Constantine and Partners in Washington, D.C., said no amount of evidence is likely to sink Microsoft's monopoly so long as U.S. antitrust laws aren't up to the job.

He said that the policies of the 12 years of the Reagan and Bush administrations had weakened the enforcement of "tying" and monopoly leveraging violations to the point that it was nearly impossible to prosecute those types of violations. The Department of Justice's current action alleges that Microsoft is improperly "tying" the sale of Internet Explorer to it monopoly product, Windows.

Moderating a panel of software developers at the conference, longtime Microsoft critic Audrie Krause of NetAction, a consumer rights group, said her choices as a consumer have shrunk as a result of Microsoft's practices and that political and legal action should be taken.

"Right now, as a consumer purchasing computers in the retail market, I have very little choice," she said. "My choice has diminished over time and I'm concerned it's going to disappear entirely if Microsoft isn't reigned in some way."

She added that NetAction needs to look at political action as well as other tools, such as civil lawsuits and a consumer class-action suit, to answer to those concerns.

NetAction earlier in the week released a scathing report that accused the software giant of spending at least $4 billion in an attempt to dominate the Internet by extending its PC operating system monopoly to Internet-related software and content. Microsoft called the study "biased."

Other speakers scheduled for today include Bryan Sparks, chief executive of Caldera.

Caldera brought a civil suit against Microsoft in 1996, shortly after it acquired Novell's DR-DOS operating system. The suit alleges that Microsoft engaged in anticompetitive tactics, but isn't likely to go to trial before 1998.

The suit involved a product that Caldera inherited the historical rights to, and the company alleges that Microsoft drove that product out of business through some of its bundling requirements for Microsoft DOS and Windows operating software.

Bryan Sparks, chief executive for Caldera, said his company does not license anything from Microsoft and does not rely on the software giant for any revenues.

"We're not beholden to Microsoft," Sparks said. "I don't care about [Microsoft]. That allows us to stand up. We're very different from a lot of companies that can't do this."

Nader is expected to discuss in his closing remarks what next steps should be taken in the fight against Microsoft. Nader is expected to present his remarks later this afternoon.

"We must expand the antitrust debate, so that it moves beyond a discussion of the contractual obligations of Microsoft deriving from the narrow Justice Department consent decree, and begin to think prospectively, with conduct rules relating to tying, bundling, and disclosure of information, about functionality of the operating system--the dominant one for the world--to competitors," Nader said in his statement.

He added that the debate also should focus on state attorney generals offices and congressional oversight committees.

"The government also should limit purchases of applications or operating systems to some maximum percent from a single company, in order to protect the existence and future of competition," Nader said.