A New Thorn for Microsoft

By Peter Galli  |  Posted 2001-10-08 Print this article Print

Advertising campaign takes aim at Novell; Utah company files suit.

Microsoft Corp.s latest legal battle—fighting a misleading advertising suit filed by Novell Inc.—could have a negative effect on the outcome of its antitrust case with the Department of Justice.

Novell last week filed a lawsuit in U.S. District Court in Utah, accusing Microsoft of false and misleading advertising designed to create fear and uncertainty among Novell users and to discourage future customers from doing business with Novell, in Provo, Utah.

"These latest actions indicate Microsofts continued arrogance and complete disregard of the courts findings of its illegal anti-competitive behavior thus far," said John Soma, a law professor at the University of Denver, who worked on the IBM antitrust case for the Justice Department in the 1970s.

"If a negotiated settlement is not reached, the government can introduce Novells charges in the remedy hearings before Judge [Colleen] Kollar-Kotelly as evidence of the need for strong behavioral remedies against the company to prevent its continued violation of antitrust law," Soma said.

Kollar-Kotelly has left her options open regarding the remedy, according to Soma, a sign that a court-imposed breakup of the company is not impossible, though unlikely. She has rejected a Microsoft request to narrow the scope of possible remedies and said she has "large discretion" to design a remedy.

Dana Hayter, a lawyer with Fenwick & West LLP, in San Francisco, and formerly with the Justice Department, agreed, saying that claims of false advertising and unfair competition could be viewed as exclusionary acts that would support monopolization charges. Hayter agreed that a breakup is not impossible.

The latest brouhaha involves a Microsoft ad campaign last month that took aim at Novells NetWare network operating system, which competes with Microsofts Active Directory.

As part of the campaign, Microsoft sent Novell customers across the country a container shaped like a breakfast cereal box. But in place of the name of a cereal, the box read: "Microsoft Server Crunch." Also on the box were numerous statements questioning the expiration date of the NetWare platform and claiming that "Novell is shifting its focus from software development to consultancy services."

Another statement on the box read: "Youre left with a server platform without the full support of its manufacturer. Which means increasing costs as it rapidly becomes obsolete, forcing you to implement time-consuming retrofits."

Microsoft, of Redmond, Wash., has not admitted any wrongdoing, but spokesman Jim Desler said the company has already tried to address the concerns by sending a clarification letter to all those who received the initial package. "We regret any inconvenience to these customers," Desler said.

Some Novell and Microsoft customers said the move exposes Microsofts concerns about the threat of NetWare 6, which was released early last month.

"We have switched all of our file servers from Novell to Microsoft, and we all concur that Novell has a far superior product," said a network manager in Los Angeles, who manages 500 nodes of Windows NT/Windows 2000 desktops and numerous NT servers. "There are lots of annoyances and problems with Active Directory."

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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