Microsoft Back on Attack

Confident of court win, company steps up bundling efforts, Linux offensive

The kinder, gentler face that Microsoft Corp. put on after last years landmark court decision to split up the company seems to have all but disappeared, as the company has stepped up its software bundling efforts and its campaign against Linux.

The latest signs of the Microsoft of old can be seen in the aggressive negotiations the company is conducting with AOL Time Warner Inc. to bundle the AOL online service client with the forthcoming Windows XP operating system. Intensifying the conflict, Microsoft last week announced it will include its real-time communications technology, Windows Messenger, in Windows XP. While Windows Messenger goes far beyond pure instant messaging, it does in some ways take direct aim at rival AOL.

These latest actions seemed to indicate that the Redmond, Wash., company is confident the imminent ruling by the U.S. Court of Appeals will go in its favor.

"This more confident and assertive Microsoft and its aggressive rollout of new product development plans reveals a high level of confidence within the firm, that it will be completely vindicated on the issue of integrating new features into existing products when the Court of Appeals for the District of Columbia Circuit issues its opinion," said an antitrust expert and law professor, who requested anonymity.

In addition to its aggressive negotiating tactics, the software giant is trying to force competitors such as AOL to back off on the legal front. An AOL source close to the negotiations said Microsoft is insisting that AOL agree to cease all current, pending or future legal claims for the AOL bundling deal to go forward.

According to sources, AOL is balking at this and continues to retain the option of pursuing legal action against Microsoft on antitrust grounds if the two parties cannot agree otherwise. Microsoft spokesman Jim Cullinan declined to discuss the negotiations but did say it was "quite reasonable" for Microsoft to expect a company whose products might be bundled into Windows XP to agree not to litigate against that very product. AOL has also been aggressively courting the state attorneys general who were part of the antitrust action currently under review and drawing attention to Microsofts .Net and HailStorm initiatives as being possibly anticompetitive.

Meanwhile, Microsoft has been stepping up its assault on open-source software and the GNU GPL (General Public License) in particular, as it struggles to protect its turf from "free" software. As it does, it is increasingly finding itself at odds with partners and rivals that see money to be made from open source and Linux.

Steve Ballmer, Microsofts CEO, talking after launching Office XP two weeks ago, said that Linux was a "cancer that attaches itself in an intellectual property sense to everything it touches." His comments followed similar attacks by Microsoft executives Craig Mundie and Jim Allchin.

Eben Moglen, the general counsel for the Free Software Foundation and a professor of law at Columbia University, in New York, said these attacks reflect just how worried Microsoft is about open-source software and of losing its stranglehold on government customers, its largest software buyers.

"Microsofts continued onslaught against the GPL license and its calling into question the matter of government funding for GPL work thinly mask its true concern: that governments around the world will increasingly embrace open source as an alternative to expensive proprietary software," Moglen said. "This strikes at the heart of the Microsoft revenue machine."

Complicating the issue for Microsoft are the computer makers, which have long worked hand in hand with Microsoft on behalf of Windows but are now equally supportive of the open-source licensing model.

"HP sees benefits in the open-source licensing and development model, but we dont see all software going open source," said Martin Fink, general manager for Hewlett-Packard Co.s Linux Systems Operation, in Fort Collins, Colo. Fink added that HP supports Linux as a strategic platform along with HP-UX and Windows. "We believe that the computing market will thrive for both proprietary software and open-source software."

But perhaps the most noticeable change in Microsoft recently is how aggressive its sales force has become, said Bob Cancilla. According to Cancilla, director of corporate systems planning for Republic Indemnity Co. of America, in Encino, Calif., the company has employed a tactic "like the IBM of old" and is lobbying top corporate executives, rather than system managers.

"Theyre leveraging the top executives and getting them to believe that Microsoft is the way to go," making it difficult for IT managers to choose non-Microsoft products, Cancilla said.