Getting Caught in the Lying Game

Did Microsoft lie? The answer depends on whether you side with the wife or the husband in the age-old domestic dispute about "lies of omission."

Did Microsoft lie? The answer depends on whether you side with the wife or the husband in the age-old domestic dispute about "lies of omission": Do you believe that failing to reveal crucial details is a technically defensible strategy, or an out-and-out prevarication?

The key question, though, is not which side you or I take, but which side the Bush administration takes. And in a surprising shift of sentiment, that increasingly looks like it could be the wifes side. The political tide in Washington, D.C., is clearly turning away from Microsoft, as politicians who once sang the praises of bold entrepreneurs from Redmond now rail against unbridled arrogance.

Microsoft didnt help its case when it committed a lie of omission, when — in response to the recent appeals court ruling against its monopolistic practices — the company stated that it would open the desktop of its forthcoming Windows XP operating system (OS), allowing computer makers to put icons for competing browsers on their start-up screens.

What the company failed to mention, it turned out, was that any computer maker that slaps a competing icon on its desktop will be required to also display an icon linking users to Microsofts online service, MSN. Microsoft only owned up to that little tidbit after the truth was reported in the news. The company then conceded that the omission had been intentional.

In other words, as many wives might say, it lied.

While that may not really surprise anyone familiar with the company, it does seem like an especially reckless gambit at a time when the Bush administrations Department of Justice is surprising many Washington insiders with an aggressive defense of the antitrust charges filed by the Clinton administration against the company.

After the appeals court sent key questions about Microsofts practice of tying other software into its OS back to a lower court for review, the DOJ hired a heavy hitter, Phil Beck, to lead the governments case.

Beck is a distinguished Chicago trial lawyer with solid credentials defending large corporations. In many ways, hes the equal of David Boies, the Clinton administrations show-stealing lead trial lawyer in the Microsoft case. In fact, the two were direct rivals during the Florida election dispute, with Beck representing Texas Gov. George W. Bush and Boies representing Vice President Al Gore.

With Beck in place — and settlement talks between Microsoft and the government proceeding in slow motion — federal and state regulators are considering legal action to force Microsoft to alter XP. Their view is that Microsoft doesnt make concessions unless its forced to — and even then, it usually finds a loophole.

Its a model case of déjà vu all over again. Three years ago, the issue was Windows 98 and Microsoft bolting its Internet Explorer browser onto the OS. XP extends that tradition by tightly integrating Internet services while bolting on multimedia, instant messaging and shopping applications.

In addition to the legal scrutiny, lawmakers and privacy advocates are turning up the heat on Microsoft.

Sen. Charles Schumer, D-N.Y., a member of the Senate Judiciary Committee, has asked federal and state regulators to force changes in XP before it is launched. He will get a chance to address those concerns at a committee hearing next month.

Privacy advocates are also on the attack, pressing the Federal Trade Commission to investigate XP and the abilities of both XP and Microsofts .Net applications to gather personal information about users.

The test version of XP has already been released, and the final product is set to go on sale in October. This is always a frantic time in the development cycle, but given the mood in Washington, the company has a lot more to worry about than last-minute debugging.

The difference this time, however, is that if anti-Microsoft foes succeed in getting prerelease changes, the biggest immediate losers would be some of the very parties that the antitrust case was filed to protect — computer makers that have pinned their hopes of a turnaround in dismal sales reports on a consumer rush to XP.