Software Group Takes Jab At Microsoft Eight New ‘Principles’ Attack Software Giant’s Business Practices
The world’s largest software industry group took aim at its largest member last week, releasing a set of “competition principles” that decry many of the business practices that have landed Microsoft Corp. in hot water with the Justice Department.
The 1,200-member Software Publishers Association called its eight principles a blueprint for government agencies and courts to use when weighing industry actions against antitrust and other laws and policies.
The group’s president said member companies wanted to proffer the document to head off any inclination by Congress or European and Japanese officials to regulate the software business.
“We’re afraid that without the principles we will end up in an era of regulation,” said Ken Wasch, SPA’s president. “We don’t want competition authorities around the world flying blind.”
But Microsoft said the set of principles was pushed through by its rivals within the SPA, which include Netscape Communications Corp. of Mountain View and Oracle Corp. of Redwood Shores.
“This has been a process … driven by a handful of SPA members that happen to be the same companies involved in the campaign against us and that have an interest in the current dispute between Microsoft and the Justice Department,” said Jack Krumholtz, Microsoft’s federal government affairs manager.
“It is unfortunate SPA has allowed itself to become a pawn to promote the interests of a handful of its members,” Krumholtz added. “The job of an industry association should be to combat software piracy worldwide and advocate rational public policy in Washington on issues where there’s consensus in the industry. I think SPA really jeopardizes its position as a credible representative for the industry.”
Asked if Microsoft would withdraw from the association, Krumholtz said the company would review its membership, as it does each year.
Wasch insisted the main point of the principles is that competition policy should serve to “maximize innovation and dynamic competition.” But at their core the eight principles are an anti-Microsoft litany. They insist the “owner of a dominant operating system” shouldn’t use its position to leverage the sale of other products and services, to control the look of a computer’s desktop against the wishes of the computer’s manufacturer, or to influence access to Internet content.
The Justice Department in its current lawsuit against Microsoft accuses the company of violating a 1995 consent decree prohibiting it from tying a license for computer makers for installing its near-monopoly Windows 95 operating system to the installation also of its Internet Explorer browser software, the No. 2 product in its market. As evidence, the Justice Department points to depositions from computer manufacturers about Microsoft’s refusal to let them change the Windows desktop. Justice Department officials have said their long-term concern is Microsoft’s extension of its market power into Internet-based information and services.
The competition principles also appear to bolster the Justice Department’s contention that current antitrust law can be applied to the software industry in general and the Microsoft case in particular. Microsoft has argued that the laws are outdated, and the industry shouldn’t be subject to competitive tests developed in the era of railroad and steel monopolies. Some members of Congress have argued the laws aren’t working and ought to be replaced with new ones that target a high-tech economy.
“The value of these principles is they help identify practices (governments) should consider in applying the law,” said Mark Traphagen, vice president of intellectual property and trade policy for the SPA. “The Justice Department at this time is not expert in all the practices of the industry.”
SPA officials delivered a copy of the principles on Jan. 30 to Joel I. Klein, assistant attorney general in charge of antitrust activity for the Justice Department. That followed a speech Klein made to some SPA members on Jan. 13 when “he asked us … to engage the Justice Department,” said SPA President Wasch.
Microsoft representatives were given two opportunities in January to address their concerns to the SPA’s board of directors, the culmination of the two-year process of developing the guidelines. But “I don’t think the company was very excited” about the organization’s decision to adopt the principles, Wasch said.
Microsoft doesn’t have a seat on the elected board this year, although it is the largest single member company and pays a $100,000 yearly membership fee, 1 percent of SPA’s annual operating budget. But Microsoft’s archrival in the current Justice Department action, Netscape, does control one of the 15 seats. Other board members are Intel Corp., Symantec Corp. IBM, Price Waterhouse, Intuit Inc., Internet Shopping Network, Computer Curriculum Corp., SkillsBank Corp., Axtive Software Corp., Intelligent Systems Corp., Wayfarer Communications Corp., Tenth Planet Productions and MicroBusiness Italiana.
The policy guidelines were initially developed by the government affairs committee of the SPA, of which Microsoft is a member, over Microsoft’s objections. Other members of that committee are Adobe Systems Inc., Apple Computer Inc., Autodesk Inc., Borland International Inc., Compaq Computer Corp., Corell Corp., Disney Interactive, Encyclopedia Britannica, IBM, Intuit, Jostens Inc., Netscape, Novell Inc., Oracle, Sybase Inc., Symantec and Viacom Inc.
The eight principles also call for equal access to retail store shelves for all software products; for vendors to refrain from intentionally using one of their products to cause the failure of a competitor’s program; and to refrain from pre-announcing new products in such a way as to freeze the market and harm competitors.
xxxx THE PRINCIPLES Knight Ridder Here are the Software Publishers Association’s Principles of Competition: Innovation and competition should be maximized for the benefit of consumers. Interface specifications to third party software developers should be licensed in a nondiscriminatory manner. Operating systems should not be used by a company to unfairly leverage its own products and services (or its favored partners) over those of competing vendors. The operating system vendor should not include its own services or products as part of the operating system or user interface unless it gives the same ability to integrate products and services into the operating system to competing vendors. Competitive licensing of software applications to original equipment manufacturers benefits consumers. Software publishers should have equal access to retail customers, without practices that monopolize limited retail space. A software vendor should not intentionally disable or otherwise interfere with the intended functionality and execution of other products. A dominant operating system should not be used to favor Internet content that is owned, offered by or preferentially licensed to the operating system vendor. When a product pre-announcement is knowingly false, it harms competition and restricts the availability to the market of innovative products from other vendors.
The full text can be found on the SPA’s Web site at http://www.spa.org/gvmnt/tos/compprinciples.htm
Source: Software Publishers Association