January 26, 2007 2:27 PM PST

Did Microsoft want to 'whack' Dell over its Linux dealings?

Barely a week after a U.S. judge approved a landmark antitrust agreement with Microsoft, company executives were swapping e-mails suggesting Dell deserved a beating for its growing interest in Linux, according to documents filed with a state court.

But Redmond representatives said Friday that the 2002 exchange, made public this week as part of an antitrust suit unfolding in Iowa state court, only tells part of the story. They said it omits evidence that Microsoft executives were simultaneously seeking legal advice on how to ensure they were responding to such competitive threats without shirking their antitrust responsibilities.

The e-mail thread (PDF), which occurred over three days in November 2002, showed up in the latest batch of court exhibits posted to a Web site maintained by attorneys representing a class of Iowa consumers embroiled in an ongoing antitrust suit against the Windows maker. It was reported earlier by Bloomberg News.

In the first e-mail, Bill Veghte, now a company vice president, described a panel discussion he had recently attended in which a Dell executive boasted that the company was the top distributor of the open-source operating system among equipment manufacturers and was "committed to seeing that position grow."

Veghte and others went on to express concern about the competitive threat potentially posed by Linux and Red Hat.

"We should whack them, we should make sure they understand our value," wrote Paul Flessner, a senior vice president in Microsoft's server applications unit.

U.S. District Judge Colleen Kollar-Kotelly in Washington, D.C., had approved most of the federal government's antitrust decree with Microsoft about a week before the exchange began.

Microsoft spokesman Jack Evans on Friday downplayed the messages.

"While this may sound provocative, what counts at the end of the day is what actually happened," he said. "Looking at subsequent portions of this e-mail thread, which the plaintiffs chose to exclude from their exhibits, it's evident that we didn't take any retaliatory action against Dell. In fact, we very clearly increased our investment with Dell."

Participants in the same e-mail thread also sought confidential legal advice about how to proceed in such situations where competitive threats existed, given the limits imposed by Microsoft's antitrust agreements, Evans added.

Iowa antitrust suit unique

The Iowa suit, filed in February 2000 on behalf of a businessman in the state, is one of the last remaining state antitrust proceedings against Microsoft. The company has already reached settlements in 17 states and had class-action suits dismissed or decertified in 18 others.

The Iowa case is unique because it allows consumers, as opposed to just equipment manufacturers, to sue Microsoft directly. The class, which is made up of the so-called "indirect" purchasers of Microsoft's operating-system software and of its applications software including Word and Excel, seeks $330 million in damages. The trial, which began in December, is expected to last at least six months.

Microsoft has reportedly turned over 25 million pages of documents to Iowa prosecutors, and it has already had to do some explaining to the public about what they contain.

In December, the blogosphere took note of a 2004 memo (PDF) in which retiring Windows chief Jim Allchin professed, "I would buy a Mac today if I was not working at Microsoft." (He later said he was being "purposefully dramatic.")

The plaintiffs have already uploaded thousands of pages for public consumption. A spokesman for the plaintiffs said more are likely to be on the way, as the court admits them as evidence.

See more CNET content tagged:
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47 comments

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I guess this explains...
why no major retailers appear to be offering Linux PCs to consumers.
Posted by mh20932 (41 comments )
Reply Link Flag
Uhhh...
Wal-mart offered them with huge fanfare...

Sales were lukewarm and then HP cut a deal with Wal-mart for the shelf space and after less than a year, they were pulled.
Posted by adlyb1 (123 comments )
Link Flag
No it doesn't
This exchange in particular appears to be focused solely on the
server business.

No major retailers are currently offering Linux PCs because there
isn't a single Linux distro with the breadth of hardware and
multimedia support that Windows has. Why would they offer a
product that no one wants?

Microsoft isn't innocent, that's for sure, but to blame Microsoft
for Linux distros failing to be competitive consumer desktop
platforms is just ignorant.
Posted by chort0 (5 comments )
Link Flag
Microsoft is evil, pure and simple.
The company should be placed into receivership and it assets sold
off. Windows should be taken off the market and all copies
destroyed. It's the only way to fix the beast.
Posted by lkrupp (1608 comments )
Reply Link Flag
In America we do things differently
How about hanging all Microsoft employees and breaking all PCs? But I guess it is not how it works in US, is it? We have things called "laws" here in US. Everybody is bound by the laws and court rulings.
Posted by Shef Seattle (26 comments )
Link Flag
Ignorant statement
It "proves" MS considered using it's weight to punish Dell but opted not to. That's not evil.
Posted by extinctone (214 comments )
Link Flag
Dell is "whack"...
Dell is whack, as in "displeasing or undesirable" and "of poor quality".

<a class="jive-link-external" href="http://www.ocf.berkeley.edu/~wrader/slang/w.html" target="_newWindow">http://www.ocf.berkeley.edu/~wrader/slang/w.html</a>
Posted by john55440 (1020 comments )
Reply Link Flag
Get with the times...
john55440,

I find your comment outdated and just hateful. I have a Dell XPS 410 that is amazing computer. I have no complaints. It's an excellent computer. Granted, they went through a tough patch, but don't just be "hating".

NateMan_99
Posted by nateman_99 (9 comments )
Link Flag
Laws
Yes, and large corporations like Microsoft are never able to buy themselves out of actually having to obey these laws... right?

Microsoft has lost quite a few lawsuits here in the U.S., and how has this affected the way they do business? The answer is, it hasn't forced them to change there ways much at all. They have great lobbyists and lawyers, and are able to successfully avoid having to compete by buying their way out of legal issues. It's a disgrace to this land of "laws".
Posted by halfNakedPappy (34 comments )
Reply Link Flag
Contradicting yourself
Microsoft has lost nearly every lawsuit and as you could plainly see they *did* change their behavior. It's only the "too blind to see the truth" people like you who just blindly hate that can't see the changes.
Posted by extinctone (214 comments )
Link Flag
Then I can't imagine what they'd do with Dell OS X
Michael Dell has recently affirmed that he'd be more than happy to
ship Dells with OS X if it was available for OEM license (whether it
ever will be of course is an entirely other question).

I can't imagine the fury that would generate in Redmond!

Something approaching that huge eye on the top of Mt Doom in
Lord of the Rings might come close...
Posted by dotmike (154 comments )
Reply Link Flag
Apple holds the clue
But Apple wont sell OSX to Dell - in the same way that MS might have withheld the MS OS from Dell to punish Dell. So where is tha outrage that Apple is withholding an operating system that Dell customers might want to buy? Why is no anticompetitive furor unleashed against Apple? Where are the class actions against Apple? Why should Apple be allowed to restrict the sales of its OS?

Anybody?
Posted by gggg sssss (2285 comments )
Link Flag
I for one would love to see that happen.
But - Apple is a Computer company (that is, hardware + software), and I doubt they'd peel off OSX from the equation.

/P
Posted by Penguinisto (5042 comments )
Link Flag
People who use Linux are the people who make there own computers.
I can't see many people who run Linux (Or BSD) wanting to buy a prefab computer.
Posted by ralfthedog (1589 comments )
Reply Link Flag
I bought an Inspiron 8100 specifically for Linux.
...because laptops aren't so easy to simply fabricate at home, y'dig?

Also, the metric you stated is changing - servers now come with RHEL or SLED pre-installed. Finally, home users w/ Ubuntu or similar easy-to-use distros don't really have to do anything on the tinker-level anymore.

/P
Posted by Penguinisto (5042 comments )
Link Flag
$MadCheap$
Some prefabs are cheap and perfectly suitable to run linux, being as linux supports pretty much anything. I don't see the connection between people who build their own computers and linux users.
Posted by hellsyes (44 comments )
Link Flag
You are very assuming
I don't know where you get such an assumption. Yes, I built my Linux system but not because I prefer too but due to the fact that when I bought it pre-fab systems from the top tier vendors weren't available in standard consumer configurations.

It actually costs more to build your own PC than to buy a pre-fab one using the same hardware specs. In the reason I don't just buy a Windows based one and convert it is many have some hardware (especially modems) that are Windows only not to mention I don't want to have to pay for an OS I'm not going to use.
Posted by dev1in (13 comments )
Link Flag
What if every crass memo you ever sent was published out of context?
I think making out of context dramatic internal emails public is a bad prescendece and only helps fuel FUD into a court case. It may be entertaining but its pure bubble headed bleach blonde news at 6 junk. I bet if you got Oracle internal emails about Microsoft you would find a lot more juicy entertainment.
Posted by Knight21024 (8 comments )
Reply Link Flag
Not one of them would show me plotting...
something that I know is an illegal anti-competitive action. In fact, you wouldn't even find me plotting something legal but unethical. But you might see that I have some harsh words for those that I'm required to deal with who don't share my ethical standards.
Posted by lcromwell34289 (12 comments )
Link Flag
What if every crass memo you ever sent was published out of context?
I think making out of context dramatic internal emails public is a bad prescendece and only helps fuel FUD into a court case. It may be entertaining but its pure bubble headed bleach blonde news at 6 junk. I bet if you got Oracle internal emails about Microsoft you would find a lot more juicy entertainment.
Posted by Knight21024 (8 comments )
Reply Link Flag
 

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