Fact and fiction in the Microsoft-SCO relationship

(continued from previous page)

Is Microsoft more than a passive participant? Is it driving the decision to take IBM (and Linux) to court and to sow FUD--fear, uncertainty and doubt--among corporate buyers?
There's been some smoke, but no smoking gun. And SCO has its own survival in mind in taking IBM to court.

Although Linux threatens Microsoft, SCO was a convenient ally rather than a Microsoft puppet in the Linux fight, maintains Illuminata analyst Gordon Haff. "There are people associated with Microsoft who have done things that directly or indirectly have aided SCO's cause," Haff said. "But I don't subscribe to Microsoft being a driving force behind this."

What's Microsoft's and BayStar's response?
Although BayStar and SCO confirm Microsoft's role in introducing them, Microsoft stands by earlier statements of independence: "Microsoft has no direct or indirect financial relationship with BayStar. Our financial dealings with SCO are limited to the purchase of a license to SCO's intellectual property to ensure IP compliance and assurance for our customers." (A Microsoft product called Services for Unix lets Unix software run on Windows.) However, Microsoft will not provide the name of the executive who introduced SCO to BayStar.

BayStar's Goldfarb bristles at suggestions that Microsoft is running the investment show.

"That Microsoft is behind BayStar--it's just absurd. For us it was a straight-on financial investment based on the merits of the case, end of story," Goldfarb said. "It was all our money. They don't invest in my fund."

Goldfarb added that Microsoft also "has zero connection" with the Royal Bank of Canada, which put in $30 million alongside BayStar's $20 million for the October 2003 investment. RBC has joined in other BayStar investments, including XM Satellite Radio.

Even with the facts as known, isn't Microsoft breaking the law?
Apparently not, though the company was aware that it could be walking a fine line.

Microsoft's referral to BayStar came during discussions in August or September 2003 when SCO offered the software giant a chance to invest, McBride said in an interview.

"That Microsoft is behind BayStar--it's just absurd. For us it was a straight-on financial investment based on the merits of the case, end of story."

--Larry Goldfarb, BayStar

Microsoft declined the offer, however, saying it didn't want to cause problems with the settlement agreement resulting from the Justice Department's antitrust suit, according to Chris Sontag, who runs the SCOsource effort to recover money from the Unix intellectual property.

"They're very careful and concerned about not doing anything that's violating their DOJ agreements," Sontag said. While not commenting specifically, Microsoft didn't deny Sontag's account.

Nevertheless, doesn't that represent a smoking gun that the Justice Department should at least be interested in?
No, at least not yet. The Justice Department case labeled Microsoft a monopolist, but legal experts have a hard time finding how its SCO ties violate either antitrust laws or the settlement with the DOJ--unless Microsoft acquires SCO, which is a competitor as well as a partial ally.

"If I thought Microsoft might be violating the law, I would be delighted to tell you they're violating the law. I have said they are on hundreds of occasions," said Robert Lande, an antitrust law professor at the University of Baltimore School of Law. "But I don't think so far, on the basis of the facts, that Microsoft has violated the antitrust laws" in the SCO situation, he said.

First Amendment freedoms permit monopolists to sue competitors or fund others to do so, as long as the suit isn't baseless, said Mike McNeely, an antitrust attorney in Gray Cary's Washington, D.C., office. And the Microsoft settlement is mostly about disclosing interfaces to Windows and to some Microsoft server software: "I don't see anything in that (settlement) that relates to the issues SCO is raising," McNeely said.

Is SCO's claim baseless?

[fgoldstein]

Steve S really doesn't get it

Once again, a Steve Shankland article uses the childish bad-journalist definition of "objective" to totally muff a story. An article is not objective if, in reporting a dispute, it give equal credence to both sides, regardless of however imbalanced the evidence is. A good journalist calls a spade a spade. Yet here, Shankland acts as if SCO had a good case, and ends with an old quote from Darl McBride that implies that the case is headed to a jury. That is *extremely* unlikely. None of SCO's cases are that strong -- the countersuits are more likely to get there, with SCO as a defendant.

He also mixes up the AIX/Monterey issue with Linux itself. Most of the SCO suits are around Linux, except when they are losing, and claim that they're about an IBM contract. These are two distinguishable issues. There is a shadow of a case concerning IBM's role in Monterey, if they acted in bad faith in pulling out and recycling the code against what an alleged contract said. That remains to be seen. It's doubtful, but it has nothing to do with Linux.

The Linux issue began with McBride's asssertion that there were "millions of lines" of SCO-owned code in Linux. This falls flat on its kiester for various reasons:

1) There are zero lines of copyrighted Unix System V code in Linux; SCO never produced any, even after repeated discovery requests. (There are some lines in common, of course, but they're not subject to copyright, and mostly originate in standards outside of System V, or older versions.)

2) SCO doesn't own the copyrights in the first place. Novell just last week opened its corporate kit to show that their BOD, in selling its Unixware business to SCO, absolutely meant to retain the copyrights, as the bill of sale says. Novell, not SCO, is the rightful owner, and Novell's now a Linux shop.

3) SCO, formerly called Caldera, distributed Linux under the GPL, and therefore is bound by the terms of the GPL. That prohibits them from enforcing a closed-source copyright claim on that code.

All of those are probably grounds for dismissing all of SCO's claims on Linux. The judges are being methodical, and SCO is a master of dilatory tactics (presumably to give them more time to unload worthless stock on investors, er, speculators fooled by bad coverage). But there is obviously no valid SCO threat to Linux users. Microsoft has profited from the FUD, but it should be called just that, not treated as equally valid as evidentiary reality.

[fgoldstein]

Steve S really doesn't get it

Once again, a Steve Shankland article uses the childish bad-journalist definition of "objective" to totally muff a story. An article is not objective if, in reporting a dispute, it give equal credence to both sides, regardless of however imbalanced the evidence is. A good journalist calls a spade a spade. Yet here, Shankland acts as if SCO had a good case, and ends with an old quote from Darl McBride that implies that the case is headed to a jury. That is *extremely* unlikely. None of SCO's cases are that strong -- the countersuits are more likely to get there, with SCO as a defendant.

He also mixes up the AIX/Monterey issue with Linux itself. Most of the SCO suits are around Linux, except when they are losing, and claim that they're about an IBM contract. These are two distinguishable issues. There is a shadow of a case concerning IBM's role in Monterey, if they acted in bad faith in pulling out and recycling the code against what an alleged contract said. That remains to be seen. It's doubtful, but it has nothing to do with Linux.

The Linux issue began with McBride's asssertion that there were "millions of lines" of SCO-owned code in Linux. This falls flat on its kiester for various reasons:

1) There are zero lines of copyrighted Unix System V code in Linux; SCO never produced any, even after repeated discovery requests. (There are some lines in common, of course, but they're not subject to copyright, and mostly originate in standards outside of System V, or older versions.)

2) SCO doesn't own the copyrights in the first place. Novell just last week opened its corporate kit to show that their BOD, in selling its Unixware business to SCO, absolutely meant to retain the copyrights, as the bill of sale says. Novell, not SCO, is the rightful owner, and Novell's now a Linux shop.

3) SCO, formerly called Caldera, distributed Linux under the GPL, and therefore is bound by the terms of the GPL. That prohibits them from enforcing a closed-source copyright claim on that code.

All of those are probably grounds for dismissing all of SCO's claims on Linux. The judges are being methodical, and SCO is a master of dilatory tactics (presumably to give them more time to unload worthless stock on investors, er, speculators fooled by bad coverage). But there is obviously no valid SCO threat to Linux users. Microsoft has profited from the FUD, but it should be called just that, not treated as equally valid as evidentiary reality.

[Not Bugged]

Hoping for an over-patriotic jury?

So SCO are relying on a jury, and IBM are trying their best to prevent it getting that far.

But what if a Jury did go for SCO? Could a jury be biased towards the locals, or even worse, could the jury become madly patriotic. Linux is a chance for non-Americans to participate equally in the software world. A win for SCO, if non-Americans honour it of course, would be a chance for America to tax one of the largest growing sectors in the industry. Haven't SCO already tried to play this card with their letters to Congress?

I can just imagine SCO hoping for a jury that thinks along the lines of "Gawd Bless America - down with Johnny Foriegner". I just hope that such a thing doesn't happen.

[Not Bugged]

Hoping for an over-patriotic jury?

So SCO are relying on a jury, and IBM are trying their best to prevent it getting that far.

But what if a Jury did go for SCO? Could a jury be biased towards the locals, or even worse, could the jury become madly patriotic. Linux is a chance for non-Americans to participate equally in the software world. A win for SCO, if non-Americans honour it of course, would be a chance for America to tax one of the largest growing sectors in the industry. Haven't SCO already tried to play this card with their letters to Congress?

I can just imagine SCO hoping for a jury that thinks along the lines of "Gawd Bless America - down with Johnny Foriegner". I just hope that such a thing doesn't happen.

Smoking Gun

This report asks some relevant questions, but seems to have missed crucial evidence:

http://www.opensource.org/halloween/halloween10.html

Smoking Gun

This report asks some relevant questions, but seems to have missed crucial evidence:

http://www.opensource.org/halloween/halloween10.html

Good ending

MS is backing away from SCO and embracing some form of open source after trying to destroy it.

SCO will end up bankrupt, and hopefully anybody that worked there that had anything to do with this farce will never be empliyed in the IT industry.

If you have to litigate to stay in business, you shouold be out of business.

Good ending

MS is backing away from SCO and embracing some form of open source after trying to destroy it.

SCO will end up bankrupt, and hopefully anybody that worked there that had anything to do with this farce will never be empliyed in the IT industry.

If you have to litigate to stay in business, you shouold be out of business.

[knobsturner]

Paul Allen is a (the?) major investor in Baystar Capital

From the article on wired:

"BayStar Capital is a private equity fund that makes direct
investments in privately held and publicly traded companies.
One of BayStar's largest investors, according to BayStar (PDF), is
Vulcan Capital, the private investment vehicle of Paul Allen. Allen
co-founded Microsoft with Bill Gates, and is the second-largest
Microsoft shareholder after Gates."

So although the Microsoft and Baystar as _companies_ have
nothing to do with each other, Paul Allen is a major share holder
in both companies.

The Baystar connection is just a back door that MS can shove
money through.

This kind of hiding makes me sick. It may be perfectly legal for
Paul Allen to start up a company with his own (all MS derived)
money, and then say that the company has nothing to do with
MS, but the OWNERS are THE SAME people.

http://www.wired.com/news/business/
0,1367,62544,00%20.html?tw=wn_tophead_2

--Tom

Hmmm.

You raise an interesting point. Whether Allen really is this big-time investor is still speculation, though, correct? Although, I wouldn't doubt it.

MS has its ways of sneaking around things and getting where they want to be. Let's hope they don't get their way.

[knobsturner]

Paul Allen is a (the?) major investor in Baystar Capital

From the article on wired:

"BayStar Capital is a private equity fund that makes direct
investments in privately held and publicly traded companies.
One of BayStar's largest investors, according to BayStar (PDF), is
Vulcan Capital, the private investment vehicle of Paul Allen. Allen
co-founded Microsoft with Bill Gates, and is the second-largest
Microsoft shareholder after Gates."

So although the Microsoft and Baystar as _companies_ have
nothing to do with each other, Paul Allen is a major share holder
in both companies.

The Baystar connection is just a back door that MS can shove
money through.

This kind of hiding makes me sick. It may be perfectly legal for
Paul Allen to start up a company with his own (all MS derived)
money, and then say that the company has nothing to do with
MS, but the OWNERS are THE SAME people.

http://www.wired.com/news/business/
0,1367,62544,00%20.html?tw=wn_tophead_2

--Tom

Hmmm.

You raise an interesting point. Whether Allen really is this big-time investor is still speculation, though, correct? Although, I wouldn't doubt it.

MS has its ways of sneaking around things and getting where they want to be. Let's hope they don't get their way.