October 7, 1998 6:20 PM PDT

Microsoft targeted by critics

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With just days before its antitrust trial is set to start, Microsoft is finding itself the target of a stepped-up campaign by new and old critics.

The latest salvo came today when four consumer advocacy groups urged Sen. Orrin Hatch (R-Utah) to "engage in vigorous oversight and, if necessary, consider legislation that would promote greater competition in the computer software industry." The letter comes as another group has unleashed a string of attacks on Microsoft.

Microsoft denied any wrongdoing.

Today's critics included the Consumer Federation of America, the Media Access Project, and Consumers Union, all of which are newcomers to the anti-Microsoft establishment. They were joined by the Consumer Project on Technology, an organization founded by Ralph Nader that has a long history of criticizing Microsoft for allegedly predatory behavior.

In the letter to Hatch, the groups called attention to a report called "The Consumer Case Against Microsoft," prepared jointly by the Consumer Federation of America and the Media Access Project. It concluded that "Microsoft has a monopoly in several software market segments and its abuse of market power costs consumers dearly."

Referring to the government's antitrust case, scheduled to go to trial next week, the letter states: "Regardless of who wins...competitive balance in the software industry and effective consumer protection will only be attained through a new public policy mechanism that prohibits Microsoft's past practices."

Microsoft spokesman Tom Pilla dismissed the report as "a rehash of tired old allegations" that lacked any basis in fact. "This report is basically neither research nor a consumer case against Microsoft," he said. "This report flies in the face of the reality of today's PC industry, which is seeing record levels of job creation, lower prices for software, an increased number of start-ups, and a significantly increasing rate of innovation, all of which greatly benefit consumers and the entire U.S. economy."

The letter to Hatch and its accompanying report comes as ProComp, a group formed by a number of Microsoft competitors, has issued a barrage of press releases criticizing the software giant during the past two weeks.

The most recent release, issued yesterday, called attention to a Microsoft licensing practice that bundles software used to run on "enterprise," or high-end corporate servers.

The Microsoft enterprise agreement gives large corporations the option of licensing Windows, office applications, and "back office" server software in one package. Microsoft says the program is designed to streamline the task of licensing software for companies with many computers, but ProComp claims the agreement is only the latest predatory move by the software giant.

"This practice will ultimately deprive users of a choice in business software," ProComp executive director Mitchell Petit said in a statement. "It will only strengthen its existing Windows monopoly, which it is attempting to invisibly transform into an NT operating system monopoly," Petit continued, referring to Microsoft's Windows NT, the company's operating system for corporate servers.

Rich Gray, an antitrust attorney with Bergeson, Eliopoulos, Grady & Gray, said Microsoft's licensing agreement could be found to be illegal, but cautioned that it would be an uphill battle to prevail on such a claim.

"These are very tough questions that would have to be hashed out in a very complex lawsuit," he said.

But Redmond, which steadfastly has defended itself against anti-Microsoft campaigns, disputed Petit's charge. Microsoft spokesman Greg Shaw dismissed ProComp as a "mouthpiece of a handful of competitors to crank out press releases," and said that the licensing plan, which requires customers to commit to a three-year deal, is only "one of many" options customers have for licensing enterprise software.

"Their announcement today is simply not in the public interest," Shaw contended. "If you follow ProComp's thinking, Ford [Motor Company] wouldn't be able to sell a fleet of cars to Avis [Rent a Car] at a discount."

Unlike ProComp, the groups that complained to Hatch today are organizations that have built a reputation for representing consumer interests. The Consumer Federation of America, which is headed by former Sen. Howard Metzenbaum, claims to be the "nation's largest consumer advocacy group," with more than 250 affiliates. Consumers Union is the publisher of Consumer Reports, a magazine that accepts no advertising.

 

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