Evil empire versus Linux
May 15, 2003 3:37 PM   Subscribe

Latest dispatch from the inner sanctums of the evil empire: (NY Times article. All the usual warnings apply: Registration required. May not be factual. etc. etc.) Last summer, Orlando Ayala, then in charge of worldwide sales at Microsoft, sent an e-mail message titled Microsoft Confidential to senior managers laying out a company strategy to dissuade governments across the globe from choosing cheaper alternatives to the ubiquitous Windows computer software systems. Mr. Ayala's message told executives that if a deal involving governments or large institutions looked doomed, they were authorized to draw from a special fund to offer the software at a steep discount or even free if necessary. Steven A. Ballmer, Microsoft's chief executive, was sent a copy of the e-mail message. The memo on protecting sales of Windows and other desktop software mentioned Linux, a still small but emerging software competitor that is not owned by any specific company. ‘Under NO circumstances lose against Linux,’ Mr. Ayala wrote.
Legitimate competitive tactics?
posted by found missing (22 comments total)
This was on Slashdot the other day and I'll just reiterate my thoughts. It's pretty ludicrous to imply that Microsoft trying to be competitive and best its competitors in the marketplace is the working of an evil empire; it's the FREE MARKET.

That's how business works, you try to win. Come on.

And lastly, we can click and read the article, you don't have to quote all of it in the post.
posted by xmutex at 3:44 PM on May 15, 2003

May not be factual. Are you posting this for us to solve the mystery of it's truthfulness/falsehood?
posted by thomcatspike at 3:55 PM on May 15, 2003


Markets require competition regulation or large corporations abuse their position to the detriment of the consumer. It's natural for large corporations to do this as they want to hold dominant positions and equally it's necessary for governments to regulate on our behalf.
posted by johnny novak at 4:00 PM on May 15, 2003

tcs, I think that is a reference to the Jayson Blair/NYT debacle.
posted by trondant at 4:12 PM on May 15, 2003

thanks trondant
posted by thomcatspike at 4:35 PM on May 15, 2003

For comparison: slotting allowances; an industry view.
posted by dhartung at 4:56 PM on May 15, 2003

While I'm all about the bashing of Microsoft, this doesn't seem that far fetched of a business practice. The dominator of the market will of course use that position to keep it.
posted by nadawi at 5:33 PM on May 15, 2003

Legitimate competitive tactics?

why no, of course not. microsoft should burn! burrrnnnn! BURRRRRNNNN!!!

in other news
posted by poopy at 6:12 PM on May 15, 2003

eat snacky smores
posted by poopy at 6:14 PM on May 15, 2003

Legitimate competitive tactics?
posted by dg at 6:55 PM on May 15, 2003

It's called predatory pricing. It's illegal, at least in theory. It results in less, not more, competition, since the point of the discounts is to put competitors with less capital out of business in the short term so you can gouge consumers in the long term.

Big airlines do it with impuniy all the time--lower fares to and from a particular airport to a ridiculously low price until a smaller competitor can't afford to compete at that airport anymore. Then the airline jacks the fares way above the original price to recoup the loss.
posted by boltman at 7:35 PM on May 15, 2003

Microsoft is dirty. This shouldn't be news. Microsoft has been found by the courts to have used it's monopoly to extort money and to have stolen competitors intellectual property and incorporated it into their own products.

Don't be surprised by revelations like those linked in the post.
posted by NortonDC at 7:36 PM on May 15, 2003

Interesting. Ballmer was recently in Spain campaigning for MSFT products before an election in which IT investment is a hot issues, as Wired reported. He announced that Windows would be localized for Catalán, a minority language in Spain, and that the company would donated $26 million in software to the nation"s poorest.

A guy I met earlier this year from the World Social Forum India puts it like this: Microsoft is a tobacco company for your computer. I think that's apt: My granddad started smoking during the second war when big tobacco handed out free smokes to GI Joe.

Legitimate tactics, maybe, if you live in a country without antitrust laws. Legitimate in the sense that's all's fair in love and war — for the amoral.
posted by hairyeyeball at 7:40 PM on May 15, 2003

Wait a minute... I looked into this a bit, and those sneaky Linux bastards are just giving away their product! Free! As in beer!

But nobody seems to mention that, huh?

In fact, I found tons of sites where you can just download it for free! Downloading software for free is piracy, people. They're promoting piracy of their own product!!! If that's not predatory, I don't know what is...
posted by whatnotever at 7:45 PM on May 15, 2003

They're promoting piracy of their own product!!! If that's not predatory, I don't know what is...

Funnily enough, it's fairly well-known that Microsoft tolerated piracy in places like Asia and on college campuses for a long time, rather than the alternative of a cheaper competing product taking hold. Now that they have their Office file formats as a de facto standard they're feeling free to go after governments to pony up for all the software they've been using.
posted by Space Coyote at 8:08 PM on May 15, 2003

The article seems to clearly indicate that Microsoft knew they were violating European law in this case. Internal Microsoft documents show that they were warned by legal experts not to specifically target particular competitors or offer special deals only to certain customers. These documents even hint at how Microsoft would try to legally defend themselves should they be challenged -- they don't deny that their actions would violate European law if they were a dominant company in the marketplace, they simply deny their dominance.

Somehow, I don't think they're going to win that legal argument... but if it takes five years to resolve, does it really matter?!
posted by insomnia_lj at 11:17 PM on May 15, 2003

Discounting or giving away your product to compete with a free product doesn't seem that evil. Evil comes into play when you charge an arm and a leg for other orgs that can afford it. Kind of reminds me on the pharmacutical business.

And then there's this. If SCO is successful in its efforts to collect from Linux users, then the playing field is leveled [in the sense MS is not competing with a free product].
posted by birdherder at 1:56 AM on May 16, 2003

These tactics are certainly against European law. No matter how Microsoft tries to stall the European Commission, these laws have teeth. IIRC, Microsoft can be fined 10% of their global turnover. That is a serious sum of money.

I think Microsoft may find the European Union less accommodating than the Unites States has been.
posted by salmacis at 2:35 AM on May 16, 2003

IBM isn't flinching at the SCO noisemaking, I see it as the last grasp for relevance on teh part of SCO, who've basically been cashing in on obsolute unixware code for a decade.
posted by Space Coyote at 2:47 AM on May 16, 2003

Big airlines do it with impuniy all the time--lower fares to and from a particular airport to a ridiculously low price until a smaller competitor can't afford to compete at that airport anymore. Then the airline jacks the fares way above the original price to recoup the loss.

airlines are an anomoly and have nothing in common with microsoft. airlines have never been profitable. airlines wouldn't exist without the great corporate gouge that passes on to the consumer the incredibly high cost of flying personnel willy nilly here and there and everywhere. if corps couldn't recoup that cost, execs wouldn't fly, and airlines wouldn't exist. nothing an airline does with regard to pricing has squat to do with free enterprise or open markets. commercial air transportation is a financial failure, it always has been, and could not exist without this continued subsidy paid by an ignorant consuming public.
posted by quonsar at 4:37 AM on May 16, 2003

The SCO suit is simply an effort to make themselves an expensive enough annoyance that it becomes cheaper to buy them outright than to settle or defend against them.

Notice how they've only sued the biggest, richest player in the Linux marketplace while making only vague threats at everyone else.

Given that what's left of SCO is nothing much more than a portfolio of intellectual property and a bunch of lawyers, this should hardly be surprising.

Interestingly, USL pulled the same tactic several years ago. At one point USL basically threatened to sue anyone who'd ever seen on a single line of BSD code. Notice how nothing came of that?
posted by Cerebus at 5:27 AM on May 16, 2003

The part about the SCO thing that I find amusing is that since they merged with Caldera, they put out a linux distro. Which means they would have released their own code under the GPL, if their claims of stolen code are true.
posted by Space Coyote at 6:38 AM on May 16, 2003

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