Why MS paid Novell half a billion bucks today

But fresh antitrust suit is in the envelope, says Novell

Broken CD with wrench

Microsoft paid Novell $536m today, although it might not be enough to fend off a fresh antitrust case, which Novell says it will file by the end of the week. Novell says issues relating to the WordPerfect office suite, which it briefly owned in the early-1990s, are still outstanding.

According to a Novell press release, today's settlement is "related to Novell's NetWare operating system". It's actually around a specific product, NDS for Windows NT, which Novell introduced several years ago, and which Microsoft effectively killed. NDS for NT was a gateway that allowed users to keep password and user management on their existing Novell servers. When Microsoft introduced cryptographic signing of key system DLLs in Windows 2000, which it says it did for security reasons, it was no longer possible for Novell to maintain the product.

The issue was one of the few details to emerge publicly from the European Union's antitrust investigation into Microsoft's server business, which originated with a complaint from Sun Microsystems. Novell had alerted Microsoft to its plans before introducing NDS for NT. But a verbal warning from the former head of the networking group for Windows NT, Dave Thompson (now Exchange Server Product Group manager) had warned Novell that if it proceeded, Microsoft would break the product.

Novell decided to reverse engineering the closed system that was no longer viable, as we pointed out here: "Microsoft had extended the security fence within which third party developers could not go, far enough to kill Novell's product."

The decision was a key factor in Novell becoming a Linux company.

Clearly there's some high-stakes brinksmanship going on between Waltham and Redmond this week, and equally clearly, given that Microsoft has already settled suits with Sun Microsystems and the CCIA, Novell thinks it has a strong hand, and reckons that Microsoft wants to clear the decks of outstanding litigation. Microsoft is appealing the EU decision and suits from Burst and Real Networks are still outstanding. ®

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