Original URL: http://www.theregister.co.uk/2003/05/15/ms_slush_fund_provides_big/

MS ‘slush’ fund provides big discounts to stop Linux – email

Top exec's 'keep Linux out of government programme revealed

By John Lettice

Posted in Software, 15th May 2003 10:27 GMT

Microsoft's head of worldwide sales last summer circulated a 'stop Linux at any price' email to sales execs and senior company executives, including Steve Ballmer, Jim Allchin and Jeff Raikes. According to the International Herald Tribune, which has seen the email, Orlando Ayala was aiming to block Linux's progress in government. "Under NO circumstances lose against Linux," he said, saying that in cases where the deal involved governments or large institutions there was a special fund available which could be used to offer large discounts, or even to give Microsoft software away.

The existence of what the casual observer might term a slush fund is confirmed in an IHT interview with Microsoft EMEA chairman Jean-Philippe Courtois, who defends it as "part of a strategy to be 'competitive' and 'relevant' in the market for big government and educational deals." Microsoft is known to be particularly concerned about the prospect of an open source avalanche engulfing its European government operations, and the likely European focus of the 'get Linux' operations is confirmed by another email obtained by the IHT, from outside legal counsel.

This covers EU law and discounting, says Microsoft should not discriminate among clients, and takes the view that short-term discounting is more likely to escape Brussels' scrutiny. Now, why would Microsoft want to ask lawyers about that kind of stuff?

Register open source contacts have insisted for some years now that Microsoft's government and large accounts sales teams have special dispensation - on the highest authority - to block open source deployments at any price; the leaked emails would therefore appear to confirm that they are right. Microsoft is particularly interested in winning and keeping control of UK government and public sector IT systems, and this has bizarre consequences for would-be insurgents.

Public sector and large account IT staff who get the green light for test open source deployments keep very quiet about it indeed, even to the extent of begging the press not to mention it until they're sure full-scale deployments are happening, and can't easily be cancelled. For some reason they seem to think large Microsoft SWAT teams will descend on their superiors, bad-mouthing them and waving vast discounts. We've no idea where they could have got this impression from.

The IHT documentation strongly suggests the existence of a comprehensive programme, as opposed to it just being a single exec getting ahead of himself (that single exec, incidentally, continues to do well at Microsoft - Ayala is now senior VP, small and midmarket solutions group). A document entitled "Open Source Software Government: World Wide Initiative" aims to stop governments adopting pro open source procurement policies, urges the "pitfalls" of open source to be emphasised, and describes the lobbying of ministries in Germany and construction of alliances with "opinion leaders" in Denmark. (Who might these allies be, gentle Danish readers?)

In his email, Ayala even says how much is available for consulting service discounts. This was $65.7 million for the US, $8.9 million for Asia-Pacific, $13.7 million for Canada and Latin America, $5.4 million for Germany, $2.8 million for France and a further $22 million for EMEA. A spokesman told the IHT that the discounts would be used again in FY 2003-4, but seems to have neglected to offer next year's rates. ®