IBM evidence shows how MS controls PC OEMs

MS on Trial In 1995, IBM paid Microsoft $40 million for Windows. In 1996 it was $220 million. In 1997 $330 million. In 1998, $440 million. Annoyance over this thumbscrew process is probably the real reason why Garry Norris is giving rebuttal evidence for the DoJ with the clear blessing of IBM, and giving us such a cornucopia. Norris, who was IBM's chief negotiator with Microsoft before and after the introduction of Windows 95, lived up to expectations in his direct examination by Philip Malone of the DoJ. His evidence provides the most damning account in the trial so far of Microsoft's exploitation of its Windows monopoly, and how it controls OEMs. This is the most detailed account anywhere of Microsoft's strategies and tactics in such matters, and even seasoned Microsoft watchers will be surprised at the extent to which their suspicions of Microsoft's business practices were confirmed. Norris has handwritten notes and computer records of the period - not exactly a kiss-and-tell diary, but solid contemporary evidence of Microsoft's actions. They were so good that they went entirely unchallenged by Richard Pepperman, for Microsoft. At the same time, what we see from the testimony is the inability of some senior IBM executives when faced with Microsoft's uncompromising abuse of ethical business behaviour. It was like the Corps Diplomatique trying to deal with threats from a gang of street fighters. So far as OS/2 was concerned, nothing new emerged, and the enigma remains as to whether IBM did change its policy towards OS/2 in a direct response to Microsoft's desires to eliminate it, or whether it was a consequence of Microsoft's actions. Even in the latter case, IBM could have found a way to keep OS/2 competitive if it had wanted to do so, but failed. The new revelations mostly concerned IBM's acquisition of Lotus, and Microsoft's reaction. Judge Jackson listened very careful to the testimony, and asked a number of questions for clarification. After this evidence, there can be no doubt that Microsoft should be prevented from ever again abusing its dominant position by having to publish an OEM price list, with only volume discounts allowed. It would also be necessary to ensure that the prices are set at a fair level and not subject to discounts refereed by Microsoft, as is the case with its so-called MDAs. The mechanism for this would need to be worked out, but it should not be beyond the capability of the courts. ® Complete Register trial coverage