COURT NOTES: On May 10th, Microsoft filed a proposal in the antitrust trial in response to the government proposal that it be split into two separate companies. Microsoft's own weakened proposal agrees to everything in the government plan, with the exception of a split - something the company referred to as being "extreme," "unwarranted, outside the scope of this case, and very damaging to consumers." Many of the government's restrictions on behavior remained intact for Microsoft's plan, but they were reworded, possibly adding legal loopholes. Ironically, all of the remedies in Microsoft's proposal were on the table during settlement talks before the case was filed in 1998. If Microsoft had agreed to settle then, it would be held under some of the same restrictions it now proposes and could have saved two years and millions of dollars in legal fees.
Microsoft also asked the judge to give it more time to prepare for punishment by moving the remedy hearings back until at least August if he decides to go with its proposals, or to December if he chooses to pursue a breakup. But Judge Jackson is unlikely to add any more delays to the trial, since he seems to be quite irritated with Microsoft's delays already and has expressed a desire to finish the trial as soon as possible. Delays like those would give the company time to defend itself in the courts of public opinion and political action, since a December delay would certainly play into the company's attempt to save itself by waiting on a new presidential administration.
Shortly before Microsoft issued its remedy proposal, the government gave Judge Jackson a memorandum explaining its earlier recommendation. That lengthy memo, accompanied by six supportive declarations from technical and economical experts, backed the two-way breakup proposal by showing how Microsoft uses its operating system and office suite monopolies to harm competitors. As evidence, the government used a July 1999 e-mail from Bill Gates saying that Microsoft should redesign Office so it will no longer synchronize with the PalmPilot. That would result in slower sales for the Pilot and more demand for Microsoft's own Office-compatible handhelds. [We would quote from the e-mail but most of it was placed under seal by Microsoft attorneys.]
Microsoft responded not by denying the existence of the message, but rather saying that it was taken "out of context" and really is about how well Microsoft's own handhelds synchronize with Office. Spokesman Jim Cullinan went on to say that the e-mail must not mean what it says, since Office and the PalmPilot still work together as well as they ever did. The weak defense is not expected to have any impact on Judge Jackson, who is still expected to issue a final judgment before mid-July.

Giving open-source fanatics yet another reason to hate its very existence, Microsoft last week went after the mother of all open source advocacy sites: Slashdot. On May 10, Slashdot parent Andover.net received e-mail from a Microsoft attorney asking them to remove content from the site. The content in question are 11 posted messages from Slashdot readers that gave away details of proprietary changes Microsoft made to Windows 2000's implementation of open Kerberos security protocols. (Microsoft is particularly sensitive about keeping those details secret, since the Kerberos changes are its best weapon against Unix) The public posting of that information was, according to Microsoft, in violation of the Digital Millennium Copyright Act.
Andover.net replied to the e-mail the next day, questioning Microsoft's intent and referring to the request as censorship. Slashdot co-founder and Andover.net editor-in-chief Robin Miller then vowed to seek legal action if Microsoft persisted in its demands. Slashdot readers were even less enthralled by the news, but their comments on the site were mysteriously blocked when slashdot.org fell victim to a poorly-timed (or perhaps WELL-timed) denial of service attack. Nonetheless, this could lead to another legal battle for Microsoft - this one offensive instead of defensive. As for Microsoft itself, the company had no comment on the issue beyond its original e-mail message.

The entire text of both e-mails can be read here on the Slashdot site.

For the second time in 13 months, a somewhat harmful e-mail virus has spread like wildfire and threatened to cripple the world's business community. Nearly every business and home computer user on earth has been affected by the virus - with the exception of we who choose not to use Microsoft products. This time, the virus in question goes by the name 'I Love You', a moniker taken from the title of e-mail it uses to reproduce itself. Just like last year's Melissa worm [see NewsSource, Apr. 19 '99], this little annoyance takes advantage of security flaws in Outlook and Windows to run a VBScript file that deletes MP3 and JPG files, then reproduces by sending a copy of itself to everyone in the Outlook address book. Again like Melissa, this is not a problem related to a bug or design flaw in Outlook or Windows; this type of behavior is an inherent trait of supposed features Microsoft designed into its software.
The problem ripped blinders off of many in the IT industry, an industry that now realizes just how dangerous the supposed features in some Microsoft products are. That realization was followed by a tidal wave of criticism from both the media and corporate Microsoft customers, demanding fixes or corrections. In reply, Microsoft refused to take any blame for the problem and defended the presence of VBScript in its software (one spokesman for Microsoft in Germany even claimed that Linux and Macintoshes are vulnerable to the e-mail worm). But denials or not, this latest example of lax security hurt Microsoft's credibility even in those groups who have historically given the company their full trust and support.

On May third, Microsoft had to shut down its MSN Hotmail site because of another security hole unrelated to 'I Love You'. The problem in this situation was related to a JavaScript that used Hotmail users' browser cookies to steal passwords and other information. Microsoft blocked JavaScript from Hotmail messages last year after a series of high-profile attacks, but the script in question was included in e-mail attachments that the service does not filter. Hotmail service resumed nearly four hours later when attachment filtering had been enabled.

On May 8 Microsoft won a small victory in its legal battle with Sun Microsystems over Java. The victory was handed down by U.S. District Judge Ronald Whyte, who decided to dismiss one of Sun's claims against Microsoft, this particular one dealing with copyright violations. The decision was expected and has little effect on the overall case since Sun has already moved away from the copyright claims and is now instead using California's unfair trade laws and trademark infringement claims. The lawsuit is still destined to end up in a full blown trial, but scheduling for such an event has not yet been set.

In an Associated Press interview, estranged Microsoft chief technology officer Nathan Myhrvold said that he has no plans to return to the company on a full-time basis. As you may recall, Myhrvold left last summer [see NewsSource, June 7 '99] to pursue his other varied interests like car racing, mountain climbing, and cooking. Myhrvold joined Microsoft in 1986 and founded the company's massive R&D division in 1991. Following his departure, Myhrvold remained on the Microsoft payroll as an occasional advisor to Bill Gates. With Myhrvold apparently out for good, Microsoft has now promoted Rick Rashid to his former position as Senior VP of Research.

Buying more ammunition for its war against Getty Images, Bill Gates' Corbis image archive purchased the Sharpshooters photo agency on May 8. Sharpshooters, a provider of stock photography for magazines and advertising, will be absorbed into Corbis sometime later this month. No details on the buyout were released since both companies are privately owned.
The latest in a long series of similar deals, Microsoft on May 3 invested $40 million into broadband service provider CAIS Internet. In exchange for the investment, CAIS will create an MSN-based portal for its broadband Internet customers, most of whom connect from hotels, airports, and cruise ships.
With Windows 2000 only months old, Microsoft is busy preparing the first major update for that system. Windows 2000 SP1 Beta1 was release to a small number of testers earlier this month, with the official release expected for sometime in June or July. Sources say SP1 will include badly-needed fixes and several questionable new features.

Microsoft's Crapshoot
"Digital Divas" take on MSN
Gates's Executive Style Inspires Cult Following
WinCE retail market share collapses
Has Gates' combativeness hurt Microsoft in court?
Microsoft, Netscape squabble over browser hole