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Apr. 06 1998
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New DOJ Charges? WebTV Pyramid Fraud & Handicapped Windows
The talk of the internet last Tuesday was centered around Netscape's release of the Communicator 5.0 source code. Shortly after the code was released, mozilla.org (Netscape's code distribution point) was overrun in a feeding frenzy as developers tried to get their hands on the uncompiled code. Netscape decided several months back to make the source available for free to developers, hoping to stop their market slide and keep Microsoft from taking over the internet. The wave of new developers for the software might not increase the company's market share, but should raise the amount of money Netscape makes from its web site and server products.
Microsoft maintains that it gives developers similar access to Internet Explorer, only with self-contained browser components rather than raw code. The Behemoth claims that most developers prefer to work with the software in this form anyway. (The actual reason Microsoft can't release uncompiled Explorer code is that it would let developers see just how much of the code is "borrowed" from Netscape products.) "We're providing a tested, compatible tuned engine," IE product manager Craig Beilinson said. "We feel like they [Netscape] didn't address some concerns: backward compatibility, optimization of code, testing. Who is doing all that work?" We dare suggest that maybe all those independant developers are.
As reported Monday in the Wall Street Journal, investigators at the US Justice Department believe they have enough evidence to bring another case against Microsoft by the end of this month. According to WSJ sources close to the probe, The new case would allege "illegal maintenance and extension" of Microsoft's control of personal-computer operating software, which violates the Sherman Antitrust Act (what the DOJ should've gone after in the first place). It would also bring back charges that Microsoft broke the 1995 antitrust settlement by bundling Internet Explorer with Windows, only this time it would deal with Explorer in upcoming Windows 98, not Windows 95.
This time, having done more thorough research, government investigators reportedly have obtained copies of memos and other documents from Microsoft executives describing a systematic plan to "break most of Netscape's licensing deals" and "make it clear [to corporate customers] that it does not make any sense to buy Netscape Navigator." Investigators have also sent more subpoenas to Compaq, HP and other companies close to The Behemoth. We will most certainly keep you updated on these events.
Despite 3Com CEO Eric Benhamou's declaration Monday that Microsoft has agreed to drop the 'palm' designation from its handheld PC, a Microsoft official yesterday said the company still plans to use the name unofficially. A Microsoft spokesman said that the ideal agreement between the companies would allow them both to use the word palm in describing their handheld computer products. But since 3Com already had rights to the palm designation before Microsoft used it, the agreement would only be "ideal" for Microsoft.
3Com filed a trademark infringement suit against Microsoft in March claiming that the Palm PC name was too similar to their own PalmPilot. Microsoft is defending its actions by saying Palm PC was only an informal name to describe a product category.
FutureNet, The top seller of Microsoft's WebTV, agreed this week to pay more than $750 million to settle federal charges that it operated an illegal pyramid scheme. The company and several of its executives were charged with engaging in "false and deceptive" marketing and operating a pyramid scheme by primarily making money from distributors. The FTC raided FutureNet's offices on February 24 and temporarily shut down the company, which still denies the charges brought against it.
Microsoft's senior VP in charge of WebTV Bill Keating explained that "FutureNet has actually done a great job for us," apparently responsible at least 9 percent of the 300,000+ WebTV units sold. Microsoft represenatives had no further comment, nor did Phillips/Magnavox, the company that made the company's WebTV boxes.
Apparently several of FutureNet's executives have been in trouble for this type of behavior before. Robert Depew, a former CEO of FutureNet named in the suit, was fined $50,000 in 1973 by the state of California as part of a civil judgment against Bestline Corp. for a pyramid scheme. And back in 1987, FutureNet co-founder Larry Huff was sentenced to two years in federal prison for a mailfraud scam that ripped off more than $80 million. Looks like Microsoft will have to start doing a slightly better job of screening its distributors.
At a seminar last Wednesday, Microsoft officials announced that The Behemoth is creating an "advisory council" of computer users with disabilities in an effort to make its products more accessible to disabled people. Sometime in the yet-to-be-determined future, Ms will increase the number of full-time employees working on handicapped accessable software from nine to 24, making the company "a model to the software community in making its products usable for people with disabilities," according to CEO BillG.
One developer demonstrated a new feature of Windows 98 designed to help disabled users, a wizard that guides the user through the steps of setting preferences for things like the size of typeface within dialog boxes (apparently for the same mentally-challenged users all Microsoft "wizard" software is designed around). The company is also encouraging Web developers to use cascading style sheets (Microsoft's version, not Netscape's) to let users select their own typefaces, colors, and backgrounds to make reading web sites easier. This ignores the fact that browsers such as Netscape, Opera and (last time we checked) IE allow users to select their own custom typefaces, colors and backgrounds without the added hassle of CSS.
BRIEFLY: Thanks to recent upswings in the value of Microsoft stock, Bill Gates is now worth more than $50 billion. That, incidentally, makes him worth more than the market values of Netscape, Oracle and Sun combined. At the rate his net worth is growing, Gates makes more than $150 per second, night and day. Beats working for minimum wage, doesn't it?
Ms is in the final stage of negotiating a buyout of Firefly Network Inc. Firefly makes personalization software like Passport, an electronic identification tag that allows users to specify their interests, then uses server software to give users web pages customized for their own tastes. The deal is expected to be finalized next week.
Gateway 2000 has announced that it will offer a free Windows 98 upgrade coupon to customers who buy its PCs between now and the product's official June 25 ship date. In addition, NEC announced that it will offer a similar deal to customers who purchase one of its built-to-order Directions computers. Other OEMs such as Compaq, IBM and Dell have neither confirmed nor denied planning similar offers.
Microsoft subsidary WebTV announced that it will raise prices for its "WebTV Plus Network" services from $19.95 to $24.95 per-month, effective June 1, 1998. Customers who sign onto WebTv Plus before June 1 will keep their current rate until January 1, 1999. "WebTV Classic" service prices will not change.
Microsoft co-founder and former executive Paul Allen paid $2.8 billion last week for Dallas-based Marcus Cable Co., the nation's 10th largest cable company. Allen, who owns several sports teams, parts of AOL, Microsoft, TicketMaster and other media companies, resigned from Ms in 1983 because of "health reasons" mostly due to fighting with Bill Gates.
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