IP: Infighting Unravels Alliance

[David Farber <farber () central cis upenn edu>]

Date: Thu, 28 Sep 1995 16:05:07 +0100
To: www-buyinfo () allegra att com
From: anon-remailer () utopia hacktic nl (Anonymous)


   The Wall Street Journal, September 28, 1995, p. B10.




   Infighting Unravels Alliance Seeking Standard to Protect
   Internet Purchases


   By Jared Sandberg




   New York -- A major alliance to develop a technical
   standard for protecting credit-card purchases on the
   Internet has unraveled amid bickering between a handful of
   heavyweights.


   The consortium brought together such top players as
   credit-card rivals Visa International and MasterCard
   International Inc., software titan Microsoft Corp. and
   Internet upstart Netscape Communications Corp. But this
   week, the alliance split because of tensions between Visa
   and MasterCard and their respective technology
   partners -- Microsoft and Netscape.


   Microsoft and Visa this week published a detailed
   description of a credit-card standard -- but with
   MasterCard conspicuously absent. MasterCard and Netscape
   now argue, in essence, that the Microsoft-Visa team is
   withholding the technical design to keep its approach
   "proprietary" and charge software developers and financial
   institutions to use it.


   "We're disappointed that Microsoft and Visa have opted
   unilaterally to take this approach," a MasterCard
   spokeswoman said. She said the Microsoft-Visa details were
   incomplete, thwarting banks and software firms developing
   new applications. MasterCard said it refused to take part
   in the Visa announcement because it is "contrary" to the
   plans for a "single open standard."


   The spat threatens to break down into an all-out standards
   battle over how to prevent hackers on the Internet from
   filching sensitive financial data such as credit-card
   numbers. The losers could be legions of users and companies
   eager to do business on the Internet.


   Banks would be forced to accommodate multiple payment
   mechanisms, merchants would have to choose one or another
   standard or incur greater costs obtaining both systems --
   passing the costs on to Internet consumers.


   "The growth of the industry is going to be impeded," said
   Robert Howe, a general manager at International Business
   Machines Corp., which has all but sided with the
   MasterCard-Netscape team.


   The dissension shows how, in high technology in particular,
   the vagaries of competition and ego can overwhelm
   highminded intentions to provide what customers need. Ego
   is at play in MasterCard's sniping at Visa, some executives
   say. MasterCard didn't like Visa taking the lead in
   partnership with the industry's powerhouse, Microsoft.


   MasterCard "viewed it as a Visa-and-Microsoft deal. And to
   invite MasterCard in to participate now is awfully late,"
   said one executive familiar with the matter.


   Ego also seems to be at work in the Microsoft and Netscape
   face-off. Yesterday James Clark, chairman of Netscape,
   asserted that Microsoft had demanded a 20% stake and a seat
   on the board of Netscape earlier this year in return for
   giving Netscape important technical data on Microsoft's new
   operating system.


   Mr. Clark levied the broadside during an otherwise low-key
   panel discussion at the Seybold Conference yesterday in San
   Francisco. An audience member asked why Netscape and
   Microsoft are backing different standards for commerce on
   the Internet, and Mr. Clark replied that Microsoft is hard
   to work with and detailed the equity demand as an example.


   The Netscape chairman couldn't be reached for comment, but
   Michael Homer, a senior vice president of marketing at
   Netscape, confirmed that Netscape considered selling
   Microsoft an equity stake as part of earlier talks about
   technologies that the two companies wanted to license with
   each other. "The equity part of the discussion never went
   anywhere," Mr. Homer said.


   Netscape accused Microsoft yesterday of withholding
   technology to extract hefty fees from any company hoping to
   develop electronic-commerce software. "Microsoft is trying
   to funnel every electronic transaction through them" and
   shave fees from each purchase, Netscape's Mr. Homer
   contended.


   Mr. Homer added that if Microsoft were truly committed to
   open standards, it would simply hand over the software code
   for all comers to use.


   Microsoft said it licenses such code rather than giving it
   away. And it admits being interested in skimming a fee off
   all the Internet transactions using the plan it unveiled
   with Visa this week.


   "If we could do that, we will do it," said Warren Dent,
   director of business development at Microsoft. He added
   that the cost wouldn't come from Internet merchants.
   Regarding Netscape, Mr. Dent said the firm's security
   deficiencies that have recently come to light have
   "tainted" electronic commerce on the Internet. Mr. Dent
   also noted that Microsoft yesterday introduced new security
   technology, including means to verify a user's identity,
   that is much stronger than Netscape's.


   Richard Lonergan, an executive vice president at Visa, said
   his firm remains committed to working on an open standard
   for all players to unite current efforts that are "all over
   the map."


   The winning standard offers potentially huge riches to the
   company that provides it. Though software firms routinely
   commit themselves to so-called "open standards,"
   competition often intervenes. "Software companies are
   always playing games to gain advantage," said one executive
   familiar with the companies. "Visa and MasterCard are
   caught up in this battle."


   Joan E. Rigdon in San Francisco contributed to this
   article.


   [End]


$0$AD