Why the Richest Company on Earth Feels it Needs to Cheat

[Dave Farber <dave () farber net>]

> Date: Mon, 01 Sep 2003 08:17:14 +0200
> From: the terminal of Geoff Goodfellow <geoff () iconia com>
> Subject: Why the Richest Company on Earth Feels it Needs to Cheat
> To: Dave E-mail Pamphleteer Farber <dave () farber net>
>
>
> http://www.pbs.org/cringely/pulpit/pulpit20030828.html
> Stupid Microsoft Tricks
> Why the Richest Company on Earth Feels it Needs to Cheat
>
> By Robert X. Cringely
>
> I had no idea when I wrote in last week's column about the lawsuit between
> Burst.com and Microsoft that there would be a public hearing on the case
> this week in Federal Court in Baltimore. Evidently, nobody else knew it,
> either, because there is no mention of the event on Google News or anywhere
> else I looked. This must be a relief to Microsoft, or was until you started
> reading this column about 20 seconds ago. You see, Microsoft did not come
> through the hearing very well as whole new levels of anti-competitive
> behavior were claimed by Burst AND ACKNOWLEDGED BY MICROSOFT -- levels that
> will likely haunt Redmond in many legal cases to come.
>
> This was, to my knowledge, the first public hearing in the case. Anyone off
> the street could walk into the courtroom and watch the fun. That also means
> everything that took place in the hearing is now a part of public record and
> will remain so no matter what happens with the rest of the case. To even
> allow this hearing to take place appears to have been a terrible blunder on
> Microsoft's part. Or maybe it was just one in a long line of calculated
> risks. From the outside looking in, the risk appears to have not been worth
> it, but only Microsoft can know for sure.
>
> To recap the overall case for the third time (you'll find two previous
> columns under the "I Like It!" button on this page), Burst claims that
> Microsoft negotiated in bad faith for over a year, then stole Burst's
> patented technology for increasing the efficiency of video and audio
> streaming. "Bursting" is protected by a total of 37 U.S. and foreign
> patents. A jury will decide later this year whether or not Microsoft is
> infringing Burst's patents and whether Redmond actively stole Burst's
> technology despite having a nondisclosure agreement in place. This all has
> yet to be proved.
>
> What doesn't have to be proved is what was stipulated in this week's
> hearing. The hearing came about because Burst felt Microsoft was not
> divulging all the documents it was supposed to as part of the discovery
> phase of the case. Discovery is where each side asks the other for pertinent
> information and documents important to its case. Among other things, Burst
> asked for copies of all Microsoft e-mail messages concerning Burst during
> and shortly after the time when the companies were trying to negotiate a
> license for Microsoft to use Burst's intellectual property.
>
> Microsoft handed over the e-mail messages on a disk, and when Burst's
> lawyers had printed all the messages they filled 140 boxes. That's a lot of
> messages, but not surprising for Microsoft, where the business culture of
> the company literally happens on e-mail.
>
> When Burst's lawyers put the messages in order by date and time, they claim
> to have noticed a peculiar phenomenon. There were literally no messages from
> approximately one week before until about a month after all seven meetings
> between the two companies. This meant that either Microsoft completely
> suspended its corporate e-mail culture for an aggregate period of 35 weeks,
> or there were messages that had been sent and received at Microsoft, but not
> divulged to Burst.
>
> Presented with this charge in court, Microsoft's attorneys acknowledged that
> the message gaps existed. The messages had been erased by the half-dozen
> Microsoft employees involved, both from their PCs and from the mail servers.
> There were no backup copies. The reason for this mass erasure, it was
> explained, is that Burst technology was unimpressive and not of interest to
> Microsoft, and the e-mails were simply not worth keeping.
>
> As a longtime Microsoft watcher, I have to jump in at this point and wonder
> why, if the technology was of no interest, Microsoft took seven meetings
> over two years to decide this? The en masse nature of this erasure is also
> interesting because every involved Microsoft employee choosing to erase
> exactly the same messages over seven perfectly identical time periods seems
> hardly coincidental. Why didn't they erase all messages relating to Burst,
> not just the 35 weeks? And it would be interesting to know if messages
> concerning every little company that negotiated unsuccessfully with
> Microsoft were also erased on such a schedule. There must be dozens or
> hundreds of such companies. That would be an interesting thing to know.
>
> It is too bad there were no backup copies of the erased messages. One would
> think a company like Microsoft would be more careful. Then one of the Burst
> lawyers pointed out testimony from a hearing in the Sun v. Microsoft
> antitrust case where Microsoft representatives said all e-mails were
> backed-up on more than 100,000 tapes that are held off-site. Surely the
> lawyers representing Microsoft weren't aware of this because if they had
> been, they wouldn't have said there was no back-up.
>
> So the judge ordered Microsoft to produce the missing messages. The employee
> PCs, the servers, and the off-site backup tapes have to be searched and
> soon. The Microsoft lawyers complained that would be like finding a needle
> in a haystack. The judge reminded them that it was they who had put that
> needle in the hay.
>
> And that, pretty much, was the hearing. It never got around to the other
> Burst complaint about discovery, that Microsoft was withholding some
> messages as privileged attorney-client communications simply because a
> Microsoft lawyer was cc'd on the message. This latter technique was invented
> by the tobacco industry long before there even was e-mail. Back in the 1950s
> and 1960s, they would make sure a company lawyer was present at every
> important meeting simply to keep out of court anything said at the meeting.
> I have to wonder how many smokers needlessly died because of that technique.
>
> What happens next with Microsoft and Burst is interesting. In a few weeks,
> Microsoft will either find the messages or not. If they do find the messages
> and produce them, whatever is in those messages becomes part of the case. If
> they don't find the messages and the case goes to trial, the judge will tell
> the jury that Microsoft deliberately withheld and destroyed evidence. Juries
> are generally unimpressed by such behavior.
>
> Those are the facts of the hearing. Now I have to wonder what the heck is
> going on here? What could have been in those messages that was so bad for
> Microsoft that half a dozen people coordinated a mass erasure of 35 weeks
> worth of e-mail? And why would Microsoft even take such a risk?
>
> Well, I don't know what was in those e-mails, though I'd be inclined to
> guess it was something along the lines of "Let's steal this cool stuff from
> Burst." But I do have a fairly good idea why Microsoft took the risk. It was
> a calculated risk. Burst.com was a little company about to run out of money
> at a time when dot coms were folding by the hundreds, their patents sinking
> from sight. If Microsoft bought a license from Burst, it would be
> propping-up the company and helping Burst to survive. But it wasn't in
> Microsoft's interest for Burst to survive because Burst's technology was
> cross-platform. If Burstware had run only on Windows, Microsoft might have
> felt inclined to buy a license. But Burstware also ran on Solaris and Linux,
> and that threatened to weaken Microsoft's plans to have Windows dominate
> digital entertainment delivery. It made more sense to let Burst die and then
> duplicate the technology based on what had been gained in those seven
> meetings and from materials acquired from Burst under a non-disclosure
> agreement. At least that's the way it looks to me, I could be wrong.
>
> The only problem for Microsoft was Burst did not die. The company shrank to
> two employees, raised enough money to continue operating for two to three
> years, then found lawyers willing to take the case on contingency in
> exchange for a healthy chunk of any damage award. The lawyers are assuming
> all the financial risk, but they also have a chance to earn a payday worth
> hundreds of millions of dollars.
>
> "Why would a company like Microsoft do this?" asked Richard Lang, who is
> Burst's CEO and half the company workforce. "We were a little company.
> Microsoft could have had our technology for almost nothing, but instead they
> stole it. We called them on it, and they could have settled at any time, but
> they didn't. They stuck their heels in and won't give an inch even now. The
> only way I can make sense of this behavior is that they need to win no
> matter what the cost."
>
> Richard hasn't been watching Microsoft as long as I have. There are a couple
> factors interacting here. It isn't that Microsoft needs so much to win, but
> that they are desperate not to lose. The company functions in part by
> encouraging paranoia. "Sure things look good now, but that could change in
> an instant." That was Microsoft's primary defense in its case with the
> Department of Justice -- not that it didn't have an effective monopoly, but
> that it had what it thought was a fragile monopoly. That's why Microsoft
> needs a war chest of nearly $50 billion because that instant could come and
> the cash would be needed.
>
> Promulgated by Bill Gates ever since he read John Walker's essay "The Last
> Days of Autodesk," this fear has been very effective as a company motivator,
> but in the process it has turned Microsoft into a monster. That's where the
> second factor comes into play. It's that e-mail culture. Bill and Steve lead
> primarily by edict. Most Microsoft employees never see them, many will never
> meet them. So the kids are trying to follow a standard that is set by the
> tone of e-mails. But e-mail is not reality. E-mail is a world of distorted
> values where it is easy to go too far, and easier still to read things wrong
> and go even further.
>
> I doubt that Bill Gates told anyone to destroy Burst.com, but I KNOW Bill
> Gates told the people of Microsoft that the company's future lay in digital
> media and that cross-platform products were, by their very nature, a threat
> to Windows hegemony. It is only a short step then to erasing e-mails because
> doing anything less would be helping to kill Microsoft, not Burst. It's them
> or us, right?
>
> Not really.
> =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
> geoff.goodfellow () iconia com * Prague - CZ * telephone +420 603 706 558
> "success is getting what you want & happiness is wanting what you get"
> http://www.nytimes.com/library/tech/99/01/biztech/articles/17drop.html
> http://blogging.cz

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