MS offices in Japan raided

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Fri, 02 Apr 2004 07:10:36 -0500
From: Srini RamaKrishnan <cheeni () cmu edu>


This was on the AP wire. Japanese officials raided Microsoft's Tokyo offices
to exter pressure on the company to change some unsavory terms in the
company's contracts with Japanese firms. There's a storm building up in
Taiwan as well (http://www.theinquirer.net/?article=15123).

Srini


Japan Joins Global Pressures on Microsoft
http://www.bizreport.com/article.php?art_id=6738

The surprise raid by Japanese anti-monopoly authorities' on Microsoft
Corp.'s Tokyo offices was impeccably timed- barely a month before the
European Union slapped a $613 million fine on the company.

by Yuri Kageyama

The message from this country's Fair Trade Commission was clear: Japan is
not about to sit idle as other global powers raise concerns over Microsoft's
suspected abuses of its domination in the computer software business.
But whether the Japanese investigation that triggered the commission's
inspections of the software titan's Tokyo offices will amount to much more
than symbolic posturing remains unclear, experts say.

"The Japanese Fair Trade Commission wants to demonstrate it's marching in
lockstep with the other nations," said Tadaaki Mataga, a Gartner analyst who
thinks anything more than a warning is unlikely.
The fair trade agency said a possibly restrictive clause in Microsoft
contracts with hardware companies here was behind the raid. The language
essentially barred Japanese companies that license Windows operating systems
from any legal action against Microsoft over patent violations, commission
and Microsoft officials say.
Microsoft has denied any wrongdoing. But shortly after the commission's Feb.
26 raid, the company said it had decided the previous week to delete the
clause in future contracts - and had already told the manufacturers.
A Japanese government official, speaking on condition of anonymity, said the
raid should be considered a pressure tactic.

The patent issue is especially critical for Japanese electronics makers as
they develop smarter cell phones, network gadgets, digital appliances and
other products that are supplanting desktop PCs as computing platforms, the
official said.

There is concern that Microsoft, if allowed unfettered access to proprietary
information about such companies' products, would be able to use it to its
advantage and their detriment in the marketplace. It's feared Microsoft
could gain even more muscle globally as broadband Internet boosts the trade
in music, video and other digital content.

Beyond the fine it imposed, the EU ordered that Microsoft provide European
computer manufacturers with a version of Windows stripped of the company's
digital media player - and ordered it to share more information with rivals
in the server market.

The monopoly watchdog in Japan rarely resorts to fines and a fine of the
magnitude of the one imposed by the EU would be unthinkable here, though the
raid was major news in Japan, topping headlines and TV news.
The government official consulted about the fair trade raid said Japan wants
to see what Microsoft will do next - watching closely how thoroughly it will
remove the contested clause - before it considers further action.
Toshiba Corp., Matsushita Electric Industrial Co., which makes the Panasonic
brand, Sharp Corp. and other Japanese electronics makers refused to comment
on the Microsoft probe, saying they were also being questioned by the fair
trade agency about it.

As in the rest of the world, Windows controls virtually the entire PC
software market here. And manufacturers are extremely nervous about saying
anything that may damage relations with Microsoft - even as they wish to
keep its prowess in check.

Microsoft Japan said that the investigation by the commission was continuing
through meetings and requests for information and that Microsoft was
cooperating with the probe.
Having modernized in the decades after World War II largely through
government-orchestrated scenarios that favored major companies over the
little players, Japan has never boasted a corporate culture that demands
transparency or slams monopolistic behavior.

Yet Tokyo has lately grown somewhat wary of Microsoft's might, trying to
push for open-source software such as Linux not only in government but also
in private-sector research and product development.
Many of Japan's latest gadgets and robots use Linux, not Windows.

Japan's trade ministry has been promoting not only the use of Linux here but
also collaboration with the governments of South Korea and China to share
research findings and encouraging exchange among experts, an effort that is
seen as going hand in hand with anti-monopoly pressures on Microsoft.
"Japanese makers are grateful that the powers above are acting," to keep
Microsoft's might in check, says Kazuya Yamamoto, analyst at UFJ Tsubasa
Securities Co. in Tokyo. "It's an expression of national policy that's
beyond the reach of individual companies."

And the chances aren't great for Microsoft to repeat in network gadgets what
it has done in personal computers, as Japanese makers decisively turn to
Linux, Tron and other less expensive operating systems for their latest
products, Yamamoto said.

Robots and cell phones are among new Japanese gadgets that already run on
Linux and Tron and more products are in the pipeline, companies say

"Behind the commission's investigation is the agenda from the Japanese
makers determined not to have their hands tied when they try to develop
network consumer gadgets," the Nihon Keizai Shimbun, Japan's top business
daily, said in an editorial following the EU ruling.
"If we hope to make various technologies work successfully together, it's
precisely Microsoft that must be more open with its own technologies," it
said.

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