On antitrust, is Google the next Microsoft?

Not too long ago, nearly every move that Microsoft made seemed to draw complaints that the company was abusing its market dominance.

Now another market-leading technology company is under fire in Washington as well. An unlikely combination of onetime antitrust defendants like Microsoft and AT&T and liberal consumer groups that have been their traditional antagonists are taking aim at Google.
Interviews by CNET News.com last week show that Microsoft and its occasional allies have met separately with key congressional committees that deal with consumer protection and antitrust issues--both of which announced last week that they will hold hearings on Google's plan to spend $3.1 billion to buy DoubleClick.

The Federal Trade Commission, which must review the merger on antitrust grounds, has also been meeting with Google, Microsoft and those nonprofit consumer groups, according to sources familiar with the meetings. The European Union, egged on by American consumer groups like the Electronic Privacy Information Center and the pro-regulation Center for Digital Democracy, is reviewing the merger too.

All this amounts to the first serious political threat to a company that has grown to a market capitalization of $162 billion by worrying more about serving customers than catering to the whims of bureaucrats and politicians. Longtime Washington observers believe that even if the DoubleClick acquisition is eventually permitted, federal scrutiny will only increase.

In addition to its full-time staff lobbyists, also involved in Google's efforts to fend off antitrust bureaucrats are four newly hired lobbyists in the Washington office of the law firm Brownstein Hyatt & Farber (including Makan Delrahim, a former top Justice Department antitrust official). Google's earlier hires include the now-renamed PodestaMattoon, which draws its name from longtime Democratic dealmaker Tony Podesta, and King and Spalding, home to former Republican Sens. Connie Mack and Dan Coats.

A Google representative said there had not, however, been any personal visits to Washington in support of the DoubleClick deal by top executives like CEO Eric Schmidt and co-founders Larry Page and Sergey Brin, who famously showed up in blue jeans and sneakers when he arrived on Capitol Hill for meetings with politicians last summer.

Citing confidentiality concerns, an FTC representative declined to comment on anything beyond the fact that the investigation is continuing. AT&T, which has made public statements in opposition to the merger before, would not comment. Time Warner, which reportedly has voiced concerns about the deal, also would not comment.

Microsoft spokesman Jack Evans declined to offer details about his employer's attempts to sink the DoubleClick deal. "As a general rule, we don't comment on specific lobbying efforts," he said Friday. "Microsoft continues to believe the Google-DoubleClick acquisition raises a number of serious questions about the effects it will have on advertisers, publishers and consumers, and we believe it warrants closer scrutiny."

By any measure, Google is seriously outgunned in Washington. Its spending on lobbyists in 2006 amounted to a mere $720,000--a fraction of what the Google co-founders spent on their personal jet. By comparison, last year AT&T wrote checks for at least $27 million to buy political influence and Microsoft spent $8.9 million.

The disparity is even greater over a longer period. Starting in the late 1990s, when Google was moving into its first office, AT&T and Microsoft spent a combined $179 million while Google spent a mere $540,000. (That's counting lobbying and political contributions through 2005, as calculated in News.com's special report last year.)

It's no surprise that Google has paid little attention to Washington and hired a government
relations director just over two years ago: it's not in a heavily regulated industry like AT&T. Microsoft, of course, began writing fat checks to lobbyists--including Rick Rule, a former top Justice Department antitrust official--only after its antitrust headaches began in 1997.

Dude their getting Linux

As of 5 pm (Eastern Time), you'll be able to order two new Dell desktop systems and one Dell laptop configuration with Ubuntu Linux 7.04 installed instead of Windows. Dell product manager Lionel Menchaca has the details in his post on Dell's corporate blog this morning. (A posting earlier in the week has more technical details about these new configurations.)

This is a fairly amazing event. I can't remember any big-name vendor of Windows machines ever offering individual consumers the option of buying its hardware with the free, open-source Linux operating system preinstalled.

Two quick thoughts about the news:

* Microsoft has lost its power to intimidate everybody else in the PC industry. Remember when this company would threaten to yank a computer manufacturer's Windows license if it had the temerity to remove desktop shortcuts to Internet Explorer? Now think about how that version of Microsoft would have reacted to Dell's latest move.

* Good things happen when companies make it easy for their customers to suggest ideas and are prepared to act on them. Dell's IdeaStorm Web site allowed Linux users to document their long-standing wishes; it's to Dell's credit that it's making this major revision to its consumer product line in response. Now let's see how the company responds to other popular IdeaStorm suggestions, like making Firefox the default Web browser or letting customers opt out of having their new Dell machine loaded up with the usual trialware junk.

I plan on trying out one of Dell's Linux models in the next month or so. Do you plan on buying one yourself? (I'm especially interested in hearing from people who haven't put Linux on one of their own personal computers before.)

Dell Joins Microsoft and Novell Collaboration

Microsoft Corp. and Novell Inc. have announced that Dell Inc. is the first major systems provider to join the business collaboration that was formed by Microsoft and Novell in response to customer demand for greater interoperability and intellectual property (IP) assurance. As part of the agreement, Dell will purchase SUSE Linux Enterprise Server certificates from Microsoft and establish a services and marketing program to migrate existing Linux users who are not Dell Linux customers to SUSE Linux Enterprise Server. Read more

Vulnerability in Microsoft Office

A remote code execution vulnerability exists in the way Microsoft Office handles a specially crafted drawing object. This update resolves a privately reported vulnerability. The vulnerability is documented in its own subsection in the Vulnerability Details section of this bulletin.An attacker who successfully exploited this vulnerability could take complete control of an affected system. An attacker could then install programs; view, change, or delete data; or create new accounts with full user rights.When using vulnerable versions of Office, if a user is logged on with administrative user rights, an attacker who successfully exploited this vulnerability could take complete control of the system. An attacker could then install programs; view, change, or delete data; or create new accounts with the same user rights as the logged-on user. Users whose accounts are configured to have fewer user rights on the system could be less impacted than users who operate with administrative user rights.

Microsoft claims Linux is infringing on 235 patents

Microsoft claims that free software like Linux, which runs a big chunk of corporate America, violates 235 of its patents. It wants royalties from distributors and users. Users like you, maybe.

Free software is great, and corporate America loves it. It's often high-quality stuff that can be downloaded free off the Internet and then copied at will. It's versatile - it can be customized to perform almost any large-scale computing task - and it's blessedly crash-resistant.

A broad community of developers, from individuals to large companies like IBM, is constantly working to improve it and introduce new features. No wonder the business world has embraced it so enthusiastically: More than half the companies in the Fortune 500 are thought to be using the free operating system Linux in their data centers.

"It's a tinderbox. Patent law's going to be the terrain on which a big piece of the war's going to be fought. Waterloo is here some where." --Eben Moglen, Executive director, Software Freedom Law Center

But now there's a shadow hanging over Linux and other free software, and it's being cast by Microsoft (Charts, Fortune 500). The Redmond behemoth asserts that one reason free software is of such high quality is that it violates more than 200 of Microsoft's patents. And as a mature company facing unfavorable market trends and fearsome competitors like Google (Charts, Fortune 500), Microsoft is pulling no punches: It wants royalties. If the company gets its way, free software won't be free anymore.

The conflict pits Microsoft and its dogged CEO, Steve Ballmer, against the "free world" - people who believe software is pure knowledge. The leader of that faction is Richard Matthew Stallman, a computer visionary with the look and the intransigence of an Old Testament prophet.

Supreme Court eases patent standards

Caught in the middle are big corporate Linux users like Wal-Mart, AIG, and Goldman Sachs. Free-worlders say that if Microsoft prevails, the whole quirky ecosystem that produced Linux and other free and open-source software (FOSS) will be undermined.

Microsoft counters that it is a matter of principle. "We live in a world where we honor, and support the honoring of, intellectual property," says Ballmer in an interview. FOSS patrons are going to have to "play by the same rules as the rest of the business," he insists. "What's fair is fair."

It's a breathtaking number. (By comparison, for instance, Verizon's (Charts, Fortune 500) patent suit against Vonage (Charts), which now threatens to bankrupt the latter, was based on just seven patents, of which only three were found to be infringing.) "This is not a case of some accidental, unknowing infringement," Gutierrez asserts. "There is an overwhelming number of patents being infringed."

Furthermore, FOSS has powerful corporate patrons and allies. In 2005, six of them - IBM (Charts, Fortune 500), Sony, Philips, Novell, Red Hat (Charts) and NEC - set up the Open Invention Network to acquire a portfolio of patents that might pose problems for companies like Microsoft, which are known to pose a patent threat to Linux.

So if Microsoft ever sued Linux distributor Red Hat for patent infringement, for instance, OIN might sue Microsoft in retaliation, trying to enjoin distribution of Windows. It's a cold war, and what keeps the peace is the threat of mutually assured destruction: patent Armageddon - an unending series of suits and countersuits that would hobble the industry and its customers.

DELL going to Open-Source?

The adoration for Linux that has been flowing from Round Rock lately is both refreshing and curious, and Dell has just taken its respect for the open-source OS to another level by signing on with Microsoft and Novell. While Linux users have long griped (and protested) about Microsoft, it's been no secret that Michael Dell has a thing for Ubuntu, and now it sounds like Dell will be "buying SUSE Linux Enterprise Server certificates from Microsoft," and moreover, "will be setting up a services and marketing program aimed at getting users of open-source platforms to switch to the new SUSE Linux offering." With the agreement inked, the Texas Powerhouse becomes the "first major systems provider to align with Microsoft and Novell in the collaboration," and judging by all the other recent Linux happenings in the Dell arena, we'd say this deal aligns perfectly with its current strategy.

Search Engine War!

Searching the Web on a mobile phone has been a lot like getting online via dial-up modem circa 1995: slow, tedious and not terribly useful. Typing on tiny buttons, squinting at a list of links and clicking through to a page that won’t display properly is enough to test anyone’s patience.

But that is beginning to change. Google, Microsoft and Yahoo have all trained their sights on cellphones, which they see as the next great battleground in the Internet search wars. They have thrown tens of millions of dollars and armies of programmers at the problem, seeking to develop tools that people on the move can actually use.

In recent months, the three search giants have introduced a new breed of search services that emphasize quick answers to urgent questions: Where is the best local pizzeria? How did the Yankees do against the A’s? What’s the fastest way to get to the airport?

The services are beginning to carry small ads related to searches like those that have turned desktop Internet search into a gold mine.

“The biggest growth areas are clearly going to be in the mobile space,” Eric E. Schmidt, chief executive of Google, said when asked about new opportunities at a conference here this week. In case his point wasn’t clear, Mr. Schmidt drove it home: “Mobile, mobile, mobile.”

The new offerings from the search companies are just the beginning. Search services that pinpoint a phone’s location using the Global Positioning System or that accept voice commands are coming out of the labs. Google has gone so far as to build a prototype phone with its own software inside, according to one person who has seen it.

But between the search giants and phone users stand some powerful gatekeepers — cellphone carriers like Cingular, Sprint and Verizon. On the PC, Web surfers can easily go to the search engine of their choice, but this takes longer on a cellphone. Carriers have the ability to dictate which search engine is easy to access and which is not through placement in their phones’ menus.

“Search will be even more of a choke point on the mobile device than on the PC because navigation is so hard,” said Marco Boerries, the senior vice president in charge of Yahoo’s wireless efforts.

After spending billions of dollars building wireless networks, building relationships with consumers and subsidizing the cost of phones, the last thing carriers want is to miss out on profits from the mobile search business. By and large, they have been eyeing the major search engines with a bit of foreboding.

“In the U.S., the carriers have complete authority over what happens on the phone,” said Sam Jadallah, a venture capitalist who has invested in mobile phone technology start-ups. For the nation’s wireless carriers, Google, Yahoo and Microsoft “are much bigger threats than they are partners,” he added.

The tension between the two sides is reflected in the scarcity of major alliances between carriers and big-name search companies. Among the big American cellphone operators, only Sprint has a wide-ranging partnership with a top search provider, Microsoft. Most other large carriers are working with small technology companies that offer generic search services, which the carriers can stamp with their own brand.

Novell's regret in Microsoft deal

If Novell's chief executive has any regrets about slipping between the sheets with Microsoft, it's around Microsoft's push for IP protection.

Ron Hovsepian's alliance with Microsoft, announced last November, saw Microsoft agree to sell SuSE Enterprise Linux (SLES) coupons, while the companies worked on interoperability between SLES and Windows on virtualization, directories and file formats between Office and Open Office. Coupons apply specifically to SLES running as a virtual guest in a host Windows operating system or vice versa.

However, it was Novell's tacit recognition of the existence of intellectual property in Linux - by accepting Microsoft's promise not to prosecute developers whose open source code is used by Novell - that really rankled the community.

According to Hovsepian in eWeek, the IP covenant was a Microsoft - not a Novell - idea, and the companies' original proposal did not include a covenant not to sue. "That was one of the business things [Microsoft] wanted out of it," Hovsepian said.

And you can see why. It put Microsoft's chief executive Steve Ballmer back on form in the weeks following the deal, claiming Linux infringes Microsoft IP and that Microsoft wanted to "get the appropriate economic return for our shareholders from our innovation." Novell agreed to pay Microsoft $40m in protection.

Which brings us onto Hovsepian's only genuine - public at least - regret: his delay in responding to a storm of community criticism through an open letter. Hovsepian believes a timelier letter would have cleared up concerns.

That letter said Novell's agreement with Microsoft was "in no way an acknowledgment that Linux infringes upon any Microsoft intellectual property." Rather than clarify, though, Hovsepian's letter left people baffled over why Novell signed the covenant, given both companies held diametrically opposed views

Windows XP GONE as of 2008

Microsoft will stop selling Windows XP to PC makers such as Dell, Lenovo and Hewlett-Packard by January 31, a company representative confirmed Thursday. The software maker will stop selling XP to system builders, the smaller custom PC makers, a year later, the representative said.

"This has been the practice at Microsoft for some time, and this process provides a gradual transition away from a previous version of an OS, from full availability, to availability only through a distributor, and finally availability via downgrade rights," the Microsoft representative said in an e-mail.

Windows Vista, the successor to XP, became broadly available at the end of January. Microsoft has worked hard to promote Vista as a safer, easier to use, better connected and more entertaining version of Windows than any of its predecessors. However, there s still a lack of Vista-compatible applications and hardware drivers, hurdles for broad adoption.

Despite those words of caution, many PC shoppers already have no choice beyond Vista. PC makers have already moved almost everything they sell to consumers--and some businesses--over to Vista, both in stores and online.

Verizon Wireless Gets its Mitts on BlackBerry 8830 World Phone

Being a Verizon customer, I'm always complaining about their lack of phones, but it looks like the boys in red just got first dibs on RIM's BlackBerry 8830 (aka the Cyclone), which is a CDMA/GSM hybrid. In other words, it'll work here in the States and overseas on GSM networks. It's Verizon's second phone with that super feature. Personally, I think Verizon needs more "hybrid" models like that.

The 8830 looks like the 8800 and will pack a QVGA screen, microSD slot, and 3G EV-DO support. The bad news is that there's no camera. Even though I don't take a lot of cell phone pics, that's a deal-killer for me. Otherwise, corporate types should fair well with this baby in their pocket

Zune 2.0 Details Leaked

So we knew the red (and pink and orange) Zunes were coming, but surprise surprise, the red Zune will include some interesting sports content to cater to the sports nuts out there, or so the rumor hounds at Crunchgear say. Supposedly you will be able to select your favorite team and the Zune will be able to download games as podcasts, which could be handy if you miss a game or don't live in the area of your favorite team and miss all of the regional broadcasts on TV.

There are definite perks to something like this, especially for sports fans, but there are all kinds of problems that could be associated. Is it full games or just highlights? I don't see myself wanting to actually download a three hour baseball game and then proceed to watch it on a Zune screen. The jury is still out, but I'll try to give it a shot as soon as I can, given these rumors are correct.