Sun brings antitrust suit against Microsoft
By Stephen
Shankland
Staff Writer, CNET News.com
March 8, 2002, 3:50 PM PT
http://news.com.com/2100-1001-855696.html
Sun Microsystems filed a private antitrust lawsuit against Microsoft on
Friday seeking damages that could top $1 billion partly over the software
giant's handling of Sun's Java software.
The suit, which had been rumored,
also seeks to force Microsoft to release the underlying source code for
Internet Explorer, and to release interfaces between Windows and
higher-level Microsoft software. In addition, the suit seeks preliminary
injunctions to require Microsoft to ship Java with Windows XP and Internet
Explorer.
AOL Time Warner filed
a similar lawsuit against Microsoft in January.
Sun's suit, filed in U.S. District Court in San Jose, Calif., extends
beyond the federal and state antitrust cases. Those cases were chiefly
concerned with the Internet Explorer and Netscape browsers but didn't
address server operating-system issues such as those surrounding
Microsoft's .Net Framework software for weaving the fabric of the future
Internet.
Sun General Counsel Michael Morris said the company is trying to stop
Microsoft from making its products a mandatory part of the Internet by
using its monopoly power to create "Microsoft-controlled choke points
to Internet access." Specifically, Sun wants Microsoft to decouple
.Net from its Windows operating system.
"Microsoft intends to use the .Net Framework to move its current
monopoly in the PC operating-system market into a more expansive and
potentially more dangerous monopoly that encompasses software development
on every computing device" connected to the Internet, Sun said in its
suit.
Commenting on the suit, Microsoft reiterated its position that legal
wrangling hurts consumers.
"It's time to move past these issues, many of which are related to
the lawsuit we already settled last year," said Microsoft spokesman
Jim Desler. "Sadly, the real losers in this type of litigation are
software developers and consumers. The industry is at its best when we
focus on innovation and developing great products."
Microsoft redirected any blame regarding Java's level of acceptance
among computer users. "Millions of consumers using Windows easily
access and use Java technology every day," Desler said. "Java
technology is widely used, and any consumer lack of acceptance of Java is
due to Sun's own failures and not actions by Microsoft."
Sun's stock rose $1.17, or 13 percent, to close at $10 Friday on the
Nasdaq amid a market that saw most technology stocks rising. Microsoft
stock rose $1.23, or 2 percent, to $63.95.
Sun's Java software lets programs run on many types of computers
without having to be modified for each one. The promise of Java for
Sun--and its threat to Microsoft--is that programmers will write software
geared to run on Java rather than on Windows.
Microsoft stripped
Java from Internet Explorer when it launched its Windows XP operating
system last fall. Microsoft said at the time that it feared that including
the software could spur Sun to try to block
release of XP through legal action.
"This private antitrust lawsuit is intended to restore competition
in the marketplace by removing unlawful barriers to the distribution of
the Java platform and to interoperability between Microsoft software and
competitive technologies," Morris said in a statement. "The
achievement of these goals will allow for greater innovation and increased
customer choice."
Sun is seeking damages that could top $1 billion, Morris said. Under
antitrust law, plaintiffs can be awarded three times the damages found, he
added, bringing the total possible cost to Microsoft to $3 billion.
Federal case an issue
Sun has been considering
a private antitrust lawsuit for nearly two years. Sun Chief Executive
Scott McNealy, a longtime Microsoft foe, raised
the possibility again last month at an analyst conference.
McNealy has long argued that it's not Sun's job to police Microsoft,
but at the same time he has said that he was dissatisfied with the settlement
in the federal antitrust case, which came after proposed stronger
penalties.
In an interview, Morris said the suit was triggered by a federal
appeals court's June
decision to uphold the finding that Microsoft had violated antitrust law
and by Microsoft's decision to stop shipping Java with Windows XP.
Sun doesn't expect the suit to affect ongoing action between several
states, the Justice Department and Microsoft. "That'll go down its
own course," Morris said. "We don't intend this filing will have
any impact."
But the earlier case could help Sun in its lawsuit. "The Court of
Appeals decision is a very powerful tool for Sun in its lawsuit against
Microsoft," Silicon Valley lawyer Rich Gray said. "However, that
does not mean that Microsoft does not have important and real
defenses."
For example, the Justice Department itself raised a point this week
that Microsoft could use. "The government asserted it hasn't been
proved that the illegal activity found by the Court of Appeals actually
prevented Java from being a viable competitor to Microsoft," Gray
said.
Sun will rely on the appeals court decision and the findings of fact
that underlie that decision, Morris said. "We believe those findings
are binding on Microsoft in this matter and that we do not have to
re-prove them," Morris said.
Analysts see a long struggle ahead. "We did expect there could be
private suits, but whenever you enter a protracted legal action, it's like
going to war," said Mike Gilpin of Giga Information Group. "And
when you come out the other end, the question is, would you regret you did
that?"
However, Gilpin doesn't expect the lawsuit to have any major effect on
the thriving Java community. Oracle, BEA Systems, IBM and hundreds of
other companies all support software written in the Java language.
In January 2001, Sun and Microsoft settled
a 1997 lawsuit over Microsoft's use of Java. Under the settlement,
Microsoft agreed to pay Sun $20 million and was permanently prohibited
from using "Java compatible" trademarks on its products.
In settlement discussions, Sun encouraged Microsoft to ship a modern
version of Java, but Microsoft refused, Morris said in a conference call
with reporters. Sun also negotiated a right to file an antitrust suit,
Morris said in an interview.
In the 1997 case, Sun argued that Microsoft breached its contract by
trying to extend Java so it would work differently on Windows computers.
Consequently, one of Sun's main arguments in the case was that Microsoft
wrongfully advertised that its products were Java-compatible because, in
Sun's eyes, they were not. Those changes broke the universality of Java,
Sun argued.
The .Net threat
Regarding the private antitrust suit filed Friday, Morris said Sun will
grant Microsoft a license to ship the modern version of Java--royalty-free
at least for the course of the lawsuit--but only for the binary version of
Java, which can't be changed.
Specifically, the suit claims Microsoft engaged in "illegal
monopolization and/or monopoly maintenance" of the Intel-compatible
PC operating-system market, the browser market and the Office productivity
suite.
It also claims Microsoft broke antitrust law by tying several products
to its various operating systems: the Internet Explorer browser to Windows
OS; the Windows workgroup server operating systems (Windows 2000
Professional and Windows XP Professional) to its PC operating systems; its
IIS Web server to its server operating systems (Windows NT 4.0 and Windows
2000 Server); and the .Net Framework to its PC and workgroup server
operating systems.
Sun wants a preliminary injunction requiring Microsoft to include the
most current Java plug-in with Windows XP and Internet Explorer.
Additionally, Sun is asking the court to require Microsoft to
"disclose and license proprietary interfaces, protocols and
formats," and to "unbundle" products such as Internet
Explorer, IIS and .Net Framework.
Some are skeptical that the case will be worthwhile. "These cases
go on forever...Why not just beat them in the marketplace? You'll never
see the money," Bear Stearns analyst Andrew Neff said in a conference
call with Morris.
"The litigation will not go on forever, and we will see the
money," Morris responded. Sun hopes for a preliminary injunction
within a year or sooner, he said.
Sun did not make the decision lightly, Morris said. And the stakes are
indeed high.
"Microsoft's movement into .Net would allow it to carve further
into Sun's space. It would allow Microsoft to continue to damage Java and
by extension continue to damage Sun," said Cal Braunstein, CEO of the
Robert Frances Group.
The .Net Framework is a crucial piece of Microsoft's overarching .Net
strategy. Currently a part of the Visual Studio.Net tools, the .Net
Framework is the software fabric that automates many development tasks and
helps software run reliably and securely across multiple servers and
computers.
The software is available for free download from Microsoft's Web
site.
Because the .Net Framework includes prewritten code, it can save
developers time, simplify a confusing array of programming interfaces, and
eliminate common bugs, analysts said. It also includes the Common Language
Runtime, which is a universal engine that will allow software developers
to use many types of programming languages to write Windows applications.
The Common Language Runtime is a competitor to the Java Virtual
Machine, essentially a computer that runs Java programs. Microsoft plans
to build the .Net Framework into the company's forthcoming .Net Server,
Microsoft's next Windows operating system for servers.
News.com's Scott Ard and Wylie Wong contributed to this report.
Last updated:
March 10, 2002
|