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Ralph Nader P.O. Box 19312, Washington, DC 20036 Ralph at essential.org James Love Consumer Project on Technology P.O. Box 19367, Washington, DC 20036 202.387.8030 | http://www.cptech.org | love at cptech.org June 15, 1998 Joel I. Klein Assistant Attorney General Antitrust Division U.S. Department of Justice Washington, DC Dear Mr. Klein: I. Executive Summary * Microsoft's hostility toward antitrust measures, and the repeated failure of its management to abide by the letter or spirit of the agreements they sign, raises serious doubts that Microsoft can ever be expected to live up to the spirit of antitrust remedies which are based upon conduct rules. Many consumers and software developers are appalled at Microsoft's continued efforts to use the Windows OS as a weapon against its competitors, and its repeated attacks on non-proprietary Internet and computing standards, and are now interested in considering alternatives * Technology is creating opportunities for non-Microsoft operating systems (OSs). The availability of large hard drives, boot management software, interoperability based upon Internet open protocols, modular programming languages that lower costs to port applications across platforms, and easily cloned GUI interfaces, make alternative OSs more appealing and practical. One should not assume that every consumer in the World will always want to use the same operating system, sold by the same company. * Today it is impossible to buy a nationally branded personal computer without buying Microsoft Windows, and consumers cannot even return Windows for refunds. No nationally branded computer vendors sells PCs without non-Microsoft operating systems pre- installed, even as a dual boot option. * Microsoft uses its market power to discourage PC manufacturers from offering computers with non-Microsoft products, including non-Microsoft operating systems. There exist several promising non-Microsoft alternatives, including free software such as GNU/Linux or FreeBSD, or new systems like BeOS. It will be difficult for these alternatives to succeed in the broader consumer market if consumers cannot buy PCs with the alternative OS pre-installed. * The 1995 DOJ/Microsoft consent order has been ineffective in several important respects. DOJ should seek non-discriminatory licensing of Windows and Office products, so that PC vendors can offer non-Microsoft products without fear of retaliation from Microsoft, and ban per-computer licensing of Windows. * One of the most important challenges to Microsoft's monopoly is coming from the free software community, which is organized in a variety of ways. Free software products have already achieved significant success in server markets, and are becoming closer to mass market consumer products. * The Free software movement represents a major change in the way that complex software projects are organized, which could become more revolutionary and perhaps more fundamental than the changes associated with the Microsoft or Apple challenges to IBM. It is becoming more important at the same time that companies like Apple and IBM are abandoning development of mass market operating systems. * Developers of free software are concerned that Microsoft may use its market power to limit access to technical information needed for free software developers to write drivers for the next generation of hardware devices. * DOJ needs to better understand how the free software movement works, and to meet with developers and users from the free software community. II. DOJ should focus on barriers to entry faced by alternative operating systems We are writing to ask that the United States Department of Justice (DOJ) antitrust authorities focus on barriers to entry faced by alternative operating systems (OSs), including both proprietary systems and those based upon free software. According to persons who use alternative operating systems, or who develop software to run on alternative operating systems, there are several concerns which should be addressed by antitrust authorities. One set of issues concerns "original equipment manufacture" (OEM) distribution. Perhaps the most basic issue is to ensure that OEMs can sell PCs with a non-Microsoft OS pre-installed without risking retaliation from Microsoft. A related issue concern s the ability of OEMs to sell personal computers which run more than one OS, including one or more non-Microsoft OS, using readily available "boot manager" software. At a minimum, Microsoft should be banned from signing contracts with OEMs that require the OEM to charge consumers for Windows software even if the consumer doesn't want the software and won't use the software. A second set of issues concerns access to technical information needed to support drivers for devices supported by the OS. Computer users and software developers are concerned that Microsoft may use its monopoly power to limit access to technical information needed to write drivers for the next generation of hardware devices. Over the past several months we have received numerous messages from consumers who want to buy computers to use with non-Microsoft operating systems. They want the choice of purchasing a computer with the following options: 1. a non-Microsoft operating system pre-installed, 2. a "dual boot" computer that can run Microsoft Windows or a non-Microsoft operating system, where the user selects the OS at the time the computer "boots," or 3. a "naked" computer, sold without any operating system, where the users acquire and install the OS themselves. On June 3, 1998, we published a survey of manufacturers of personal computers. David Chun, a university student working with us, contacted OEMs, identifying himself as an individual consumer. He asked if the OEM would sell any model of personal computer with an alternative operating system, or at least sell the system without Windows. (See attachment A, or http://www.essential.org/antitrust/ms/jun3survey.html). In each and every case, the OEM sales personnel said that the purchase of Microsoft Windows was required, even when the caller indicated that he did not want to purchase Windows and would not be using Windows. When OEMs were asked if it were possible to refuse to sign the Windows license and return the Windows software, every OEM said the refund would be zero. We conclude from this exercise and similar surveys we have conducted, as well as from many calls from consumers, that the 1995 agreement concerning pre-processor licensing fees has been ineffective in several practical areas, and that consumers who do not want to use Microsoft Windows are paying a "tax" to Microsoft each time they buy a nationally branded computer. It is indeed incredible that in 1998, years after Microsoft signed a consent degree on Windows licensing with DOJ, things have not changed at all for consumers on the ground, raising fundamental questions about the ability of Microsoft to induce OEM behavior which is putatively prohibited by the consent degree. The 1995 agreement does not insulate OEMs from pressure Microsoft can deploy with discriminatory pricing of licenses for Windows or the core applications included in the Microsoft Office suite. We are also seeking guidance concerning the provisions in the 1995 consent agreement, as they relate to the OEMs installation of Windows on dual boot PCs. Specifically, do OEMs have the unambiguous right to sell PCs with Windows and a non-Micro soft OS on the same machine, sharing the same hard drive? As indicated earlier, commercial distributors of GNU/Linux have approached a number of OEMs, to get a nationally branded PC shipped with a pre-installed version of GNU/Linux, or as a dual boot machine with both Windows and GNU/Linux installed. One leading Linux distributor told us that OEMs are extremely reluctant to ship PCs with pre-installed versions of Linux, for fear that the OEM will suffer from discriminatory treatment by Microsoft. The extremely competitive nature of the OEM business makes small price increases for Microsoft Windows or Office licenses very significant for OEMs. We are concerned that in the absence of non-discriminatory licensing for Windows or Office products, Microsoft may exercise too much control over the shipment of non-Microsoft products, including alternative operating systems. The issues concerning access to technical information and drivers for the next generation of hardware devices are complex. Again, we are concerned that Microsoft can use its market power to encourage hardware vendors to develop products, such as the so-called "win-modems" which only work with one operating system. If Microsoft engineers the OS, including its new use of television spectrum, to require secret and proprietary interfaces, it may provide a major barrier to a new OS, which would not work with new hardware devices. Our concerns on these issues are heightened by the fact that the U.S. Congress is considering legislation which many believe will be unduly restrictive concerning reverse engineering ( http://www.dfc.org/issues/wipo/wipoimpl.html), and there are similar concerns regarding the proposed changes to Article 2B of the Uniform Commercial Code. ( http://www.cptech.org/ucc/ucc.html) III Technology makes entry by new operating systems practical. There are several reasons why we believe consumers have an important stake in the development and success of alternative operating systems, and why this is even more true in 1998 than it was in 1995. 1. The Internet has made data itself much more portable, and it is no longer important for consumers to share the same operating system to share data. 2. Applications are much more portable than they were in the 1980s. Software developers are now using modular development tools, such as C++ or Java, which make ports to new OS platforms much less costly than when developers used older languages, or assembly language. 3. The economics of disk storage have radically changed. New PCs are shipping with vast disk space, making it practical for consumers to install more than one OS on the hard drive. For example, Dell is now shipping desktop computers with hard drives as large as 16.8 gigabytes ( http://www.dell.com/products/dim/hdrive.htm). Most alternative operating systems can easily be installed in partitions of 1 gigabyte. 4. Competition among operating systems is a spur to innovation. Microsoft Windows is a response to the Apple Macintosh, for example. 5. User interfaces can be standardized across operating systems. Microsoft Office works the same on a Macintosh and Windows 95. WordPerfect and Netscape Communicator look and work the same on Windows 95 and Linux. Microsoft's hostility toward antitrust measures, and the repeated failure of its management to abide by the letter or spirit of the agreements they sign, raises serious doubts that Microsoft can ever be expected to live up to the spirit of antitrust remedies which are based upon conduct rules. Many consumers and software developers are appalled at Microsoft's continued efforts to use the Windows OS as a weapon against its competitors, and its repeated attacks on non-proprietary Internet and computing standards, and are now interested in considering alternatives. We encourage and support the development of alternative operating systems, including those which are based upon proprietary systems, such as the highly regarded BeOS, which supports an impressive array of new multimedia capabilities which clearly outperform Microsoft's products in many areas, as well as other commercial OS ventures. Your staff can find information on various commercial alternatives at web sites like AltOS ( http://www.altos.org.uk/linksindex.html), OS News (http://www.osnews.com/) or Convergence International ( http://www.convergence.eu.org/). IV. The Free Software Movement is Important It is also important for DOJ to recognize the importance of the free software community. As you may know, there are many different institutions and movements to develop free software, both for operating systems and for applications, many of which run on different OS platforms. These are serious software products. Yahoo, Inc, which is valued at more than $5 billion, runs the largest web site on the Internet on FreeBSD, a free Unix operating system, and Apache, which is free server software. Indeed, Apache is a more widely used server than anything sold by Microsoft. There are many different models under which free software is developed. Thousands of software programs are developed under the GNU "copyleft" system, such as the highly rated GNU C++ compiler, and Linux, a Unix like system that has an estimated user base of 7 to 10 million (See http://www.gnu.org, and http://www.linux.org). The FreeBSD project is a non-copyleft Unix system that is in the public domain (http://www.freebsd.org). The Xfree86 project develops a powerful cross platform windowing system that many prefer to Microsoft Windows (http://www.xfree86.org). It is supported by contributions from dozens of technology firms worldwide, including Compaq, S3, Trident, Number Nine, ATI, UUNET, S.u.S.E., Tekelec Airtronic GmbH, Xtreme, and Yokogawa Electric Corporation, to mention only a few. The Apache server is developed by the Apache Project (http://www.apache.org/). The popular software runs on Unix (different flavors including FreeBSD, Linux, Solaris, e.t.c.) OS/2 and Microsoft Windows. Although the product was only released in early 1995, by January 1998, Apache was used on more than half the domains on the Internet. (50.24% of the 1,834,710 sites, http://www.apache.org/press/05Jan98.txt). Many of the developers of Apache are IT professionals who support the Apache Project so they can have a stable open source code alternative to proprietary systems, such as Microsoft's NT server products. A similar effort supports Perl, a popular programming language often used in Internet applications (http://www.perl.org/). There are countless combinations and permutations of these products and systems. For example, you can download Linux over the Internet for free, or you can purchase various "distributions" of the software from commercial and non-commercial organizations ( http://www.linux.org/dist/index.html). Companies like Red Hat or Caldera wrap various value added commercial products around GNU copylefted elements of the distribution, as well as software products which are distributed under the FreeBSD license, the Xfree86 license, the Netscape general public license, or many other variations. You can also buy commercial software, such as office productivity suites from Corel, Applixware or StarOffice, or commercial server or network products from Novell or Netscape, for example, which run on top of a GNU/Linux or FreeBSD system. What is astonishing is the sheer power and quality of many of the free software products, and the way in which data users have successfully launched products and entire operating systems that support demanding mission critical tasks. It is also interesting to note that Microsoft's predatory pricing practices, which have been often used to destroy its commercial rivals, cannot be used as a weapon against free software developers (although Microsoft can engage in other harmful antitcompetitive actions, such as acts which discourage OEM sales of PCs with a non-Microsoft OS pre-installed for users, or actions which make it difficult or impossible for free software developers to obtain technical information needed to write device drivers). We are also mindful that large companies like IBM and Apple have shrunk from the challenge of competing with Microsoft directly in the mass market for operating systems. Free operating systems like FreeBSD and Linux are evolving, and are approaching something that can be used by a general consumer audience. The Xfree86 windowing environment is an excellent graphical user interface that many users already prefer to the Windows interface. One area for improvement concerns better installation routines and broader support for hardware devices. Indeed, much of the user interest in OEM pre-installed distributions of Linux, for example, is based on consumers wanting to avoid the initial setup, and be assured that the Linux distribution will support the various hardware elements, such as video cards or backup devices. People in the free software community are concerned that Microsoft, or its business associates, may create barriers to access to important technical information needed for free software development, particularly that information needed to write device drivers or better installation routines. This is particularly important when the free software products themselves typically do not generate income, and the development is done by highly skilled and motivated volunteers, who cannot afford even modest fees that are sometimes required to obtain access to data. Also, free software products cannot be distributed if authors are responsible for per distribution royalties of any kind. We believe the modern free software movement is one of the most impressive examples ever of consumers organizing to create alternatives to high technology monopolies. It is a major change in the way that complex software projects are organized, which could become more revolutionary and perhaps more fundamental than the changes associated with the Microsoft or Apple challenges to IBM. We hope the present Administration will give weight and attention to the concerns of the free software users and developers, a community which lacks the public relations, lobbying and legal resources of large firms. In this respect, we ask that DOJ meet with persons in the free software development community to better appreciate the nature of the free software movement, particularly as it relates to antitrust issues, before DOJ becomes too committed to a particular course for the current litigation or the eventual remedies addressed in settlements. Thank you for your consideration of these issues. Sincerely, /s/ Ralph Nader /s/ James Love
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