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Weekly Column

Stupid Microsoft Tricks: Why the Richest Company on Earth Feels it Needs to Cheat

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

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 Links of the Week 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.

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