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Weekly Column

Crazy After All These Years: Does the Key to Microsoft’s Plan for Global Media Domination Involve Driving Judges Insane?

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

Last Friday afternoon, I sat in a fifth floor courtroom at the U.S. District Court in Baltimore, Maryland watching Microsoft, Burst.com, Sun Microsystems and others duke it out in front of Judge Frederick Motz. Next to me in the peanut gallery sat reporters from Bloomberg News and the Wall Street Journal. What I found most interesting was comparing their running commentary with what later appeared in published stories. There was a lot more happening in court than you read in the newspaper, that’s for sure.

The issues before the court included some scheduling of future hearings and discovery based on a recent ruling by the 4th Circuit Court of Appeals that while Microsoft was found guilty of more than a hundred instances of anti-trust in the DoJ case, other cases won’t be allowed to start with that many strikes against Redmond: they’ll have to prove at least some of those crimes all over again. This looks like a victory for Microsoft except it opens the door to further legal discovery that puts Microsoft at some risk.

Burst also wanted to depose Bill Gates, which Microsoft opposed, claiming Gates was not involved with decisions involving Burst and was too busy, and besides he’s the richest man in the world and an honorary knight, you know. Judge Motz was unmoved and signed-up BillG for three hours of legal interrogation. And that was the story that emerged from both Bloomberg and the Journal -� Bill Gates would be compelled to testify.

The final item had to do with Burst’s claim that Microsoft played fast and loose with its e-mail retention policies in such a way that consistently helped Microsoft and hurt Burst and other anti-trust plaintiffs. I covered this issue in some detail in a previous column you can find in this week’s links. What Burst wanted was Judge Motz to order Microsoft to produce a witness to explain what the heck is going on with this e-mail retention stuff. Does Microsoft keep old e-mails or doesn’t it? When did the policy change if it did and why? In short, they want a bit more depth than Microsoft carefully rehearsed to date, “Gosh, we just don’t know.”

Burst got its court order.

Meanwhile back in the peanut gallery, the reportorial subtext came down to when or if Judge Motz would be driven insane by Microsoft. The two reporters, who had both covered DoJ v. Microsoft, claimed this had happened in that case with Judge Penfield-Jackson, who was simply worn down over months of painful fighting with Microsoft lawyers. It was a war of attrition with one judge and a limitless number of attorneys, so the outcome was inevitable, they claimed. Judge Jackson went over the bend, and Microsoft achieved its objective of discrediting him with the Court of Appeals.

But none of this made it into the news stories because those guys aren’t columnists like me. I get to come to conclusions and attempt to apply logic and make bad jokes while they aren’t allowed to. Lucky me.

And since I am in such a position of privilege, let’s look behind the events I just described and see what I believe is really going on.

Burst wants to depose Bill Gates, but why? In part it is to assign responsibility at the very top of the organization, and in part it is an attempt to embarrass Microsoft. Burst claims it had a close working relationship with Intel that was destroyed by direct intercession by Bill Gates, who threatened Intel’s Andy Grove with “thermonuclear war” if Intel didn’t drop support for Intel’s own Java media player that was to contain Burst technology. If, as Microsoft claims, little Burst was inconsequential and not even on the Redmond radar screen, why did Bill Gates fly down to Santa Clara specifically to threaten Andy Grove?

Good question.

The part about embarrassing Microsoft comes down to this: Microsoft managers told Gates that they had invented the Windows Media 9 technologies Burst claims they stole. If Burst is the true inventor (which only a jury can decide), then they lied to the boss.

Frankly, Microsoft is not easily embarrassed, so whether this is true or not (I’m guessing it is true) won’t matter a whit to Gates.

The business of getting the court to summon a Microsoft witness about e-mail retention policies is a bit more complex. While Microsoft will provide such a witness, Microsoft’s own lawyers have apparently admitted that the witness they’ll proffer can’t answer the question. They claim that nobody at Microsoft -� nobody -- is in a position to explain how the company came to decide which e-mails to back up and which not to. From Burst’s position, Microsoft claiming ignorance doesn’t absolve them of responsibility, and Burst likes the idea of being able to claim that Microsoft is violating a court order. I’ve heard that the next hearing in three to four weeks will drop a second shoe, and a specific, highly-placed Microsoft executive will be tagged as having told employees to destroy e-mails specifically for “legal reasons.”

While looking around the court web site, I came across a motion listed among this week’s links identifying Jim Allchin as the Microsoft executive who supposedly asked for the destruction of “business related” e-mail. I was surprised to see this motion and wonder if it was supposed to be sealed and made it by accident onto the court web page. We’ll see.

If Burst can make this destruction of e-mail claim stick, it may hurt Microsoft in many other cases, even going back to the steadily unraveling DoJ settlement, so you can bet Microsoft will fight this one to the death. Lawyers for Sun and Real Networks were in the room and paying close attention.

But all this niggling about e-mails is a distraction from the real issue in this case, which is control of the future of streaming media. Microsoft, like everyone else in the computer and media businesses, has figured out that the new game is going to be media distribution as computers morph into some combination of TVs, stereos, telephones, and video games. That’s why Gateway and Dell are suddenly selling TVs and why Apple is making more profit from digital audio players than from desktop computers. Microsoft means to own those businesses, not through selling songs online but through owning the technology standard used to distribute those songs and a whole lot more.

As Bill Gates has proved over and over, the secret to making money is owning a de facto standard, and Microsoft is determined to do this in digital media.

It is a brilliant strategy. Microsoft claims to have 450 million free copies of Windows Media Player in circulation. They have offered Windows Media as an industry standard, which doesn’t mean they don’t make money from it. Becoming a SMPTE standard means that all the other manufacturers will have to come into compliance with Windows Media, and will have to pay Microsoft a royalty if they want to interoperate -- just as they have to pay Sony and Philips for every CD player. And in the Microsoft Windows Media Protocol License, it says that any Windows Media files have to start their journey to your TV or PC from a Windows origin server, thus building Windows into the very heart of the future of media delivery.

Yeah, but what about iTunes? What about QuickTime? What about Real? They’ve already lost. As long as Windows Media is technically comparable, it doesn’t matter to any record company, television network, or movie studio what technical standard is used to deliver the stuff they are selling. Think of this in terms of Internet Explorer versus Opera, Mozilla, and the other browsers. Yes, there are other browsers, and some of them are better than IE, but under what circumstance can you imagine ANY OF THEM having the slightest impact on IE’s market share?

See?

Microsoft is building another empire. All that messing around with WebTVs and xBoxes and investing in cable TV companies hasn’t been for naught. It has taught them the road rules for their next monopoly.

There is, in fact, only one thing that stands in the way of Microsoft achieving this objective, and that’s little Burst.com. Inside those 37 Burst patents based on work dating back to 1984 are legal control over not only efficient video and audio streaming, but control of just about every media hub strategy whether it comes from Microsoft, Sony, or Apple. These companies, on some level, hope that Microsoft beats Burst. But they have to also realize that Microsoft’s victory would eventually make Microsoft their absolute master. It’s enough to drive Microsoft competitors crazy.

That may be the plan.

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