Novell Antitrust Suit Doesn't Fit, Says Federal Court Judge

By | Jul 20, 2012

U.S. District Judge Frederick Motz has granted Microsoft's motion to have the Novell antitrust suit dismissed after nearly a decade in court, saying that while Bill Gates' company might be guilty of "aggressive conduct," they didn't violate any competition or trust laws. This ruling is important for IT admins as an example of how technology use and misuse is becoming public knowledge and a part of the public trust; the mainstreaming of tech products and their increasing value means it is in the courtroom, not the boardroom, where policies will be made.

Afraid of a Little Competition?

Novell isn't, according to an article at CNet, but they claim Microsoft wasn't playing fair. Their lawsuit, launched just after the release of Windows 95 in 2004, claimed that Gates pulled away from supporting Novell's WordPerfect and Quattro Pro software, instead backing Microsoft's own Office suite. The company alleged that Gates and Microsoft held back on details about interoperability and forced a rewrite of the software, in turn giving Microsoft an edge and effectively cutting Novell out of the market. Though they felt this constituted a breach of antitrust laws, Judge Motz stated in his ruling that the company "did not present evidence sufficient for a jury to find that Microsoft committed any acts that violated s.2 [of the Sherman Act; U.S. antitrust laws] in maintaining its monopoly in the operating systems market." Microsoft was pleased at the outcome, stating that Novell's arguments "lack merit;" Novell, meanwhile, didn't have much to say.

What's important here, to midsize IT professionals, isn't the ruling itself, but the fact that aggressive market conduct is permitted and now effectively approved by law. This is the difficulty in technology-related judgments--so many systems depend on interoperability and similar technology backbones that antitrust rulings are difficult. While it's crucial to know where to draw the antitrust line, the dismissal of suits like Novell's means IT admins can expect to see companies pushing the bounds of what's fair and what's not. Sometimes this can be an advantage. For example, if it results in lower pricing for a provided solution, but may also be a harbinger of greater concerns like vendor lock-in and poor support.

EU, Me and Microsoft

The makers of Windows and Internet Explorer are no strangers to courtrooms and the judgments of governing bodies like the EU. As detailed in a recent ZDNet article, Microsoft is facing another antitrust issue in Europe for misleading authorities about its "browser ballot" screen. The issue stems from a 2009 ruling in which the company was ordered to give users of Windows a choice when it comes to browser selection instead of defaulting to Internet Explorer. Microsoft appeared to comply, but allegations are now being leveled against the company that as of February 2011 and Windows Service Pack 1, this ballot screen no longer appeared, meaning upward of 28 million users who bought a computer preloaded with Windows may not have had a browser choice.

If found guilty of disobeying the European Commission's ruling, the company could be fined up to 10% of its global annual turnover or $7 billion. Should such a fine be levied, it will be the first one issued by the Commission for noncompliance, and Microsoft admitted that it's "fallen short in [its] responsibility" in updating Service Pack 1 due to a "technical error." Presumably, the company is hoping to defray a monetary fine with an apology, but the EU has been extremely active in pursuing potential antitrust violations; words may not be enough.

It's clear the gavel is coming down on antitrust lawsuits, but with differing results. In the U.S., court rulings have stopped short of accusing Microsoft of antitrust violations but permitted some forms of aggressive, monopolistic conduct. In Europe, meanwhile, the company is facing substantial fines for a possibly unintentional breach.

The Novell antitrust suit and the increasing amount of big tech players flexing their muscles in all market niches are warning signs for IT admins; now, it's more important than ever for IT pros to protect their company's intellectual property and be very careful about who they trust, no matter the reputation or influence they claim. The days of boardroom agreements and tacit understandings are quickly ending, and courts are only just beginning to sort out the maze of complications that come with judging IT cases.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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