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Mother Jones on Microsoft and BSA
Date: Mon, 22 Dec 1997 09:07:37 -0800 (PST)
From: Richard Reynolds <reynolds@mojones.com>
Subject: Mother Jones Microsoft story
For Release:
December 22, 1997
Contacts:
Richard Reynolds 415/665-6637 x240
Kerry Lauerman 415/665-6637 x215
Microsoft Blackmails Foreign Companies
Switch To Microsoft, and Your Legal Problems Will Disappear
Microsoft appears to be using the Business Software Alliance (BSA) to
blackmail foreign companies into making exclusive deals with Microsoft,
reports Mother Jones magazine in a story released last night on the MoJo
Wire, Mother Jones' Web site:
http://www.motherjones.com/mother_jones/JF98/burstein.html
When the BSA tracks down companies using software pirated from its
various members, reports Mother Jones investigative reporter Rachel
Burstein, the offender is offered a simple out: Switch to Microsoft
products and your legal problems will disappear.
* In 1995 the BSA caught Antel, Uruguay's national telephone company,
using unlicensed Microsoft, Novell, and Symantec software. Ricardo
Tascenho, Antel's information technology manager, told Mother Jones the
company settled the matter by signing a "special agreement" with
Microsoft to replace all its software with Microsoft products. According
to Eduardo DeFreitas, the BSA's lawyer in Uruguay, Microsoft's Uruguay
manager, Tomas Blatt, instructed him to drop the suit so that Microsoft
and Antel could "work out a deal for the future."
* Felipe Yungman, Novell's manager of security for Argentina, says
Novell's investigations also indicate that the BSA has set up sweetheart
deals for Microsoft there. "Companies or government offices had to, as a
condition [that the BSA] forgive them of piracy, replace Novell products
with Microsoft products," he told Mother Jones.
* In 1996, when the BSA sued the Australian shipping company Toll
Holdings for piracy, the suit alleged that Toll illegally used copies of
programs made by Lotus, Novell, Symantec, and Microsoft. According to
Martin Dunne, Toll's chief information technology officer, other than
keeping Symantec's anti-virus software, they only buy Microsoft now. A
Novell official told Mother Jones that Toll "offered to legalize on all
Microsoft products if [the BSA] dropped the suit." Both the BSA and Toll
deny any impropriety.
* In Slovenia, where 96 percent of all software is pirated, Microsoft's
country manager, Aaron Marko, is also head of the BSA office. Marko says
that because enforcement is difficult in the country's court system, he
offers discounted
Microsoft software to companies caught pirating by the BSA. Microsoft
denies that the BSA acts solely on its behalf. But officials at
Novell and Lotus told Mother Jones that they will stop actively
participating in the BSA's programs in Asia and Latin America by the
beginning of 1998.
Greg Wrenn, senior corporate counsel for Adobe, says his company has
stayed with the BSA, but he acknowledges Microsoft's upper hand: "If an
attorney does Microsoft work and BSA work and never hears from another
company besides Microsoft, he's going to do the work for the guy who's
in his office every week."
The BSA story is part of a five-part cover package on Microsoft featured
in Mother Jones' January/February issue.
# # #
Full Article:
Overseas Invasion
by Rachel Burstein
Like Coke, Nike, and the tobacco industry before it, Microsoft now has
to
hook new consumers abroad. But the company has discovered a way to bully
foreign companies into buying Microsoft-and only Microsoft.
In 1995 Antel, the national telephone company of Uruguay, was caught
pirating $100,000 worth of unlicensed software programs from Microsoft,
Novell, and Symantec. Antel was nabbed by the Business Software
Alliance, a
trade association that partly acts as a global bounty hunter for the
software industry. The BSA's lawyers in Uruguay quickly filed suit.
But instead of waiting for a ruling on the case, the BSA abruptly
dropped
the suit in the fall of 1997. The BSA receives funding from most of the
top
software companies but appears to be most heavily funded by Microsoft.
And,
according to Antel's information technology manager, Ricardo Tascenho,
the
company settled the matter by signing a "special agreement" with
Microsoft
to replace all of its software with Microsoft products.
The BSA's lawyer in Uruguay, Eduardo DeFreitas, supports Tascenho's
story:
"Microsoft told me to stop working on the case because they would write
an
agreement with Antel." DeFreitas says Microsoft's Uruguay manager, Tomas
Blatt, instructed him to drop the suit so that Microsoft could "work out
a
deal for the future." Blatt refused to answer questions about the
settlement, claiming, "I don't have any information about the Antel
caseŠ.
You should call
BSA in Uruguay-Eduardo DeFreitas."
Antel's situation suggests that when the BSA cracks down on piracy
overseas, it's Bill Gates who turns out to be the pirate.
Representatives
from rival firms complain that Microsoft is abusing its power within the
BSA to speed its global dominance.
Microsoft denies that the BSA acts solely on its behalf. "I am not aware
of
any instance where that has happened," says Microsoft attorney Brad
Smith.
And the BSA dismisses the charges; spokeswoman Diane Smiroldo calls them
"hard to believe." But officials at Novell and Lotus confirm that by
January, both companies will have stopped actively participating in the
BSA's programs in Asia and Latin America. Novell says these allegations
played a part in its decision; Lotus refuses to comment. Such concerns
are also among the reasons Netscape is reluctant to join the BSA, says
Netscape attorney Peter Harter.
The accusations aren't just limited to Uruguay:
* Felipe Yungman, Novell's manager of security for Argentina, says he
and
another staffer at Novell discovered, while pursuing their own
investigation for the company, that the BSA was setting up sweetheart
deals
for Microsoft. "Companies or government offices had to, as a condition
[that the BSA] forgive them of piracy, replace Novell products with
Microsoft products," he says.
were bullied by Microsoft, saying that he is trying to convince them to
come forward. "Most of the companies don't want to get involved," he
explains. "They think they need Microsoft. You cannot oblige them to
testify."
Mario Tucci, Novell's country manager for Latin America, supports
Yungman's allegations. "If you call BSA, you will reach Microsoft," he
says. "They shield Microsoft's actions with the BSA name. It's bad for
us
and [for] the software industry."
* In 1996, when the BSA sued the Australian shipping company Toll
Holdings
for piracy, BSA lawyer Charles Gonsalves, of the Sydney-based firm of
Mallesons Stephen Jaques, oversaw the case.
"I generally handle cases for both Microsoft and the BSA," Gonsalves
told
Mother Jones.
But while the suit alleged that Toll illegally used copies of programs
made
by Lotus, Novell, Symantec, and Microsoft, Martin Dunne, Toll's chief
information technology officer, says the company settled by paying fines
to
only Symantec and Microsoft. And, Dunne says, other than keeping
Symantec's
anti-virus software, the company has made a significant change: Toll
only
buys Microsoft now.
According to a Novell official, Toll "offered to legalize on all
Microsoft
products if [the BSA] dropped the suit." Both the BSA and Toll deny any
impropriety. While a written agreement between Toll and Gonsalves does
exist, neither party would reveal the terms of the settlement. When
Gonsalves was asked if Microsoft ever paid for his handling of BSA
cases,
he chuckled and said, "That's a confidential matter."
* In Slovenia, where 96 percent of all software is pirated, the head of
the
BSA office, Aaron Marko, is also Microsoft's country manager. Marko says
that because enforcement is difficult in the country's court system, he
offers discounted Microsoft software to companies caught pirating by the
BSA. Does Marko see this as a conflict of interest, since he also
supposedly represents other software firms? "BSA is trying to find the
pirate. Then it is a question of marketing and product awareness to see
who
will get the legal market share," he says. When asked which BSA members
have local subsidiaries that do local marketing, Marko says only
Microsoft
and Oracle, which is not a direct Microsoft competitor.
These allegations "raise questions as to whether the BSA serves the
interest of its members or whether it serves its dominant member," says
James Love, director of Ralph Nader's Consumer Project on Technology.
And
for the foreign companies, he says, "these seem to be stories of
blackmail."
The BSA employs a team of more than 100 lawyers and investigators to
find
cases of software piracy-a crime it says costs the industry $11 billion
a
year. The BSA says it catches "thousands of cases a year," many through
its
55 piracy hotlines, the most famous of which urges employees to "Nail
Your
Boss" by calling.
While the BSA won't release its funding details, it does say that money
comes from membership dues, which are based on each company's software
revenues. This is one way in which Microsoft dominates the BSA:
Microsoft's
annual revenues, for example, are eight times that of Novell, its
largest
rival.
In the future, Novell and Lotus say they will use their own in-house
resources for anti-piracy efforts in Asia and Latin America.
But other BSA members, while concerned about Microsoft's role in the
organization, aren't quite willing to go their own way. Greg Wrenn,
senior
corporate counsel for Adobe, says his company has stayed with the BSA
despite having had some uneasy experiences with Microsoft. For example,
Wrenn says, the Microsoft attorneys who worked for the BSA refrained
from
going after big Microsoft clients caught pirating Adobe products-until
Adobe prodded them.
Wrenn says Adobe will stay in the BSA, pressuring the organization to
play
fair. But he acknowledges Microsoft's upper hand. "If an attorney does
Microsoft work and BSA work and never hears from another company besides
Microsoft, he's going to do the work for the guy who's in his office
every
week," Wrenn says.
________________________________________
Richard Reynolds/Communications Director
Mother Jones magazine
415/665-6637 x240
731 Market Street, 6th Floor
San Francisco, CA 94103