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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
  case҆.
  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