US Exclusive: Caldera CEO says Microsoft threatening PC makers

Microsoft is threatening to suspend the contract of at least one of the United States' largest computer manufacturers in a dispute over bundling a competing operating system, Caldera CEO, Bryan Sparks alleged yesterday.

Caldera, together with more than a dozen other companies, produces a version of Linux, a low-cost, collaboratively developed version of the popular Unix operating system. Linux was the only operating system not owned by Microsoft that gained market share in 1997. "Microsoft has gone and threatened to pull their license and I know it happened," Sparks said. "It's one of the top five."

Jamie Love, director of Ralph Nader's Consumer Project on Technology, said his group will ask Justice Department officials to look into the allegations, perhaps as early as Wednesday. "It's completely outrageous," he said. "You hear consumers are choosing Microsoft one day, and then you hear (Microsoft) is threatening to pull licenses if anyone tries to offer anything else."

Caldera's complaint is not the first time a competitor has accused Microsoft of hardball marketing tactics. For years, rivals including Sun and Netscape have complained that Microsoft has used exclusive contracts, bundling agreements and threats of retaliation to force companies to take software programs they didn't want as a condition of licensing its Windows operating systems.

Until now, however, competitors had stopped short of saying Microsoft had its sights on Linux a cooperatively developed, low-cost clone of the Unix operating system in addition to other operating systems common to the servers that make the Internet run.

Microsoft officials dismissed Sparks' complaints. "It's a little odd that a CEO would talk about hearsay," a Microsoft spokesman said. "Here they're issuing a blanket statement and they're just running roughshod."

Microsoft has previously acknowledged giving discounts to manufacturers that put more than one of its products on their computers, but has steadfastly denied forcing the hand of computer makers.

Claims that Linux may be the victim of predatory tactics take on special meaning in light of the ongoing federal and state investigation of Microsoft's business practices. In addition to making up as much as 5 percent of the market for microcomputer operating systems, Linux figures prominently in the plans of Netscape, arguably the most outspoken of all Microsoft rivals.

Netscape co-founder, Marc Andreessen, last week told a gathering of software developers that the company wants its suite of Internet software to be the standard interface for the fast-growing Linux market. Sparks refused to say which computer manufacturer had been threatened by Microsoft. Nonetheless, he said, fear of Microsoft has grown so widespread in the computer industry that marketing personnel at large makers routinely reject overtures to consider selling any operating system for fear of damaging their relations with the company.

Officials at Dell he said, told him they couldn't accept a proposal from his company for fear of offending the software giant.

A Dell spokesman said Dell's contract with Microsoft contained no restrictions on any operating systems used by company. If Dell wasn't interested in selling computers that run Linux, lack of demand - not pressure from Microsoft - was the more likely reason for the decision. He denied the company had been pressured to turn down alternative operating systems by Microsoft.

Though some estimates place the current population of Linux users at 5 million to 10 million, "I haven't been able to find any examples of customers requesting Linux," the spokesman said. "If we felt as if we were turning down business because we don't default to Linux, we would rectify that."

This isn't the first time Caldera has tangled with Microsoft. Last year, the company filed suit against its larger rival in a separate action, alleging that Microsoft had engaged in a number of anti-competitive practices to kill off Caldera's DR-DOS operating system.

Among other things, the company charged Microsoft had inserted into the Windows program some code whose sole function was to make it impossible to run Windows on top of DR-DOS. Since its introduction in the mid 1980s, Windows has operated only when a non-graphical operating system such as MS-DOS was also installed on the computer.

Caldera claims the packaging of Windows with the underlying MS-DOS operating system constitutes an unfair "bundling" practice that makes it impossible to sell DR-DOS to a wide variety of users.