13 Mar 2004

Microsoft and SCO: A Beautiful Friendship

This last week brought confirmation of the large financial stake Microsoft has taken in the SCO Group’s legal attack on the freedom of free software. Eric Raymond first published at opensource.org a leaked memo to SCO’s Chris Sontag from one Mike Anderer of S2, a “strategic consulting” firm, detailing $86 million of investments in SCO arranged or facilitated by Microsoft, including a $50 million investment by Baystar Capital. The memo was subsequently acknowledged by SCO to be genuine; Baystar Capital conceded that it had been advised or encouraged by Microsoft to make the investment, but said that neither Bill Gates nor Steve Ballmer had been the Microsoft executive who made the call, as though there weren’t anyone else at Microsoft fool enough to have gotten involved in such a risky move.

Meanwhile, SCO filed two of the lawsuits against users that had been threatened for months, but the big news was that the users SCO sued, AutoZone—a retailer of auto parts—and Daimler-Chrysler, were users or former users of SCO Unix, as well as of the Linux kernel and other free software. From here, it looked as though the greatest risk factor for by sued by SCO was being a SCO customer.

At any rate, we now know for sure where we stand. SCO has no intention of surviving as a company with customers: suing your customers in preference to other people is not a recipe for having customers at all. SCO is now de facto a litigation subsidiary of Microsoft. When it has lost the lawsuits it has brought—which it must for various reasons I have outlined here and in other writings over the past eleven months—it will disappear. But the SCO lawsuit is merely the first attempt by the now-desperate monopoly to use lawsuits to destroy the free software movement that is killing its business. Microsoft has by now invested on the order of $100 million in supporting a series of flimsy lawsuits by SCO intended to disrupt the commercial market for free software, hoping against hope that its involvement wouldn’t ultimately be traceable.

The leaking of what Eric Raymond called the “Halloween X” memorandum was undoubtedly a disappointment to Microsoft, which had probably hoped to keep its own involvement in these affairs secret for a good while longer. Microsoft officials personally assured me in a meeting last spring in Redmond that Microsoft’s only financial relationship with SCO concerned “arm’s-length” bargaining for a patent license, a statement reiterated by a senior Microsoft official in correspondence with me only two weeks ago. These statements now appear at best literally true but substantially misleading in light of the extensive efforts to create financial support for SCO.

On the other side, increasingly aligned with the free software movement, are the world’s largest hardware manufacturers and IT solutions suppliers, including IBM and HP. IBM has borne significant direct expenses in defending itself against SCO, and has also backed such entities as the Open Source Development Lab, which now employs both Linus Torvalds and Andrew Morton. The Free Software Foundation continues to prize its independence above all, and is therefore supported only by donations from its members and some very restricted corporate support, while Richard Stallman and I continue to work without salary, but elsewhere in the free software landscape the battle lines are hardening. Hardware manufacturers and other similar enterprises can see the value of software as a public utility, bringing to an end the “Microsoft tax” that now amounts to more than 10\% of the cost of each personal computer sold, while governments and other large enterprises perceive that upgrade costs and other license payments return little benefit to them and drive up the costs of the software support services they do need. The monopoly, on the other hand, is in a death struggle with the movement: by the time Microsoft’s much ballyhooed new version of Windows, codenamed Longhorn, comes to market in 2006, the free software movement and its allies in industry will have brought a user-friendly and data-compatible desktop for end users to every computer near you, at a cost everyone can afford. For the first time, Microsoft is now playing catch-up, trying to preserve a market that is one failed upgrade away from disappearing out of its grasp altogether.

Under these circumstances, there is little reason to suppose that SCO will be the last Microsoft lawsuit proxy. We’re going to beat SCO this year, but the problem SCO represents will never be defeated until the monopoly that has piled up $60 billion by charging high prices for bad software everyone thought they had no alternative to buying has been driven out of the market altogether by better software available at marginal cost. In setting the long-term future of the information technology industry, nothing else matters as much as Free Software Matters.

This column was first published in the UK in Linux User. It is also available in PostScript and PDF formats.

permalink | columns/lu | 2004.03.13-00:00.00

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