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Thursday, May 21, 1998 < Prev Next >

Local Companies Keep Close Eye On Antitrust Suit Against Microsoft

Ted Johnson, co-founder of Visio, brainstorms with an employee at the company's Seattle headquarters.
Dean Rutz / The Seattle Times

Ted Johnson, right, co-founder of Visio, brainstorms with an employee at the company's Seattle headquarters. Visio software, below, sharing a shelf with Microsoft products, is written solely for Windows, so officials are watching the antitrust case against Microsoft with special interest.

Visio software sharing a shelf with Microsoft products.

Some Tech Firms' Fortunes Closely Tied To Software Giant's

For all the talk about innovation, technological progress and free markets, few companies had as much immediately at stake in the debate over Microsoft's future as Kao Infosystems.

The Bothell-based company employs roughly 350 people who will package and ship most copies of Windows 98, the controversial computer operating system that sits at the center of government antitrust lawsuits.

As Microsoft and the government trudge into their antitrust battle, Kao is just one of a broad range of technology companies around the region watching with varied interests.

Some, whose products run on Microsoft's operating system, have their fortunes closely tied to Microsoft's success. Others, who provide technology or services to Microsoft, need the software giant to do well to keep business coming.

The government decided not to try to block the Windows 98 release, and this weekend Kao will begin boxing versions of the software, complete with user manuals and warranty registration cards, that will go to customers June 25.

"It was a minor hiccup in our production plan," said Kevin Corrigan, manager of human resources at Kao Infosystems.

Without the Windows 98 work, Kao would have had to put its employees on temporary leave, Corrigan said.

"Had there been a delay, it would have complicated our life," he said.

In the broader debate over Microsoft's business practices, its peers in the computer industry have been some of the most active speakers.

Competitors such as Netscape Communications and Sun Microsystems have lobbied authorities to try to check Microsoft's power in the computer industry.

Critics, including state and federal antitrust attorneys, accuse Microsoft of using its dominant Windows operating system to promote other products, such as its Internet software.

Others, including Microsoft partners such as Intel, Compaq and Dell, have stood alongside Microsoft, echoing the company's contention that it is innovating on behalf of consumers.

Among Seattle technology companies, where Microsoft alums have started their own businesses and the software giant's roots run deep, there is a decidedly pro-Microsoft - or at least anti-government - tone.

"I'm totally pro-Microsoft," said Dan Fine, founder and CEO of "I don't own any shares of stock in them, which is probably stupid. But do you want the people that run the IRS determining what's on your (computer) desktop?", which develops Web sites, counts Microsoft as one of its biggest customers.

"It's not that I'm personally a big fan of Bill Gates," Fine said, "but he's right when he says we've taken a step backward (with the antitrust lawsuits)."

Mike Slade, a Microsoft veteran and chief executive at Starwave, the Internet publishing company founded by Microsoft co-founder Paul Allen, said it is too early to speculate about the outcome of any lawsuit.

"There's nothing really to do about it," Slade said. "You just sit there and watch. Clearly, if you work at Microsoft, it's less fun because you've got all this scrutiny on you."

Slade said he isn't certain which is better: Microsoft's dominance in the Internet browser marketplace or more browser software choices for consumers.

Today, Starwave has to program its sites to work with both Microsoft and Netscape software.

"It's tricky, what you want to have happen," Slade said. "On the one hand, its bad for (Internet) publishers if there's only one gateway (to the Internet). On the other hand, a standard makes it easier to program to."

Brent Frei, chief executive of Onyx Software, said he opposes the government intervening in the technology industry at the urging of Microsoft critics.

"I feel strongly about the government dabbling in this whole affair," Frei said. "I think it is a really poor idea for private industry to basically look to the government to define what's fair and who can produce what."

Ted Johnson, executive vice president of Visio, joined Gates on stage in New York earlier this month to show support for Microsoft.

"We're obviously in Microsoft's hometown, but I can't believe the government has been influenced by what I honestly believe is a small number of California competitors," Johnson said this week.

When Johnson and some colleagues founded Visio in 1990, they decided to develop Visio's computer diagramming software to run exclusively on computers using the Windows operating system. Eight years later, Visio has grown to a publicly traded, 500-employee company.

"We founded our company on the belief that Windows would become the dominant computing standard," Johnson said.

Antitrust attorneys have asked a federal judge to force Microsoft either to market Windows without its Internet Explorer or to include a competitor's product, Netscape Navigator. A judge will schedule hearings for that dispute tomorrow.

Johnson said Visio is less concerned about the fate of Windows 98 because Visio's programs are targeted at Windows NT, Microsoft's corporate computer operating system.

Still, the legal battle creates uncertainty for developers building software in the long term. Even Gates has acknowledged that, if the government is successful, it could hamstring Microsoft's efforts to develop all Windows products.

"I don't believe that these (legal) actions will fundamentally change Windows' market share," Johnson said. "(But) I think that it could create confusion among users and among developers, such as ourselves."

Frei, of Onyx, said he also doesn't expect the legal battle to slow Microsoft's momentum in the operating-systems market. Onyx creates customer-management software that runs exclusively on Microsoft's computer systems.

"I can't think of anything (the courts) could hand down to Microsoft which would impact Windows' dominance," Frei said.

Others have chosen not to take sides in Microsoft's battle.

"We just really have not wanted to be actively involved in the debate," said Erik Moris, vice president of marketing for RealNetworks, an Internet technology company founded by Microsoft alum Rob Glaser.

Microsoft is an investor in RealNetworks. But the two compete with their own products that send audio and video over the Internet.

"Our business model is not at all dependent on what Microsoft does or doesn't do," Moris said. "The thing about the Internet is it's the great equalizer." Thomas W. Haines' phone message number is 206-464-2537. His e-mail address is:

The Seattle Times

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