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Essential Information's response to Bob Herbold
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Date: Tue, 06 Jan 1998 19:39:48 -0500
From: James Packard Love
I don't think this has been posted before. On November 13, 1997, Microsoft's Chief Operating Officer Bob Herbold, wrote a letter to Ralph Nader, criticizing Essential Information's Appraising Microsoft Conference (http://www.microsoft.com/corpinfo/nader/11-13nader.htm). Microsoft distributed this letter at the Conference and to the press, and has placed prominently on the MS web page. Mr. Herbold's letter included pointed attacks on most of the speakers at the Appraising Microsoft conference. On December 15, 1997, Essential Information's Chief Operating Officer John Richard responded in a letter to Bob Herbold. This is the text of Mr. Richard's letter to Mr. Herbold. It includes an offer to give Microsoft the opportunity to choose exactly half the speakers at the next Appraising Microsoft conference. Mr. Herbold has yet to respond to this offer. Jamie
James Love
(On the web: http://www.essential.org/antitrust/ms/bobherbold.html)
Essential Information P.O. Box 19405 Washington, D.C. 20036 (202) 387-8030 tel (202) 234-5176 fax
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December 15, 1997
Mr. Robert J. Herbold Executive Vice President Chief Operating Officer Microsoft Corporation One Microsoft Way Redmond, WA 98052-6399
RE: Essential Information's Appraising Microsoft and Its Global Strategy Conference
Dear Mr Herbold:
Ralph Nader shared your November 13, 1997 letter to him with me. I would like to respond to the main thrust of your letter, and then address a few misstatements and unfair characterizations in your letter.
Your main criticism of the Conference is that many (but not all) of the speakers are known critics of Microsoft, and that several of the speakers represent commercial competitors of Microsoft.
For the most part, Microsoft by its refusal to attend made this the case. The Conference did include some of the best known and most important critics of Microsoft's business practices. When the Appraising Microsoft Conference was first announced on October 6, 1997, there had been almost no coverage in the general news media of issues relating to Microsoft's growing monopoly power in software markets, and Microsoft's efforts to leverage its software market power into new areas of Internet publishing and electronic commerce. Indeed, this was before the Sun Microsystems lawsuit over Java. This was before the Wall Street Journal announcement that several state attorneys general were investigating allegations that Microsoft violated antitrust laws. This was before Attorney General Janet Reno announced the U.S. Department of Justice would seek a $1 million per day fine of Microsoft for contempt of a 1995 antitrust consent order. This was before the Japanese Fair Trade Commission announced an investigation of Microsoft's anticompetitive practices. This was before the European Commission announced its investigations of Microsoft. This was before the Texas attorney general sued Microsoft over its non-disclosure agreements. This was before the United States Senate Judiciary Committee held hearings on antitrust and the software industry.
On October 6, 1997, when the Conference was announced, we planned the Conference as a tutorial of sorts, on the issues raised by the Microsoft software monopoly. We sought out speakers who could explain, in plain English, a variety of issues relating to Microsoft and antitrust problems. Some Conference speakers were experts on the software industry, some were experts in economics, and some were experts in the law.
You are of course correct that the Conference featured presentations from some of Microsoft's competitors in the software and electronic commerce area. Indeed, we regret we were unable to get even more competitors to participate in the Conference. Why would we invite Microsoft competitors? The focus of the Conference was on anticompetitive actions by Microsoft. The people who are most knowledgeable about anticompetitive problems are often commercial competitors. They know the business, and they can explain what the crucial issues are.
As you point out, this was not a typical trade show. It was a Conference which had a decided edge -- a provocative edge on extremely important issues.
Microsoft was invited to participate. Not only was Mr. Gates invited to participate, we asked Microsoft representatives to suggest other company spokespersons to present Microsoft's views. Indeed, we specifically suggested that Steve Ballmer, Nathan Myhrvold or Bill Neukom would be welcome guests. We met with Microsoft's Jack Krumholtz very early in the process. At that time, Mr. Krumholtz asked if we would put non-Microsoft speakers on the agenda, which were recommended by Microsoft. We told Mr. Krumholtz that we believed it would be best if Microsoft would represent itself, rather than rely upon surrogates.
When Mr. Krumholtz finally did write my colleague James Love to suggest several speakers for the Conference, none of the suggestions included any Microsoft employees. (Moreover, while Mr. Krumholtz's letter was dated November 5, more than three weeks after our first meeting and eight days before the Conference began, Mr. Love was in Chile, and did not receive the letter until November 10, three days before the Conference.)
In your letter, you mentioned that the event had a high ticket price, and also that some persons were given free tickets to the event. The Conference was expensive, for us, and the standard ticket price was designed to defray the costs of the event, without having to seek third party funders for the Conference. However, we made it clear that scholarships would be available for those without funding to attend. This was advertised on the Conference web page, and it was mentioned in numerous Internet mailings about the event. Every request for a scholarship was granted, without any effort to ascertain the views of the applicants. I'm not sure what you are complaining about -- that we charged fees to those with funding to attend, or that we made scholarships available?
Your letter asserted that we placed advertisements in national news media at a cost of $50,000 per ad. This is untrue. We placed a single ad in the California edition of the New York Times, at a cost of $3,200, and a second ad in Legal Times, a small Washington, D.C. trade publication.
Your detailed descriptions of the speakers was amusing, particularly coming from someone who expressed so much concern for the lack of balance at our Conference. Mr. Reback, our opening speaker, was a popular and effective choice. It is certainly no secret that Mr. Reback represents several of Microsoft's competitors. It is also no secret that Mr. Reback is among the most sought after analysts of Microsoft's business practices, and we were delighted that he agreed to attend.
I was surprised to read your description of Santa Fe Institute economics professor W. Brian Arthur. Professor Arthur was the Morrison Professor of Economics at Stanford (1983-1986). You might listen to his remarks from the RealAudio server on the http://www.Appraising-Microsoft.org/ web site. His presentation barely mentioned Microsoft. It was a discussion of his very influential work on increasing returns industries, and his observation that many high-tech industries will have a single firm with a very high market share, due to increasing returns to scale. You mention Professor Arthur's work was criticized in the Wall Street Journal, which by itself hardly says anything. I recommend you read Professor Arthur's book, Increasing Returns and Path Dependence in the Economy, published by the University of Michigan Press. For starters, you might read the forward by Kenneth Arrow, the Nobel Laureate in Economics, who seems to have a much more favorable opinion of Professor Arthur's work than you do.
I was surprised that you felt it necessary to write that Mr. Love is not a lawyer. Since Mr. Love has never attended law school, it seemed like a strange comment. He's not an orthopedic surgeon, he's never climbed Mr. Everest, and he's not qualified to pilot an airplane either. I'm not sure what point you wanted to make. Last I heard, Mr. Gates wasn't a lawyer either. Mr. Love does hold graduate degrees from Harvard University and Princeton University in public policy and economic policy. I'm sorry you are not as enthusiastic about his work as we are.
You say that Andrew Schulman, the O'Reilly & Associates Senior Editor and author of three books about the undocumented features of DOS and Windows, was not qualified to speak about the perspectives of software programmers because he was once an expert witnesses in a successful lawsuit against Microsoft. This is confusing. We think being an expert is a plus.
Even more confusing was your statement that Daniel Nachbar, the director of the Public Software Institute, was unqualified to speak about the concerns of software developers and users, because James Love is on the Public Software Institute board of directors. This seems an unseemly lapse into conspiracy theory. Mr. Nachbar works as a securities analyst who monitors the software industry. He does his Public Software Institute work as a volunteer, as does Mr. Love. There are other volunteer board members of the Institute, including, for example, Michael O'Dell, who is one of the people at UUNET who helps Microsoft deploy the Microsoft Network. Does this make Mr. Nachbar a tool of UUNET? Another Institute board member is Mike Hawley, a faculty member of the MIT Media Lab. Is Mr. Nachbar a tool of MIT? Isn't this a bit ridiculous?
Your description of the JavaLobby as "a mouthpiece for Sun" is something that Rick Ross surely objects to. And if Mr. Ross was also unqualified, why did Microsoft recently invite Mr. Ross to Microsoft's own Java Summit?
I won't go through every speaker's description, to justify each selection. However, I will say that each speaker mentioned in your letter offered something unique and important that we wanted to include in the Conference. If you had chosen to attend the event, you would know it was not a "Microsoft bashing" exercise, but a serious attempt to analyze Microsoft's business practices and to consider how they enhance or hinder competition, innovation and consumer well-being. Fortunately, you can still confirm the veracity of this claim by listening to the Conference proceedings on RealAudio (http://www.appraising-microsoft.org/day1rm.html). Perhaps then you will see fit to apologize for the unjustified attacks in your November 13 letter.
I would like to close with a suggestion. For our next "Appraising Microsoft" Conference, I suggest we work together on the Conference agenda and that Microsoft select exactly one half of the panel members.
Sincerely,
John Richard Director Essential Information ```
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