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Congress: Clear the Air and Stop Preloads

Posted by tadelste on · 23 comments
Lxer Day Desk; By Tom Adelstein, Editor-in-Chief
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LXer Day Desk: 12-16-2005

American consumers do not like living in the dark when it comes to products we buy. In that respect, we don't believe citizens of other countries do either. So, with consideration to the people who drive the US economy, we would like some straight answers to questions which should shine some light on an area of darkness with which we lived far too long.



1. Does the US Administration lobby on behalf of Microsoft and if so should it cease and desist from such activity?

2. We ask Congress to evaluate the administration's role with regard to Microsoft's monopoly.

3. We ask Congress and the President to prohibit Microsoft preloading agreements.

4. We ask for Congress to perform a comprehensive review of Microsoft's political activities including and starting with the House Ethics committee's failure to investigate the links between Tom DeLay, Jack Abramoff, Preston Gates &Ellis and the BSA.

5. We request Congress to enact laws requiring Original Equipment Manufacturers to disclose their policies with regard to selling Microsoft products.

6. We ask for schedules of payments to and from Microsoft and OEMs be disclosed immediately to the public so we can ascertain the influence exerted on consumers buying computers and computer related products.

Consumer consumption determines the health of the US Economy. Some of us would prefer a return to manufacturing, distribution, exports and technological innovations. But poor decisions in the past have painted us into this corner.



As consumers, we need more information about the products we buy. Today, for example, we know about the employee discounts for most automobile manaufacturers. We know a lot more about the availability of generic drugs versus name brand drugs whose patents have run out.



Now, we believe we need to know more about the computer systems offered to us in stores and off web sites. So, we believe consumer advocates should lobby for a small set of simple requests with regard to the US computer industry as it affects consumers.

Gives us the answers to these six questions or requests discussed below:



1. Does the US Administration lobby on behalf of Microsoft and if so should it cease and desist from such activity?



In particular, we feel courious as to why the US Justice Department lobbied on behave of Micrsoft when the South Korea found Microsoft guilty of anti-trust. In an article entitled U.S. Wades Into Korea's Microsoft Controversy Chosun.com states:



The U.S. Justice Department on Wednesday took the unusual step of sharply criticizing a decision by Korea’s Fair Trade Commission to fine Microsoft W33 billion (US$33 million) in an antitrust case, which it said went “beyond what is necessary or appropriate.”



(It went on to say)

FTC director-general Kim Byung Bae said it was rare for the U.S. Justice Department to issue a statement on the matter since it was customary to respect decisions by partnering institutions. That was why the Korean government made no comment on a recent decision by the department to fine Samsung Electronics for price-fixing, Kim said. Asked if the U.S. statement could lead to a full-scale trade war, Kim said the FTC decision was based solely on whether Microsoft violated antitrust law or not, so it was not a trade issue.



We're also concerned about the Administration's attempts to convince the European Union to back off on Microsoft.



2. We ask Congress to evaluate the administration's role with regard to Microsoft's monopoly.



Our reference here relates to the fact that Microsoft and the Department of Justice reached settlements in which a District Court objected:



The judge found it odd that Justice initiated a massive antitrust probe, found significant violations in the large market and only wrote a complaint alleging minor anticompetitive practices.

He felt the decree didn't work in the public interest because: 1) It declined to provide the Court with the information it needed to make a proper determination. 2) The scope of the decree was too narrow. 3) The parties did not address other anticompetitive practices. 4) The Court was not satisfied that enforcement and compliance mechanisms were satisfactory.



We wonder why the Department of Justice and Microsoft jointly appealed the Court's decision.





3. We ask Congress and the President to prohibit Microsoft preloading agreements.



We feel that as long as Microsoft maintains their preloading agreements with Original Equipment Manufacturers, no one can break the Redmond Company's grip on the computer market. We believe it maintains an unfair monopoly restraining trade.



While we can see the power of preloading an operating system today, we didn't think much about it in 1992. Today, 95% of the people who own computers use what comes on their PCs.



Preload agreements seemed like a clever marketing tool. In the least they gave someone an edge. At the other end of the spectrum under the Sherman and Clayton acts they should be potentially felonious.



Back when these agreements started, preloads gave OEM's a good price on DOS. But OEMs had to agree to buy Windows, too. They would have to pay for DOS and Windows for every computer they shipped, whether DOS and Windows were on it or not.


4. We ask for Congress to perform a comprehensive review of Microsoft's political activities including and starting with the House Ethics committee's failure to investigate the links between Tom DeLay, Jack Abramoff, Preston Gates &Ellis and the BSA.

Recognizing that the Chairman of the House Ethics Committee represents Redmond, Washington, we wonder if he is so disposed as to keeping potential wrong doing from disclosure. We have knowledge of the Gates foundation contributing to the foundation Tom DeLay allegedly used to launder contributions to other candidates.



5. We request Congress to enact laws requiring Original Equipment Manufacturers to disclose their policies with regard to selling Microsoft products.



We don't know what agreements exist today because disclosure goes beyond the scope of the US Government's enforcement of their agreement with Microsoft. Everything is done in secret without public disclosure.




6. We ask for schedules of payments to and from Microsoft and OEMs be disclosed immediately to the public so we can ascertain the influence exerted on consumers buying computers and computer related products.



We simply want to know if Microsoft's monopoly position results in funds going back and forth between OEM's and Microsoft. For example, does Microsoft reward OEM's for recommending Microsoft XP?

When Congress returns to work in January, we want these questions put on the Congressional agenda. We also request these questions be considered priorities.





Related Story:
Superior Linux Technology not Stopping Microsoft - Time to Call Uncle Sam


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Comments (23)

Swinging the pendulum

I agree with most except...

3. Targetting MS alone with such a measure is simply trading one interference with another.

"Preloading", in general, has been immeasurably influential in the success of the 'PC' market since the idea was first explored. Many consumers feel that they simply do not have the time, energy, or "comfort level" necessary to install their own operating system copies. Despite that to "me" and "you" doing so is not particularly bothersome, and despite the great pains that O/S makers including MS have gone through in recent years to make O/S installation a "no brainer", most consumers are not particularly "tech savvy" and are justified in feeling leery of the task.

"Whether you think you can or think you can't, your right!" -- Henry Ford

Despite the many levels of facade and "user friendliness" MS has built into Windows, [in my experience] most users find that they simply can not do anything with their computer that is not made immediately obvious. For most, a computer is a thing of mystery... a "black box" which constrains them to its "built in", or "magically added", capabilities and modes of operation... rather than a tool for managing their information in ways they want to manage it. The thought of having to first install those initial modes and capabilities as akin to having to stick one's hand into a "hissing" black bag. They simply "can not" do it no matter how "easy" or "harmless" they're told it is.

Of course, this point is not about preventing preloads of Windows on PC's but, rather, about restricting MS from entering into agreements for them. That too is unsupportable as it asks the government to restrict a company's right to engage in contracts (though, albeit, of a particular sort). If such is to be regulated, then such regulation must be applicable to all companies that would engage in "preload agreements". Indeed, does this whole issue not stem from the affect MS' agreements have in limiting preloads of "Linux"?

MS is not guilty of anti-competition because it engages in preload agreements. Rather, they are guilty because of the prohibitions, limitations, and requirements on OEMs MS puts in those agreements (the so-called "MS tax", among others). What is needed, therefore, is not a limitation on MS to engage in such agreements (do we not swing the pendulum the other way, in such case?), but, instead, restrictions on the requirements that can be made in them -- which, of course, must apply to the industry as a whole. Such would likely be enough, anyway, to help turn the tide, so to speak.

Contracts, simply put, are declarations of reciprocal benefits. In the present situation, the benefit to the OEM is a substantial discount on MS softwares, while the benefit to MS is they get assurance of mass sales equivalent to the OEM's PC production. Though not direct parties to the transaction, the 'consumer', the 'store', and the 'world' also "benefit":

* the consumer gets a "ready to run" off-the-shelf computer... though, at an increased cost he or she might otherwise be able, and prefer, to do without;

* the store gets to display and promote the product line with increased "value add"... though, the passed along "MS tax" forces them to cut corners and subsume costs in other areas in order to promote sales for attracting more customers;

* the world gets wider sharing of information ("communication") and greater compatibility among programs for accessing that information through a de facto standard platform... though, it also gets wider sharing of security risks and threats to that information because of that very "standard" (note, however, that it is by virtue of a "global platform standard" that the risk is created, not the particular platform itself -- that only determines the nature of the risk and the mode in which it spreads).

In any case, by restricting such "assurance clauses" from entering into the agreements, I see the most immediate consequence as being increased competition from both sides (OEM and MS)... and competition benefits not only the consumer, but the economy as a whole. The OEM will have to (be able to) compete on more than just "brand recognition" (er, do I buy that P4, 3Ghz, 256MB/80GB machine with XPsp2 for $???? from Dell or from Compaq?); whereas MS will have to truly work for its success... that is they will finally have to "compete" on the merits of their products since the days of the "MS tax" will finally be gone. Only then will the OEM be able to offer the consumer a "choice" and cater to his or her wish.

5. In the event of '3' (above) this becomes somewhat superfluous and unnecessary except, perhaps, in the case of ensuring "oversight" compliance. Yet, again, such a measure has to be imposed with regard to all O/S companies that would enter into such agreements with OEMs. However, doing so dangerously encroaches on the "confidentiality" of contracts, in general, against public scrutiny. Let the regulatory body assure us that such restrictions are being adhered by the involved parties, but also let those parties keep their confidentiality privileges. Those, too, help to foster healthy competition and thereby benefit the consumer.

6. This sounds an awful lot like asking a car dealer to reveal his "manufacturer sticker price". Sure, it seems like a great idea 'cause now he can be haggled out of his profit margin. Of course, do that too much and soon he's out of business, driving down competition (er, no pun intended), and thereby hurting not only the consumer but the industry as a whole.
We really need to stop buying into the "Users are too intimidated to buy anything but a preloaded computer" nonsense. No one is saying that customers should have to install their own operating systems. The problem is that these OEMs do not offer this "preload" as a service but instead, make it mandatory. This is what we refer to as the OEM/Microsoft Tax.

It's really pretty simple.

Adam Kosmin WindowsRefund.info
pendraco: A simple solution exists. When the IBM PC came out you had three choices of OS's to load: PC-DOS, CPM-86, and UCSD D-PASCAL system. The latter was a multi-tasking system.

Now, when you purchase a system from the major OEM's they provide a restore CD. You put that in your computer and boot and it will install the OS and the basic load on your computer.

Any OEM can ship a system without a preload and provide different operating systems.

You could ask for Windows, Linux, Solaris, BSD and others could easily become available.

You're just arguing about pre-configuration for a hardware platform - not "preloading".

People who don't know much about computers can still have their cake and eat it too.

But, the OEMs should give them a choice.
Perhaps my point got a little askew of itself... OEMs "preloading" an operating system onto their PC products started as a "service", but which has since become a "gimme", though one pushed on the consumer. Part of the reason for that original "service" was to attract more sales... particularly among the "computer illiterate" who otherwise would either have not purchased a PC or whose purchase would have been delayed until a third-party (the seller, perhaps) could be paid to install the desired, if not included, O/S. At that time, most "PCs" were purchased via mail order or through small "computer shops". If computers were found sitting on the shelves of a larger retailer they were of the "operating system" embedded console variety. The average consumer didn't want to have to "learn how to use the computer" before they could actually use it to learn how.

Once this "service" of preloading an O/S "caught on" and the number of PC sales suddenly started to skyrocket, it became less of a "service" by the OEM and more of an "expectation" by the consumer. Now, the typical non-technical computer user barely has a notion that the hardware and software are even separate, or separable... indeed, I deal with users daily who, though "cognizant" of the fact that they are using applications hosted on remote computers, they none-the-less have immense difficulty understanding that the 'terminal application' they use on their PC to access those remote systems is not only distinct from them but the two are not even directly related to each other. To them, when something "bad" happens to their "computer", plopping in the "recovery CD" will just "fix everything" back to before. These are the majority of the "average PC consumer" and probably not one of "them" comprise LXer's "15,000 daily readership". :)

I am not suggesting that these consumers/users are "stupid", but simply "computer illiterate" and were it not for the de facto "service" offerings of O/S preloads, the PC market would likely not be anywhere near the 200M+ "desktop sales" figure it has since reached.

As 'windowsrefund' states:

The problem is that these OEMs do not offer this "preload" as a service but instead, make it mandatory. This is what we refer to as the OEM/Microsoft Tax.

Exactly. The "service" of "preloads" has become "mandatory"... in part due to consumer demand, but even more so due to the anti-competitive "assurance clauses" MS puts into its OEM contracts. The OEM doesn't have to install anything on its computers and, yes, it certainly can install something other than Windows... even by its own volition. However, the OEM does do so, in part because it can wedge its own "tax" into the sales figure by doing so... yet would doing so have become "mandatory" if MS couldn't demand their tithe "for every PC produced"? If such clauses were not allowed to enter into the agreement then the OEM would not be compelled to force Windows upon the consumer and instead might truly offer a range of products to suit different market segments.

Consumers are not "cost illiterate"... it doesn't take them long to figure out that a difference in cost between "Brand A1" without Windows (or with something else, or nothing at all) vs. the cost with it is due solely to the absence of Windows (er, and if it does elude them, there's always "Consumer Reports" :) ). In many cases, such as in quantity purchases, the cost savings may add up to so much that the currently prohibitive cost of considering more reliable alternatives becomes, instead, a sustained cost savings. Of course, the "alternatives" are no more for everybody than Windows is and so the industry would level itself out due to real supply-and-demand market dynamics.

It is this cost raising practice of MS that is what "we refer to as" the "MS tax". The existence of the "MS tax" is what makes possible the OEM's little addition to equation through "mandatory service" offerings. Yes, the OEM may in fact sell you a computer with a non-Windows O/S installed. However, as long as the OEM still has give MS their cut regardless, that "tax" will still either be passed on or otherwise subsumed into their cost margins. Either proposition translates into a limited practice... either through decreased sales, or through decreased profits. That is why a "preload" of anything but Windows appearing on the display stands of your local Best Buy or CompUSA is "not happening"... and that is why the consumer must "jump through hoops" to get a non-Windows "preload", or even a "no-load", even by order request.

My point was not that we "need Windows preloaded" rather than something else. My point is that "preloads", of anything, has benefitted the industry by raising PC sales above the line of just the "technically comfortable". However, having Windows as the standard for "preloads" has also hurt the industry along with the consumer. Despite that, no alternatives for this "service" are yet offered to any significant degree by any OEM -- and, I agree, "the OEM should at least offer a choice". Yet, it does not... not really or, at least, there are not yet any "Linux computers" on the shelf of my local retailer. Ironically, I do still find a section for Macs and, though by many estimates the number of "Linux sales" now exceeds the number Mac sales, there is no "Linux section". Why is that? Simple... the "MS tax" and the consumer's unwaivering "cost sense". Until the practice of "preload taxation", regardless of from whom, is put to a stop, there will not be a section for "Linux computers" found covering my retailer's floor space. However, I do not believe that prohibiting any one particular O/S provider from entering into "preload agreements", in general, which can only be seen as giving preference to that provider's competitors, is any more "fair play" than MS' current standard practice of forcing a "pay me for all" clause upon the OEM.
Quoting:Once this "service" of preloading an O/S "caught on" and the number of PC sales suddenly started to skyrocket, it became less of a "service" by the OEM and more of an "expectation" by the consumer.
pendraco: I don't necessarily disagree with you on your points. Nothing in the PC world sky-rocketed until the Internet became real. Microsoft had 30 million users of Windows 3.1-3.11.

That took about three years to accumulate. Most of those desktops ran with UNIX, Netware and IBM Lan Servers.

I bought a new Toshiba Satellite notebook in 1994 for a few thousand dollars and less than two years later, I couldn't get $500 for it. It came with Windows 3.1 btw and it wasn't pre-loaded.

People can accomplished the same result of preloading by having their PC come with a CD Rom or a DVD Rom. Preloading any OS is a problem.



We need to stop debating how this problem came about and actually do something to restore freedom of choice to the consumers.

Adam Kosmin WindowsRefund.info
I'm just amazed at how difficult it is to explain such a simple issue to some people. Being involved in this campaign for a few years now has convinced me that those who believe they are powerless often spend the most time debating this issue. Almost as if they're trying to justify their lack of effort. Please spare me.

If you want to continue giving your money to Microsoft, go right ahead. The OEMs will be more than happy to help you out. If you want to do something more than posting your $0.2 on forums, shoot me an email. I'm looking for "doers", not talkers.

Adam Kosmin WindowsRefund.info
Quoting:" ... he always argues an opposite view to irritate people. He's been doing it to me for about six years. He understands the issue. He's just an irritating guy who has a law degree and wants to get your goat."


Nooo!!! Say it's NOT TRUE!

Gosh, I would have never guessed. He just seems so nice, just like my son (the incipient lawyer).
I have often thought that the best way to bring this about is to require some sort of statement at the time of sale as to the cost of the software. The problem is that because Windows comes on every computer they have ever seen consumer have often come to believe Windows is free. I have stopped working on most private computers because most people don't understand that I cannot simply give them a free copy of Windows.

A sticker or something on the invoice would solve this and make other software more competitive.
"A sticker or something on the invoice would solve this and make other software more competitive."

SamShazaam,

This is an excellent idea and should be a requirement by all buyers. It ought to be mandated by each State. Unfortunately, most people do not realize what is happening. I consider it a sleazy tactics created and encouraged by MS and OEMs are collaborating on it since it is beneficial to them.

"I have stopped working on most private computers because most people don't understand that I cannot simply give them a free copy of Windows."

This on the other hand is not a good idea. It is better to keep channels of communication with people. Don't give up on them just because of their behavior.

Unusual Influence

It has always puzzled me how MS could buy the support of whole Government bodies, without leaving some evidence of mass corruption. The buying of votes or the influencing of a few Government members is easier, but does not guarantee a majority decision.

So is the political system itself in need of an overhaul, so that accountability for not representing the best interests of the "people" (as in "we the people") is always unavoidable? Or is corruption and self interest and influence pedaling just too deeply ingrained in the political, judicial, and media landscape?

Or is there a secret agreement between MS and the US Government, about some back door in the software that allows Government spying? What is the explanation for such seeming undue influence? The Chinese Government seems to have some thoughts about this same issue too, which limits the "pre-install" process somewhat in China. But there is still a lot of "Open-Source" MS product in China.

Preloading is unstoppable!

The series of articles you recently wrote on the subject are really interesting, with all the information they contain about the MS court cases, questionable practices and lobbyist activities.

The only problem I see with this last piece is that point 3. (prohibition of preloading) feels perhaps a little utopistic and at the same time a little naive. The same naivite' of some intellectuals that we saw in Europe in the twenties: they sincerely strove for a better society, but ended up unwittingly serving the purposes of the current or next generation of oppressors. Let me explain my point.

I do not think that the preloading of MS OS is realistically going to disappear. Ever. Not even if RMS stages a coup and becomes the first dictator in the history of the USA (note for the NSA: it's a joke, folks!).

The economics of the PC industry to would make it impossible. Currently all PC manufacturers make money out of preloading agreements on third-part software installed on top of the OS. Unbundling everything could make clueless users bungle their installation and get frustrated, but more importantly would cause a rise in the price of a PC. Result: consumer outrage, and massive PR gains for MS , which would look like a customer-friendly, almost philanthropic company that actually benefits the consumers (the irony!).

However, I think that more limited, non-threatening changes could be (sort of) acceptable for everyone (even in the short-term), promote choice and make life easier for the consumers:

1. Mandate that a full copy of the OS preinstalled is packaged with the PC. No recovery disc or similar rubbish, a full working copy, that has to be identical to the unbundled product with the same name. And no license sticker preapplied, but to be applied upon registering the key. So, even if MS refuses a refund, one can always sell a high-quality CD, unregistered serial key and COA on ebay and run Linux. Smaller system integrators, like the local computer shops, which do not enjoy bulk discounts from MS, will be able to obtain cheaper licenses and will love us. Or alternatively, they could offer cheaper PC's with the same specs, but Linux preloaded.

2. (as discussed in a another thread) separation in the invoice between the cost of the PC and the cost of the bundled OS. A separate invoice, even. This is similar to what happens in the US for restaurants: the bill is food&drink + service + tax, so the consumer would hardly get upset. If anything, they would like this increased transparency.

No pain and maximum benefit for the consumer!
Quoting:The economics of the PC industry to would make it impossible.


I appreciate your biting on the subject and offering your point of view for consideration. I can see where others might subscribe to similar ideas.

Sure the economics of a Microsoft industry would make it difficult - but not impossible to stop preloading. I spent a good year working with Jim Von Holle, at Gateway. He's the executive who testified against Microsoft in the US v Microsoft anti-trust case. The economics of the industry would favor a ban on pre-loading. OEM's would save money and time if they didn't have to preload an OS. That's from the floor of one of the big 5 manufacturers. I also see it applying to other OEM's because several steps related to the manufacturing process would disappear.



The economics of the PC industry to would make it impossible. Currently all PC manufacturers make money out of preloading agreements on third-part software installed on top of the OS. Unbundling everything could make clueless users bungle their installation and get frustrated, but more importantly would cause a rise in the price of a PC. Result: consumer outrage, and massive PR gains for MS , which would look like a customer-friendly, almost philanthropic company that actually benefits the consumers (the irony!).

The pre-loading doesn't have to be totally eliminated, it can be made more consumer friendly without OEMs losing any revenue while keeping the consumer happy. Here is how

1) Make the OS a line item in cost list. Some hardware peripherals are treated this way, why not OS?

2) Give buyers a choice of what ever they desire. Windows, Linux, or FreeDOS (no OS). Supply CD(s) for OS and apps purchased by buyer. Charge for license, media and documentation when ever they apply.

3) Charge for installation services for OS and whatever other services apply if buyer requests it.

What is wrong with this senerio?
What is wrong with this senerio?.....

Dell fears Microsoft. Gateway fears Microsoft....everyone who is in the computer manufacturing business fears Microsoft. At least the ones that have OEM agreements with them. Wait...maybe I mis-spoke. They do not fear Microsoft. They fear losing the Microsoft License. I would be willing to bet that many manufacturers are secretly praying for the success of Linux. At least the dictator of Iraq was a known murderer and rapist. MS hides the fact they do the same thing in a business sense behind legal incorporation. Getting out from under The MS Thumb would be a dream come true for many.
There are many other outfits that don't have agreements with MS, so what is stopping them? Also, Red Hat, Novell, IBM etc. could offer PC, as resellers, not as OEMs, with the options I outlined, that might be a good start to help Linux gain wider adoption and eventually, the OEMs will start breaking away from MS lock-in and Linux will have a more of a fair chance of being pre-loaded. This approach will require some resources to start, but what chance do they have right now? If they don't do something about the status quo and invest into getting Linux a better chance than what it has now to be pre-loaded, they might never be able to move ahead.

Whatever happened to four missing threads?

Inquiring minds wish to know.
Martin --

I'm inclined to agree with you.

I know that Tom sometimes removes abusive postings, but it looks like the definition of abuse is moving awfully close to "doesn't agree with me".

I hope that I'm wrong.
Removing abusive posts is fine, if it is based on policy. It doesn't even matter much what that policy is, as long as it is knowable by the poster.

E.g., Pamela Jones will wipe 'foul language' that was foul around 1950, but has since become mainstream. You know, like 'smartass'. It does make posting a bit challenging sometimes, like having to write an essay without using the letter Q. But that's her right...

However this feels more like a software bug to me. I hope that's what it is, and that it gets fixed. I am completely demotivated to post when anything may happen. Ah well, with 15,000 readers, who needs posters anyway.
Martin --

When we delete a thread or a post, it doesn't update the history. That's a bug and it's reported.

Contrary to the "doesn't agree with me" remark, we don't moderate unless a post or thread becomes abusive. Dino knows what abusive around here means. We don't use Pamela Jones or anyone else as a reference. Flame baiting, attacking someone's person, religion, family member, or going totally off topic will justify a delete.

It doesn't happen much. It seems coincidential that you caught about the only ones we've moderated off.

You're welcome.
Flame baiting, attacking someone's person, religion, family member, or going totally off topic will justify a delete.

What if Windows is their religion? ;->

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