Microsoft

History of Microsoft

The company was founded by Bill Gates and Paul Allen in 1975 and generated profits of $16,000. In the 1980s microsoft flourished as it provided the operating system DOS for IBM’s PC.

Today Microsoft is an international company present in 102 different countries, employing 76,000 people and generalting a profit of $44.28 billion per year.

Microsoft takes up 18.3 million square feet of office building space and is ranked 15th in the world top 500 companies. Microsoft's has driven 93% of the world's desktop computers since 1991 and its office software dominates 90% of the market and earns the company $9 billion a year. In 1990 Microsoft became the first software company to reach $1 billion in revenue. In 2003 Microsoft's revenue increased by $3.82 billion to $32.19 billion with a net income of $9993 billion. Although Microsoft have been accused of fraudulent accounting in order to show profit.

The company headquarters are in Redmond, Washington, USA Microsoft have ownership of MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta multimedia encyclopedia.

The company has faced much controversy over the years as many have attributed their success to their illegal monopoly over operating systems which effectively pushes competition out of the market. The company has faced legal proceedings aroung the world and have been found guilty on the charges of holding an unfair monopoly. However, as microsft are an extrmely rich compnay the finacial penalties they face are insignificant and they often pay their way out of any legal obligations to rectify this monopoly. ^[1]

Microsoft’s Philanthropy

Bill Gates likes to consider himself above all as a philanthropic man. At the Government Leader Forum he quoted Carnegie ‘he who dies rich dies disgraced.’ Although Gates found the funny side to this saying that he was still working on that his charity has been described as the ‘Microsoft of charities’. The Bill and Melinda gates Foundation was launched by a donation from Bill Gates of £54 million in 2000. Gates has a very philanthropic public image and has joined Bono on the cover of Time magazine as Humanitarian of the year and was voted 8th in the list of “Heros of our Time” by the New Statesman.

However, the ‘Microsoft of charities’ may hold alternative meanings as it has been criticised for disinvestments. In January the Los Angeles Times exposed the foundation for investing over £254 million in oil companies including Royal Dutch Shell, Exxon Mobil, Chevron and Total who were being accused of causing health problems in Nigeria which, ironically is another area of funding for the trust.

Microsoft's Partner Companies

Charteris plc

US Conflicts

On May 18th 1998 Microsoft faced a public court case against the United States Department of Justice and 20 other US states. Microsoft were subjected to two accusations:

1. Microsoft was accused of abusing their monopoly in operating system and web browser sales. Microsoft’s combination of Windows and Internet Explorer software came under scrutiny as its legality was questioned.

2. Microsoft was also accused of restricting web browser competitors. Microsoft was suspected of changing its Application Programming Interfaces (APIs) to suit Internet Explorer and to the detriment of competitors.

In October 1998 Microsoft were sued by the Justice Department for threatening PC manufacturers with revoking their licence to distribute Windows if they removed the Internet Explorer icon from the initial desktop, a request made by its competitors Netscape.

Microsoft lost their cases as Judge Jackson concluded that Microsoft were guilty of holding a monopoly of the personal computer operating system and that Microsoft had taken illegal actions to prevent its competitors from realistically competing in the market. However, Microsoft launched an appeal and in September 2000 the Federal Appeals Court overturned Judge Jackson’s ruling due to the fact that he had given off the record interviews to the media during the trial and they believed him to have allowed his personal opinions interfere with his decision. Despite this the court upheld Jackson monopolization ruling and remanded the case for ‘consideration of a proper remedy.’ In September 2001 under George Bush’s government the Department of Justice decided that they were no longer demanding Microsoft separate their products and were deciding on a lesser antitrust punishment. The final settlement came in November 2001 requiring Microsoft to make public its application programming interfaces with competitors and employ three people who would have full access to Microsoft systems, records and source codes for five years. There was no restriction on Microsoft combining other software with Windows again. Despite the objections of nine of the prosecuting states the US Appeals Court approved the settlement in 2004.

Wired magazine has quoted Bill gates as saying "Of course I have as much power as the president has" ^[2] Microsft undertook a public defence. The Independent Institute who are funded by Microsft put a full page advert in the Washinton Post and the New York Tiomes on June 2nd 1999. The publicationwas a"An open letter to president Clinton From 240 Economists On Anti Trust Protectionism:

"Consumers did not ask for these antitrust actions -rival business firms did. Consumers of high technology have enjoyed falling prices, expanding outputs, and a breathtaking array of new products and innovations...Increasinly, however, some firms have sought to handicap their rival' races by turnign to governemnt for protection...Many of these cases are based on speculation about some vague specified consumer harm in some unspecified future, and many of the proposed interventions will weaken successful U.S firms and inpede their competitiveness abroad."

During this trial Microsoft became very involved in politics. In 1995 Microsoft had one person working in Washington, which grew to ten in 1999. Microsoft increased their presidential campaign contributions and lobbying budget greatly. In 1994 Microsoft donated $106,000 to presidential election campaigns, in 1996 this figure rose to $232,000 and in 1998 it had reached $1 million. Their lobbying budget almost doubled between 1997 and 1998 to $3.74 million. Lobbying efforts were focused on the Anti Trust case as they lobbied against the budget increase for the Justice Department s Anti Trust department. This was criticised fiercely as the Washington Post wrote:

“The effort by Microsoft to get the proposed budget of the Justice Departments Anti Trust division slashed fits a comical caricature of the thuggish company that Microsoft enemies believe the software giant to be “

In relation to the Anti trust campaign Microsoft most interesting financial contributions have been their contributions to Members of the Judiciary Committees in the Senate and the House of Representatives, the people that would have the greatest influence over the Justice Department.

Microsoft are also involved with The Association for Competitive Technology and The Americans for Technology Leadership The latter were accused of sending letters, from two dead, people to Mark Shurtless, the Utah Attorney General, asking for lenient treatment to Microsoft for their monopoly conduct. This is reportedly part of Microsoft's strategy to influence Congress ^[3]

Microsoft has also lobbied for tax relief, stronger intellectual property protection and a greater number of visas for foreign high tech workers. It is speculated that as well as attempting to influence the Anti Trust case in their favour Microsoft have been anxious to get a greater influence in the White House to counter efforts of their competitors to do the same. Sun Microsystems, Netscape and Oracle formed a group called The Project to Promote Competition and Innovation in the Digital Age or ProComp. ProComp’s strategic advisor and former presidential candidate Bob Dole tried to convince the Justice Department to pursue Microsoft further on the Anti Trust case.

Affiliations

Business Software Association

European Information & Communications Technology Industry Association

Computing Technology Industry Association

Institute for Software Choice

PR Firms

Edelman

APCO

G Plus

Media

MSNBC

Slate Magazine

Tech Central Station

Microsoft In Europe

Gordon McKenzie

European conflicts

The European Commission fined Microsoft 497 Euros for misconduct in the market place.

Two complaints were made against Microsoft:

The first accusation was that Microsoft 'illegally tied the availability of Windows to Windows Media Player, making it impossible to obtain the former without the latter, and so distorting the market in media Players.'^[4]

The Second complaint was that 'Microsoft enagaged in conduct designed to make it difficult for other compnanies or organisations to write software with interoperates with Windows in particular important ways.'^[5]

The European Commission demanded that Microsoft remody the situation and stipulated that Microsoft produced a version of Windows with the Windows Media Player. However, although Microsoft have complied they have attempted to undermine these stipulations. firstly they suggested that the new versions would be given "Not with Windows Media Player" labels. The EU did not agree to this and so following further negotiations they agreed to "Edition N"

Microsoft have retailed the new versions at the same price as the older version, ensuring its failure in the market place.

The second remody demanaded that Microsoft publish the specifications of the CIFS protocol. However, Microsoft provided further barriers to this demand. The main competitor in the CIFS server space is a free software project named Samba. Samba are generally a generation behind Microsoft as the have to 'reverse-engineer all the behaviuor from scratch.'

"For example, machines in Windows domains which talk to each other using the latest versions of CIFS use a machine acting as an Active Directory Domain Controller to keep order. At the moment, Microsoft has a monopoly on these Domain Controllers - the code is built into the expensive Server versions of Windows 2000 and Windows 2003."

The information that would have to be publish would assist Samba in catching up with Windows and would make the more expensive Microsoft products redundant.

Microsoft have not fully complied with the demands set and the EU's Monitoring Trustee ruled that 'using the current documentation to implement anything would be "frustrating, time cinsuming and ultimately fruitless." Thus, the EU ruled that unless Microsoft fully complies 'by the end of January, it will be fined £1.5 million per day,back dated to Decemnber 15, for non compliance.'

However, Microsoft makes £14 million per dayfrom Windows client operating system liciences. This success is credited to their monopoly over operating systems. Therefore, £1.5 million per day is a small price to pay for a company that has a monopoly that will earn then £14 million. ^[6]

During this trial Microsoft recruited Detlef Eckert, who was working on information technology policy in the European Commission. The official line was that Eckert would help help Microsoft develop better computer security.

The president of The Computer and Communication Industry Association, Ed Black visited Eckert put forward their concerns of Microsoft’s misconduct. The Association have been lobbying the European Commission to impose an anti trust ruling on Microsft. Black reports Eckert as saying:

“he was not within the competition directorate but he was probably in the directorate most closely involved in this case. ^[7]

Despite the European Commissions assurances that Eckert signed an agreement to fully respect with the conflict of interest rules and refrain from revealing confidential Commission information to Microsoft his involvement will surely be of no political use to the company.

Microsft have also been greatly involved with the Campaign for Creativity. Microsoft have been concerned with patent rights and have used the campaign to represent their concenrs in Europe. The Campaign was replaced by the Innovation and Creativity Group in 2005 and although they would not reveal where their funding came from there has been strong speculation that Microsoft gave significant finacial supoort.

Microsoft's Involvement with UK Public Services

NHS UK

The UK's National Health Service has a nine-year licensing deal with Microsoft, claiming that it will amount to savings of £330 million. The discount come from the licensing fee but is suspicious, as the NHS was not paying this fee in the first place.

The December announcement was followed by a Bill Gates summit with Richard Granger, the IT director general for the NHS and Secretary of State for Health John Reid. This meeting was followed by discussions between Granger and Microsoft CEO Steve Ballmer which ultimately lead to the deal.

The contract, in effect, ties the NHS into a single supplier for desktops, and in that sense flies in the face of Office of Government Commerce advice in its OSS report to :"determine whether current technologies and IT policies inhibit future choice; and if so consider what steps may be necessary to prevent future 'lock in'". The OGC has been evaluating open source precisely because it needs government departments to have an alternative to Microsoft.

This standardisation is effectively eliminating smaller suppliers, for example EMIS who claim that although they produced the most widely-used GP system they have been unable to gain contracts with any of the five English Local Service Providers (LSPs) for the NPfIT, claiming that

"The conditions that would have been imposed on it were "untenable." In a letter stating its position the company claims the "NPfIT is intent on standardising NHS IT not by encouraging innovation and competition but by monopolising the market place..." ^[8]

NHS Wales

In 2006 the Welsh NHS made a deal with Microsoft for desktop and mobile computing software claiming that it would lead to savings of £8.5. The deal includes 35,000 desktop software licences and incorporates all local health boards and trusts in Wales for three years.

Health workers will receive IT vouchers and "home -use" scheme will allow staff to purchase cheaper software licences for their home computers.

The Health Minister at the Welsh Assembly Dr Brian Gibbons, the director of IM&T Mike Lugg and the head of IT in Bro Morgannwg Carol Mustad have all commented positively on the new deal. ^[9]

Microsoft Scotland

Microsft Edinburgh 127 George Street Edinburgh EH2 4JN

08706010100

Microsoft Workers

Raymond O'Hare

Microsoft Scotland have a work force of 40 people mostly working in sales and technical support

Scottish Company Investors

Scottish Widows Investment Partnership

Aegon UK

Scottish Equitable

Aberdeen Asset Management employ a PR company called BIG Partnership whose other clients include the Scottish Executive

Microsoft's Involvement with Scotland's Public Services

Microsoft has fiercely lobbied the Scottish Executive to have access to Scotland’s public services. The Scottish Executive and Microsoft are both clients of the lobbying agency 2Collaborate, which may account for Microsoft’s success in gaining public service contracts.

Police Force

On the 11th August 2005 Central Scotland Police announced that Microsoft Windows would replace some open source technologies and Charteris plc, a Microsoft partner, is providing training and consultancy.

“Central Scotland Police is basing its IT system on the Microsoft platform because its internal study shows that it offers the best value in total cost of ownership, ease of use, interoperability, reliability and support,” said Nick McGrath, head of Platform Strategy for Microsoft Ltd. “Central Scotland Police estimates that it could save 30 percent on IT maintenance costs and 25 percent of IT staff’s time by using Microsoft technology.”

NHS Scotland

NHS Scotland has signed a national deal with Microsoft to supply office software and desktop operating systems at a discounted rate, saving an estimated £8m. Software will be provided to NHS Scotland through an appointed reseller, Trustmarque Solutions.

The recent deal between Microsoft and NHS Scotland followed public criticism by Microsoft that NHS Scotland was wasting billions on IT

Microsoft’s former director for Scotland, Gordon McKenzie publicly criticised NHS Scotland for it's inefficiency and claiming that the NHS in Scotland pays four times more than the English health service for its IT systems.

"But NHS Scotland is still operating in a piecemeal way," said McKenzie. "Royal Bank of Scotland has 100,000 employees and one IT system. The NHS in Scotland is about the same size, but there are 14 NHS trusts and even within each trust there may be four different systems. They even have different e-mail systems."

McKenzie said there was "no plan for convergence" in the NHS and that the public services, including local government, could be heavily streamlined so there was one system for HR, one for payroll, and even one council tax across Scotland, but he said Microsoft was "making more money out of the mess". ^[10]

NHS Scotland before the Microsoft deal

Microsoft and the Scottish Executive

Microsoft and the Scottish executive have been cofounders of the Not in Education or Employment Project (NEET) aiming to train young Scots who are not in employment or education in an attempt to give them key transferable skills to compete in the job market. They are also involved with other Scottish organisations such as Learn Direct Scotland.

Microsoft want to engage in this project on the basis of The Microsoft Citizenship Strategy and core business model includes inclusion, innovation, skills, regional development, local software economy and online safety. Microsoft envisages supporting NEET through the use of the Microsoft brand, seconding a senior person for 2/3 days per week, facilitating access to the Microsoft Partner network (1500 SMEs), all of which aim to deliver ICT solutions customers, connecting to Microsoft's existing skills and education programmes and helping ensure new programmes are practical and offering IT and software development expertise. ^[11]

The Executive identified seven local authorities 'where NEET is a particular challenge and where reducing NEET locally would make an impact nationally." ^[12]These included Glasgow, West Dunbartonshire, North Ayrshire, East Ayrshire, Clackmannanshire, Inverclyde and Dundee.

Four high profile recruits have agreed to support the work of the NEET Programme Board in improving access to opportunities for those identified as NEET, estimated to be around 20,000.

Four recruits helping in the NEET project

Mark Adams from Microsoft

David Watt from KPMG

Euan Davidson, formerly CEO of the Princes Trust

Ray Perman from the Hunter Foundation

Shared Services

Shared Services is a partnership between the government and the private sector aiming to use private business to run public services.

The Minister for Finance and Public Service Reform Tom McCabe estimated savings of between £250 million and £750 million a year across the whole of the Scottish public sector.

"The Executive is committed to spending taxpayers' money as efficiently and effectively as possible. This new shared services strategy on which we are seeking views is a central plank of our Efficient Government initiative which aims to tackle bureaucracy and duplication in the public sector." ^[13]

The Shared Services strategy was set up with the involvement of many big businesses such as Microsoft, CapGemini and Logica. David Amos met with these companies to discuss the executive’s proposals for the planned Holyrood Consultations research to determine the best way forward for Shared Services. This meeting was followed up with Amos and Microsoft on the 8th November 2006 to discuss their response to the consultation.

Microsoft representatives Caroline Findlay and Marcus Henderson also met with the head of Shared Services Jonathan Moore for an informal discussion on developing the shared services strategy. And further meetings between Microsoft and the Permanent secretary John Elvidge took place on the following dates 23/01/06, 17/03/06, 03/07/06, 08/08/06, 06/09/06, and 05/10/06. Thus, Microsoft have been greatly involved in the development of shared services and there is little doubt that their input has been strongly related to their own interests of gaining a stronger hold on Scottish public services.

Microsoft Government Leaders Forum

On the 30th January 2007 Microsoft held their fourth annual European Government leaders forum in the Scottish Parliament. The forum is a gathering of leaders including Prime Ministers, Ministers, EU Commissioners and policy advisers from across Europe. The event aims to discuss issues relating to the government, the role of technology in education and employability issues.

The announcement of Microsoft partnership with the Scottish Executive was fitting in this context. Bill gates accompanied Jack Mc Connell in a press statement highlighting the philanthropic work both the Microsoft Corporation and the Scottish Executive will undertake in helping young Scots achieve. The signed agreement aims to train 100,000 Scots in computer skills. ^[14] The project is aimed at those not in education, employment or training (NEET)

However, Bill Gates did not come to Scotland solely for the purpose of the forum. Gates was awarded an honorary degree by Edinburgh University. A further coincidence was that the forum was undertaken at the same time as Microsoft’s new operating systems launch, Vista. The company has invested £3 billion and expects a healthy return on those investments as Vista is expected to be used in 100 million computers by 2008.

Microsoft Board of Directors

• Bill Gates

• Steven A. Ballmer

• James I. Cash Jr. Ph.D.

• Dina Dublon

• Raymond V. Gilmartin

• David F. Marquardt

• Charles H. Noski

• Jon A. Shirley

UK Executives

Gordon Frazer

Neil Thompson

Nick Barley

Sharon Baylay

Steve Dunn

Scott Dodds

Andy Watson

Matthew Bishop

Tery Smith

Chris Parker

Alison Dodd

Bronwyn Kunhardt

David Gartenberg

Notes

1. ^ Microsoft website Board of Directorsaccessed 30/01/07
2. ^ Microsoft website Board of Directorsaccessed 30/01/07
3. ^ Microsoft website, Board of Directors
4. ^ Microsoft website, Board of Directors
5. ^Microsoft website, Board of Directors
6. ^ Microsoft website, Board of Directors
7. ^ Microsoft website, Board of Directors
8. ^Microsoft website, Board of Directors
9. ^Scottish Parliament to host the UK’s first Microsoft Government Leaders’ Forum | 20 September 2006.[15]
10. ^Scottish Parliament to host the UK’s first Microsoft Government Leaders’ Forum | 20 September 2006.[16]Microsoft UK Press Center Raymond O'Hareaccessed 18/02/07
11. ^ Scottish Parliament to host the UK’s first Microsoft Government Leaders’ Forum | 20 September 2006.[17]Microsoft UK Press Center Raymond O'Hareaccessed 18/02/07
12. ^ Lucy Sherriff Microsoft says Scottish NHS must curb IT spend: Unusual advice from a vendor The Register, Published Wednesday 5th January 2005 13:25 GMT
13. ^Microsoft Website UK executives accessed 21/02/07
14. ^Microsoft Website UK executives accessed 21/02/07
15. ^ Microsoft Website UK executives accessed 21/02/07
16. ^Microsoft Website UK executives accessed 21/02/07
17. ^ Microsoft Website UK executives accessed 21/02/07
18. ^ Microsoft Website UK executives accessed 21/02/07
19. ^Microsoft Website UK executives accessed 21/02/07
20. ^Microsoft Website UK executives accessed Microsoft Website UK executives accessed 21/02/0721/02/07
21. ^Microsoft Website UK executives accessed 21/02/07
22. ^Microsoft Website UK executives accessed 21/02/07
23. ^Microsoft Website UK executives accessed 21/02/07
24. ^Microsoft Website UK executives accessed 21/02/07
25. ^ Scotsman website Billionaire, benefactor...but is Bill Gates a force for good? Microsoft and Scottish executive Agreement accessed 28/02/07
26. ^ Scottish Executive Website Scottish executive Website Shared Services Strategy
27. ^Microsoft Website [Police IT System] accessed 22/03/07
28. ^ The Register [NHS Contract with Microsoft] accessed 22/03/07
29. ^ Microsoft Website [UK executives] accessed 22/03/07
30. ^ 2Collaborate Website 2collaborate accessed 22/03/07
31. ^ NHS Scotland NHS Scotland accessed 22/03/07
32. ^ NHS Scotland pre Microsoft [Microsoft Criticisms] accessed 22/03/07
33. ^ Dispatches NHS Where did all the money go? Channel Four
34. ^ Scottish chamber of Commerce Website [Scottish chamber of Commerce] accessed 24/03/07
35. ^ Federation of Small Business [Federation of Small Business] accessed 23/03/07
36. ^ICAS ICAS accessed 23/03/07
37. ^ Law Society [Law Society] accessed 23/03/07
38. ^ SCDI SCDIaccessed 24/03/07
39. ^ Institute of Directors IoD accessed 24/03/07
40. ^ Microsoft signs for NHS Wales NHS Wales accessed 28/03/07
41. ^ Microsoft Europe Monopoly Europe conflicts accessed 28/03/07
42. ^ Corporate Watch (2004) Microsoft: A corporate profile
43. ^ Corporate Watch (2004) Microsoft: A corporate profile
44. ^ Corporate Watch (2004) Microsoft: A corporate profile
45. ^ Corporate Watch (2004) Microsoft: A corporate profile
46. ^ Corporate Watch (2004) Microsoft: A corporate profileaccessed 05/04/07