Editor 30-Mar-03
Office Depot Aids Monopoly

Microsoft has recruited Office Depot to help them drive competing products from the market.

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Windows XP brought with it the "Designed for Windows XP" logo program and extended the "signed drivers" program beyond the business oriented Windows 2000 (A3). Many observers feared these programs gave Microsoft far too much control over what software and hardware the public could buy. Office Depot has now cofirmed these fears were well founded.

The logo program requires all hardware and software be submitted to Microsoft and approved by Microsoft before the manufacturer or publisher can use the "Designed for Windows XP" logo on packaging, There is a substantial charge for this service.

The "signed drivers" program requires device drivers for all hardware be submitted to Microsoft for approval and a digital "signature" applied. If a user starts to install an unsigned driver, a warning message pops up recommending it not be installed (A4). Every time a bug fix or other change is made to the driver, it must be resubmitted to Microsoft for re-approval and a new "signature". There is a substantial charge for this service.

Many manufacturers and publishers can't afford the time and expense of Microsoft approval every time they change something, or may have reason to believe Microsoft dislikes their product for competitive reasons. They may skip the approval and mark their boxes "Works with Windows XP" and/or inform users to ignore the warning messages during install. Users have become accustomed to this, which bothers Microsoft.

Office Depot has now destroyed these options by ordering all products not branded with the "Designed for Windows XP" logo removed from their shelves. Almost certainly this move responded pressure from Microsoft, but exactly what pressure we may never know due to the nondisclosure agreement included in every Microsoft contract.

Office Depot sent a letter to their suppliers in mid March (A1) telling them that all purchase orders for goods not carrying the logo by May 30 2003 will be automatically canceled. It's simply impossible to get logo approval from Microsoft in that short a time, or even to change the packaging if your product is already approved (A2). Effectively all products which do not already carry the logo are canceled as of the date of the letter.

If a few other mass market retailers bow to Microsoft pressure as Office Depot did, many products won't be available to the public at all for lack of volume sales. Innovative new products will not be developed because the risk of Microsoft rejection is too great.

This gives Microsoft total control of what products you can buy, destroying any pretense of a free market economy. If they don't approve of a product, they can draw out the logo process until the product is too late to market, or they can just deny the logo entirely based on mysterious "incompatibilities".

Far worse, this gives Microsoft greatly increased leverage over non-Windows competitors like Apple and Linux, depriving their users of access to new peripherals and devices. All it takes to apply monopoly control is hinting "off the record" or under nondisclosure that the logo process might go a lot better if support for competing systems is dropped.

Will Microsoft use this leverage in apparent violation antitrust law? Both the Department of Justice and Caldera antitrust cases yield ample evidence that Microsoft applies this sort of underhanded pressure as a matter of routine. Years ago they forced Epson to drop driver support for OS/2 with far less leverage than this.

What does this mean to you

You'll have fewer products to choose from, and you'll be paying more for products that now face far less competition. New and innovative products will not be developed, especially in the U.S. where Microsoft is strongest. Once again, Microsoft's monopoly threatens our technology leadership and reduces U.S. job opportunities.

Action

For those who wish to express their views to Office Depot, you can contact Michael Dietrich's secretary (toll free) at 1-800-937-3600 ext 83969. Dietrich, Vice President of the Technology Marketing Division, is the person who signed the Office Depot letter. You can also send email to investor relations at investor.relations@officedepot.com. If anyone knows any better phone numbers and/or addresses, please let me know.

We don't recommend our clients injure themselves over this matter, but there can be many cases where the decision between Office Depot and another source of supply is about equal. In these cases, keep in mind that Office Depot is conspiring with a convicted monopolist to restrict your ability to chose the best product for your application.

Here's the letter I sent to Office Depot.

Ladies / Gentlemen:

As a business technology influencer, directly to nearly 200 companies, and indirectly to thousands of businesses through my popular business technology Web site, I will be recommending that all businesses avoid purchasing from Office Depot.

The reason for this is simple: your enforcement of the "Designed for Windows XP" logo program hands Microsoft, already convicted on 8 counts of abusing a monopoly, additional monopoly leverage to drive competing products from the market. This is simply bad for purchasers of business technology, encouraging yet higher prices for Microsoft products and yet lower margins for those who sell them.

Unable to sell in volume without the Logo, hardware manufacturers and software publishers will be at Microsoft's mercy. Microsoft is the only issuer of the logo and can thus eliminate any product they don't like for competitive reasons. Also, as they have in the past (see both federal and Caldera antitrust suits), Microsoft will suggest, off the record or under nondisclosure agreement, that Logo approval might be a lot quicker and easier if support for Apple and/or Linux is discontinued.

I realize you have probably moved to make the XP Logo mandatory under pressure from Microsoft, and that your nondisclosure agreement forbids you to admit to that pressure, but sometimes it pays to grow a spine.

I look forward to hearing that you have withdrawn the program. Meanwhile, I'm preparing an article for my Web site.

Thank you for your attention.

- Andrew Grygus

Additional Reading

  • A1 - Office Depot Letter - The Inquirer - Microsoft logo scheme means Office Depot won't sell non-compliant XP products
  • A2 Vendors protest Logo Program - The Inquirer - Vendors show fury at WinXP Logo plan
  • A3 Designed for Windows - Microsoft Designed for Windows
  • A4 Digital Signatures - Microsoft Digital Signatures and the Logo Program

©Andrew Grygus - Automation Access - www.aaxnet.com - aax@aaxnet.com
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