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Overseas Invasion

Like Coke, Nike, and the tobacco industry before it, Microsoft now has to hook new consumers abroad. But the company has discovered a way to bully foreign companies into buying Microsoft -- and only Microsoft.

In 1995 Antel, the national telephone company of Uruguay, was caught pirating $100,000 worth of unlicensed software programs from Microsoft, Novell, and Symantec. Antel was nabbed by the Business Software Alliance, a trade association that partly acts as a global bounty hunter for the software industry. The BSA's lawyers in Uruguay quickly filed suit.

But instead of waiting for a ruling on the case, the BSA abruptly dropped the suit in the fall of 1997. The BSA receives funding from most of the top software companies but appears to be most heavily funded by Microsoft. And, according to Antel's information technology manager, Ricardo Tascenho, the company settled the matter by signing a "special agreement" with Microsoft to replace all of its software with Microsoft products.

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The BSA's lawyer in Uruguay, Eduardo DeFreitas, supports Tascenho's story: "Microsoft told me to stop working on the case because they would write an agreement with Antel." DeFreitas says Microsoft's Uruguay manager, Tomas Blatt, instructed him to drop the suit so that Microsoft could "work out a deal for the future." Blatt refused to answer questions about the settlement, claiming, "I don't have any information about the Antel case.... You should call BSA in Uruguay—Eduardo DeFreitas."

Antel's situation suggests that when the BSA cracks down on piracy overseas, it's Bill Gates who turns out to be the pirate. Representatives from rival firms complain that Microsoft is abusing its power within the BSA to speed its global dominance.

Microsoft denies that the BSA acts solely on its behalf. "I am not aware of any instance where that has happened," says Microsoft attorney Brad Smith. And the BSA dismisses the charges; spokeswoman Diane Smiroldo calls them "hard to believe." But officials at Novell and Lotus confirm that by January, both companies will have stopped actively participating in the BSA's programs in Asia and Latin America. Novell says these allegations played a part in its decision; Lotus refuses to comment. Such concerns are also among the reasons Netscape is reluctant to join the BSA, says Netscape attorney Peter Harter.

The accusations aren't just limited to Uruguay:

  • Felipe Yungman, Novell's manager of security for Argentina, says he and another staffer at Novell discovered, while pursuing their own investigation for the company, that the BSA was setting up sweetheart deals for Microsoft. "Companies or government offices had to, as a condition [that the BSA] forgive them of piracy, replace Novell products with Microsoft products," he says.

    Yungman would not divulge the names of the companies he believes were bullied by Microsoft, saying that he is trying to convince them to come forward. "Most of the companies don't want to get involved," he explains. "They think they need Microsoft. You cannot oblige them to testify."

    Mario Tucci, Novell's country manager for Latin America, supports Yungman's allegations. "If you call BSA, you will reach Microsoft," he says. "They shield Microsoft's actions with the BSA name. It's bad for us and [for] the software industry."

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