Microsoft News Tracker

Yesterday, the head lawyers for the protagonists in the Yahoo acquisition soap opera headed off to Washington for testimony before both House and Senate committees, but it turned out to be one of the least exciting episodes so far. Brad Smith (Microsoft’s General Counsel), David Drummond (Google’s Chief Legal Officer), and Michael Callahan (Yahoo’s General Counsel) all delivered predictable prepared testimony as to whether Yahoo’s search advertising deal with Google indicated creeping monopoly or was just an ordinary business transaction that would provide better advertising for both consumers and advertisers.

The biggest excitement was provided by Brad Smith quoting Yahoo CEO Jerry Yang:

Yang "looked us in the eye," Smith said, and told Microsoft executives, "The search market today is basically a bipolar market. On one pole there’s Google, and on the other pole there are Yahoo and Microsoft both competing with Google. If we do this deal with Google, Yahoo will become part of Google’s pole, and Microsoft would not be strong enough in this market to remain a pole of its own."
…
Senators quickly bored in on Smith and Callahan, saying that Yang’s "bipolar" comments, if substantiated, were startling.

"This is pretty explosive stuff," said Sen. Herbert Kohl, D-Wis., chairman of the antitrust subcommittee, who reminded the witnesses they were under oath.

Smith said he repeated "exactly what Mr. Yang said." After the June meeting, Smith recalled, Microsoft chief executive, Steve Ballmer, told him "He (Yang) said there’s only going to be one pole in the market. I guess that would be a monopole, wouldn’t it?"

Callahan was pressed to respond by Sen. Arlen Specter, R-Pa., a former prosecutor. At first Callahan said "it would not be appropriate to comment on Mr. Smith’s accuracy." Then he said he could not recall Yang’s comment.

Good punning on Mr. Ballmer’s part, I’d say, but none of the solons called for storming the gates at the Department of Justice on behalf of either Microsoft or Yahoo-Google so this was merely all for PR value.

Dawn Kawamoto reports at CNET on the upcoming Congressional fireworks related to Yahoo’s proposed search ad deal with Google:

Top legal counsel for Yahoo, Google, and Microsoft will address a Congressional hearing Tuesday, as lawmakers examine the Yahoo-Google search advertising agreement and its potential anticompetitive effects on the future of Internet advertising.

The Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights will call Microsoft general counsel Brad Smith, Yahoo general counsel Michael Callahan, and Google chief legal officer David Drummond to testify as witnesses.

Congressional hearings are mostly an opportunity for bloviating politicos to beat their chests and get their names in the Washington Post and NY Times, but it will be modestly interesting to have the parties repeat in public what they are telling the Department of Justice in private.

Microsoft today announced that they had reached agreement to purchase full control of MSN Israel from their local partner, Internet Gold, who currently owns 50.1% of the Israeli MSN portal. No terms were revealed.

The parties are currently discussing the terms of migration and possible future cooperation. The msn.co.il portal will continue to operate throughout the transition period and both parties are working together to support employees, advertisers and users through this period.

MSN is a global portal network which operates in 44 countries. In almost all of these countries the MSN portal is fully owned by Microsoft Corp. and only in a very few instances has Microsoft joined forces with a domestic partner to establish a local MSN portal. In 2007, MSN Israel accounted for less than 3% of Internet Gold’s total revenues.

I guess they are trying to tell us this is no big deal for either party, but obviously it must be for Microsoft if only to provide worldwide uniformity of offerings. Two other large MSN/local partner variants are in Australia (the 50% partner is the Nine Network which we mentioned last week) and in China where the original quasi-governmental partner, Shanghai Alliance Investment Ltd., has been trying to unload its 50%, most recently to The9 Ltd., although despite some reports, that deal has apparently never been consummated. It cannot go to Microsoft because of Chinese restrictions.

Microsoft has given up on the third party translator route to support the Open Document Format (ODF) for office documents that is so beloved by governments and open standards advocates. Office 2007 SP2 scheduled for 1H2009 is now slated to have built-in support for ODF:

The 2007 Microsoft Office system already provides support for 20 different document formats within Microsoft Office Word, Office Excel and Office PowerPoint. With the release of Microsoft Office 2007 Service Pack 2 (SP2) scheduled for the first half of 2009, the list will grow to include support for XML Paper Specification (XPS), Portable Document Format (PDF) 1.5, PDF/A and Open Document Format (ODF) v1.1.

When using SP2, customers will be able to open, edit and save documents using ODF and save documents into the XPS and PDF fixed formats from directly within the application without having to install any other code. It will also allow customers to set ODF as the default file format for Office 2007. To also provide ODF support for users of earlier versions of Microsoft Office (Office XP and Office 2003), Microsoft will continue to collaborate with the open source community in the ongoing development of the Open XML-ODF translator project on SourceForge.net.

In addition, Microsoft has defined a road map for its implementation of the newly ratified International Standard ISO/IEC 29500 (Office Open XML). IS29500, which was approved by the International Organization for Standardization (ISO) and International Electrotechnical Commission (IEC) in March, is already substantially supported in Office 2007, and the company plans to update that support in the next major version release of the Microsoft Office system, code-named “Office 14.”

Open Office XML (OOXML) which was approved as an ISO standard in April, is almost but not quite the native document format of Office 2007, so some touch-up is required.

Back in February when the EU gave Microsoft the 899M euro bill for continued noncompliance beyond the original 2004 antitrust judgement, Microsoft gave no indication that they would do anything but grin and bear it. It turns out that wasn’t the case:

"Microsoft today filed to the (EU) Court of First Instance an application to annul the European Commission decision of February 27," Microsoft said in a statement.

"We are filing this appeal in a constructive effort to seek clarity from the court," it said.

Presumably they have some expectation of success, but given the poor outcome of their last venture before the Court of First Instance, it is hard to see why.