I wondered if we'd finally get to this particular slant on the Microsoft Vista/Intel chipset controversy...
From Microsoft Watch: Intel-Microsoft Graphicsgate, Part 1
News Analysis. How serious could be Intel's and Microsoft's mutually beneficial, apparent collusion over Windows Vista and integrated graphics chip sets? Criminal.
This morning, I asked Eric Goldman, a law professor at Santa Clara University School of Law, if there might be violations under the jurisdiction of the Federal Trade Commission, Justice Department or Securities and Exchange Commission.
"Yes, to all of the above," he answered. "Maybe, we haven't exhausted the universe of possible problems here."
Quick recap of this week's events: As part of the discovery process for the Windows Vista Capable lawsuit, on Wednesday the court publicly disclosed 158 pages of internal Microsoft documents. On page 30, unidentified Microsoft employee John Kalkman writes in an e-mail about Vista certification for an Intel chip set: "We lowered the requirement to help Intel make their quarterly earnings so they could continue to sell motherboards with the 915 graphics embedded." Later, after explaining some of the negative market results, he admits: "It was a mistake on our part to change the original graphics requirements."
Goldman hadn't yet reviewed all the released documents, when we first spoke. Clearly stunned, he asked me to reread the Kalkman quote about Microsoft helping Intel earnings.
The statement is "very serious" if straightforward as it appears, "with life-changing consequences for the individuals involved," he emphasized.
Later, after becoming more familiar with the case, he e-mailed and expressed how news stories "shockingly haven't been getting into the legal consequences.
Having been part of Enron Broadband during the hyped years, I understand a bit about how things can be made to "fit" for Wall Street. Turns out that many of those "deals" that were closed right before quarterly earnings reports were done primarily to juice the reported earnings, when in reality they were washes or cover-ups with little real substance behind them. They all looked and sounded great to us employees at the lower levels, but little did we know the amount of smoke and mirrors that were really being used.
Fast forward to Microsoft and Intel... We apparently have Microsoft making false statements (the Vista-capable certification) in order to sell their software on Intel chipsets that were not up to the task. And if it's proved that Microsoft did this in order to help Intel make quarterly earnings numbers, then I don't see how the feds *can't* get involved in terms of potential criminal violations of financial security laws. One of the charges that seemed to be part and parcel of the indictments of Enron executives was the intent to defraud the market in terms of earnings based on written financial reports and quarterly conference calls. While not a pure apples-to-apples comparison, it's not a huge leap to see either Intel or Microsoft (or *both*) executives having to answer for this apparent collusion in a court of criminal justice, not just a class-action civil case.
The monopoly aspect of Microsoft has been well-established over the years. Their financial reports have always shown an incredible amount of free cash-flow. But I've always wondered what might happen if somehow it was proved that the statements were not all they appeared to be, and that the financial results were somehow manipulated in some way, shape, or form. They wouldn't be the first company to do so, and they wouldn't be the last. But an event like that would definitely send tremors through the tech industry, and would rock the very foundations of the company...