The story behind the meteoric rise of Microsoft due to the PC-DOS product in
the early '80s is known to almost everyone in the software industry. Not so
widely known is that PC-DOS, the basis for almost all Microsoft operating
systems to date, is claimed to contain stolen property. PC-DOS was known for its
similarity to the CP/M operating system (Paterson).
This similarity was one of PC-DOS' attractions, as it could run most CP/M
software with little modification (Antov) - industry
legend has it that WordPerfect Corporation ported their word processor from
CP/M to PC-DOS by changing one byte of machine code. Unfortunately, this high
level of compatibility wasn't achieved by reverse engineering, or by licensing
code from Digital Research, who produced CP/M. It was achieved by theft of
Digital Research code; in 1982, Gary Kildall of Digital Research produced
evidence to IBM that his code and copyright notices were present in PC-DOS (van Wensveen).
However, due to lack of money, he was unwilling to fight either IBM or
Microsoft in court (Cygnus). This means that all of Microsoft's
success from PC-DOS onwards was built upon the success of a product that was in
essence stolen from another company.
The hypocrisy of Microsoft's position in this issue is blatant - in 1983, Gates complained
about theft of intellectual property:
"Imagine the disincentive to software
development if after months of work another company could come along and copy
your work and market it under its own name...without legal restraints to such
copying, companies like Apple could not afford to advance the state of the
Meanwhile, Microsoft continued to build upon the PC-DOS / MS-DOS product
with intellectual property stolen from others. An example of this can be found
in Microsoft's theft of intellectual property belonging to Stac Corporation:
"During that conversation, Mr. Chase admitted
that, during Microsoft's "normal due diligence process," Microsoft had
concluded that the DoubleSpace data compression utility of the MS-DOS 6.0
operating system software infringed Stac's '009 patent, one of the two patents
in suit." (Stac Electronics vs.
Microsoft was perfectly aware in advance that what they were doing violated
a Stac patent, and yet they continued on their way. Ignoring the Stac patent
afforded Microsoft the ability to add a useful feature to MS-DOS in a timely
manner; the DoubleSpace technology in MS-DOS 6.0 was one of its major features (Huxford), especially for those with older or portable
One strategy that Microsoft has employed in the past is paying for the
silence of people and companies. Charles Pancerzewski, formerly Microsoft's
chief auditor, became aware of Microsoft's practice of carrying earnings from
one accounting period into another, known as "managing earnings".
This practice smoothes reported revenue streams, increases share value, and
misleads employees and shareholders. In addition to being unethical, it's also
illegal under U.S. Securities Law and violates Generally Accepted Accounting
Practices (Fink). Mr. Pancerzewski claims he was forced to retire, for raising
the issue of deferred earnings with Microsoft
executives, thereby making plausible deniability more difficult for said
executives. He has since sued Microsoft, who responded by settling out of
court, but also sealing the records to prevent public disclosure (Fink).
There is another defense available to a company that steals, but can't
silence its opponents by buying them out - render them bankrupt by fighting
them in court. In 2001, Microsoft was convicted of software piracy and fined -
they illegally copied 3D animation features from a product produced by French
company Syn'x Relief (Hoie). However, rather than pay up or
admit their guilt (not acceptable PR for a company with such a strong public
position on piracy), they have fought the case, driven Syn'x into bankruptcy,
and still intend appealing the ruling that found them guilty. This sends out a
strong message to anyone who would report theft by Microsoft - complain against
Microsoft, and be financially destroyed.
Microsoft has also lied about its products. Consider the
buffer overflow bug that allows anyone to crack a Windows XP system over the internet (USA Today). The discovery of this bug was no real surprise to the IT
industry, but Microsoft's then Group Vice President of Windows, Jim Allchin, had earlier promised
that all such bugs had been removed from Windows XP (USA Today). In this
case, Microsoft made a claim which was clearly unsubstantiated - and, in the opinion of this
author, should never in good conscience have been made.
Finally, there other arguments against Libertarian praise of Microsoft. These
arguments claim that Microsoft violates the very principles of
Libertarianism (Thompson) as part of their natural business practices, not
just in the cases of theft, fraud, and abuse of the legal system. These arguments will not be
upon in this essay, as they are not as easily quantifiable as proven cases of theft and
fraud, but should nonetheless be examined carefully by any person considering giving
his support to Microsoft.
From the start, Microsoft's business practices were ethically and legally
unsound, they have built their current wealth upon a product that was
essentially stolen from a competitor, and through the legal system they have used the State to
destroy their victims. Microsoft does not deserve moral support
from anyone, least of all Libertarians. They should be supported against anti-trust litigation, as
should any company, but they should not be held up as an example of the greatness of
Petition Against the Persecution of Microsoft (US Version)." The Center For The Advancement
Joins Global Pro-Capitalism Rally." Scoop. 22 Nov 2001.
Antov, Leven. "History of MS-DOS."
MaxFrame Corporation. 1996.
Patent Infringement - Stac Electronics vs. Microsoft Corporation."
United States District Court Central District of California. 25 Jan 1993.
the Company." Automation Access.
Operator." CFO Magazine. 01 Aug 1999.
Gates III, William H. New York Times, 25 Sep 1983, p. F2.
Hoie, Oystein W. "Microsoft
found guilty of software piracy." InfoSatellite.com. 08 Dec
Huxford, David C. "Technology
New Releases." Journal Of Financial Planning.
Paterson, Tim. "An Inside Look
at MS-DOS." Seattle Computer Products.
Thompson, Joe. "Why Moral Defense is Wrong."
11 Feb 1999.
van Wensveen, Frank W. "Why I Hate Microsoft."
"XP flaw due to
'buffer overflow'." USA Today. 21 Dec 2001.
©2002 Duncan Bayne. This document may be distributed under the terms of the