Be sues Microsoft|
Defunct company says OS leader used its muscle to squeeze it out of the market.
NEW YORK (CNN/Money) - Claiming it was harmed by anticompetitive business practices, software maker Be Inc. said Tuesday it has filed an antitrust suit against Microsoft Corp.|
Be (BEOS: Research, Estimates), which makes operating system software for PCs as well as information appliances, claims that Microsoft, "through a series of illegal exclusionary and anticompetitive acts designed to maintain its monopoly in the Intel-compatible PC operating system market" effectively destroyed its business.
Most of the Menlo Park, Calif., company -- which has had very limited success with its BeOS, a consumer desktop operating system optimized for digital media applications -- was acquired last year by handheld computer leader Palm Inc. (PALM: Research, Estimates).
Elements of Be's operating system for information appliances, called BeIA, are expected to be included in Palm's next operating system, Palm OS 5.
Microsoft (MSFT: Research, Estimates), the dominant supplier of desktop computer operating systems, was found guilty of abusing its monopoly in that market and is currently in the process of working out a remedy agreement with the government.
Because the federal court system has ruled that Microsoft has violated antitrust laws, legal experts are expecting scores of follow-on suits against the software maker that use that case as grounds to sue.
"We certainly intend to make use of the findings entered against Microsoft in the government litigation, including the findings that the relevant market consists of Intel-based PC operating systems and that Microsoft has monopoly power in that market," said Parker Folse, an attorney with the law firm of Susman Godfrey L.L.P., which is representing Be in the case.
At the core of Be's case is Microsoft's historical licensing practices which it claims precluded personal computer manufacturers from pre-installing non-Windows operating systems on new PCs.
In a 21-page complaint filed in the U.S. District Court in San Francisco, the company says that it had offered BeOS to PC manufacturers to make available in a "dual boot" configuration. That means the user would have the choice when starting the computer whether to run BeOS or Windows for any given session.
The company claims that some manufacturers, including Hitachi, had wanted to make such dual-boot systems available, but were unduly pressured by Microsoft not to do so.
"Microsoft did more than just enforce the restrictive terms of its ... licenses, Microsoft threatened to raise the price of Windows to Hitachi if Hitachi installed Be's boot manager on its machines," the complaint says.
Folse said executives from Hitachi, as well as other PC makers including Compaq (CPQ: Research, Estimates) and Gateway (GTW: Research, Estimates), are likely to be called as witnesses to corroborate those claims.
The lawsuit seeks unspecified financial damages. "We do intend to seek compensation for the loss of the going-concern value of the business, lost future profits and loss of the substantial money invested by Be in developing the product and attempting to bring it to market," Folse said.
Microsoft spokesman Vivek Varma on Tuesday said the company had not yet had an opportunity to review the filing but planned to "respond accordingly."
He also said that computer makers have always been able to ship multiple operating systems with their products and "have chosen Windows over competing operating systems because it is the best product in the market."
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