26 March 2002 Microsoft said in court yesterday that Red Hat had failed to popularise the open source Linux operating system because of its own shortcomings, not because of any illegal interference in the PC market by the software giant.

Microsoft had argued that Red Hat had spent little money on research and development (R&D) and dedicated few employees to recruiting software developers to write applications for Linux. It said that this was the reason why Linux had failed to make substantial headway in the market for desktop PC operating systems.

Red Hat chief technology officer Michael Tiemann conceded that the $18.8 million (€21.5m) the company spends on R&D is small compared to other companies’ expenditure, but that its strategy was to take advantage of Linux enthusiasts outside Red Hat.

In testimony last week, Tiemann said that computer makers had rebuffed his attempts to have Linux pre-installed on their machines, fearing that Microsoft would retaliate against them by charging them more for Windows or even withdrawing their Windows licence altogether.

His claims were backed by similar testimony from Anthony Fama, an executive at struggling US PC vendor Gateway. He argued yesterday that Microsoft can still use Windows licensing agreements and other contractual provisions to extract concessions from PC makers.

The ‘two strikes’ policy by which Microsoft can terminate a PC maker’s Windows licence “has a remarkable chilling effect on an OEM’s willingness to promote non-Microsoft middleware, platform software or otherwise”, testified Fama. “Microsoft retains incredible power over Gateway and, presumably, other OEMs,” he concluded.