The Santa Cruz Operation is breathing a sigh of relief following its escape from the obligation to pay Microsoft Corp up to $15 for each copy of the Unix operating system it sells. It won the concession from Microsoft after complaining to both the US Department of Justice and the European Commission about anti-competitive practices. When the EC agreed that the clause in question constituted an infringement of European competition law, Microsoft agreed to drop it. The obligation came about through a deal Microsoft struck with AT&T Co, the original developer of Unix, back in 1988 (CI No 1,005). Microsoft agreed to drop its Xenix product line – one of the earliest, and certainly the most successful implementation of Unix for Intel chips – in return for royalties and an agreement from AT&T to maintain Xenix compatibility in all future versions of Unix for Intel. Novell Inc inherited that agreement when it went on to acquire Unix from AT&T in 1993, and in turn passed it on to SCO in 1995 when it exited the Unix market. The agreement called for the inclusion of Xenix compatibility software on all of SCO’s Unix lines, OpenServer, UnixWare and the forthcoming Gemini product line, and involved changes to the kernel. SCO argued that as Unix is increasingly competing with Windows NT, Microsoft’s insistance on the continued use of and royalty payments for now obsolete code was anti-competitive. It payed out $4m in royalties to Microsoft last year, and was obliged to keep engineers employed to keep the Xenix emulation fully functional and passing quality assurance tests. It is now legally able to remove the code, and says it will do so as soon as possible. SCO still sells Xenix for some applications, such as for keeping a record of hotel minibar usage, but has a separate contract for that. Microsoft, of course, still has an 11% stake in the Santa Cruz Operation. What makes the deal particularly interesting is the European Commission’s involvement in other alleged Microsoft-related anti-competitive practices, such as the Netscape/Microsoft browser row.
