Did Microsoft use pressure tactics on Acer America?

A former software product manager for Acer America said recently that Microsoft used pressure tactics to force the PC maker to bundle Microsoft applications rather than those of competitors.

Ricardo Correa is one of the first industry insiders willing to go on record publicly about Microsoft's business tactics. An Acer manager for five years, Correa resigned in April of this year in part, he says, because he got tired of having his strategic plans yanked after Microsoft leaned on upper management.

Correa told News Radio that Microsoft stepped in three separate times, in one case right before he was able to sign a deal with Lotus Development to bundle its SmartSuite software on Acer consumer PCs.

"After that happens a few times, it gets kind of old," complains Correa. "It's almost like you really don't have to have a strategy because you know that most of the software on systems is going to be Microsoft software."

Correa also said that an Acer vice president nixed a licensing deal earlier this year that Correa had arranged with Corel, and substituted Microsoft's Office suite instead.

Correa says Acer executives feared that Microsoft would retaliate in some way. Correa reports that his boss said he'd pay $US2 million more for Microsoft's product just to keep the big company happy.

Correa explained that it's risky to not be a "serious Microsoft partner: If you don't have the latest operating systems ... if you don't have strategic information on what the 6-month projection or the 12-month projection on that technology curve is going to be -- that means you don't plan right and Compaq does.

"The other thing has to do with bug updates and training and marketing cooperation. If you don't get that cooperation, that definitely handicaps you in the industry," he added.

Both Acer and Microsoft say Correa's account is inaccurate and called him a disgruntled employee. If that's so, Correa says he wonders why Acer made offers to retain him after he announced his resignation. And he claims that product managers at other original equipment manufacturers (OEMs) go through similar things, but they stay quiet to hold on to their jobs.

"If I wasn't leaving the industry, I would not have the courage to do this" says Correa. "If you're a product manager... you're destroying your career by speaking against Microsoft because there's two companies you work with -- Intel and Microsoft. If you're anybody in the industry, those are the companies you have to do business with. ... And while I know that many of my peers in the industry really want to come out, but they have rent to pay and families to keep."

While these strong-arm tactics, if true, could bolster the government's case against Microsoft, Silicon Valley antitrust attorney Richard Gray says it's not a clear-cut violation of antitrust law.

"If all that is going on is that they are saying, 'You know, we want our OEMs to be our business partners and that means we want your support across our whole product line,' that, by itself, is on the border," says Gray. "But I don't think it crosses the border over into antitrust concerns or... the general area of unfair competition.

"As soon as you add anything to it, though, if there is anything at all that looks like it is a retaliation or a warning shot across the bow, then I'd be more inclined to say that there may be something that could fall into the antitrust or unfair competition camp."

Late last week, attorneys general from 20 US states narrowed their case against Microsoft and removed Microsoft Office from their complaint. They, along with the US Department of Justice, will likely want to talk with Correa more about his experience at Acer, prior to the trial that begins Sept. 8.