Out-Law News 1 min. read

Whistleblower clarifies SCO and Microsoft deal?


A leaked e-mail that purports to come from a source within the SCO Group suggests that Microsoft has been supporting the software company at the heart of the ongoing Linux controversy to the tune of at least $86 million, according to reports.

SCO's battle with the open source community began in March last year when it sued IBM, alleging that Big Blue had allowed parts of SCO's UNIX operating system to 'slip' into the Linux operating system, in breach of SCO's rights.

Developments over the past year include a counter suit by IBM against SCO, the filing of a suit against SCO by Linux distributor Red Hat, and actions between Novell and SCO over who actually owns the intellectual property rights in the UNIX system.

This week SCO sued two Linux end-users – AutoZone, a Memphis-based car parts retail giant, and DaimlerChrysler – alleging that their use of Linux is in breach of SCO's copyright.

It is well known that Microsoft sees Linux as a threat to its own Windows operating system, so it has much to gain from the current saga. Microsoft struck a licensing deal with SCO Group in May last year, giving the Redmond, Washington-based company the right to use SCO's patents and source code for the UNIX operating system.

On Wednesday, open source group The Open Source Initiative published an e-mail on its web site that purports to come from within SCO.

The document appears to have been sent by strategic consultant Mike Anderer to the vice president and general manager of SCOsource, Chris Sontag, on 12th October. Anderer's company, S2, has apparently been contracted by SCO in the past.

The e-mail discusses the SCO/Microsoft relationship in general terms, but crucially goes on to discuss an investment made by venture capitalists, Baystar Capital, as a "Microsoft referral". The document later states that "Microsoft will have brough (sic) in $86m for us including Baystar. The next deal we should be able to get from $16-20."

Until now it has been thought that the only financing given to SCO by Microsoft was in terms of the licensing deal. Baystar has, in addition, always denied being "persuaded" to make its $50 million investment in SCO.

SCO and Microsoft have made no comment as yet.

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