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Threat of lawsuit brought Microsoft to the table with Palm

Microsoft claims it was OK to exclude Palm Computing from an industry-wide software program, because Palm "dominated" the hand-held market.

The anti-trust action against Microsoft - extended by the refusal of nine US states to sign an agreement unless stronger sanctions were in place - has now heard the "chief competitive officer" of Palm's software division, who has said Microsoft had claimed its Visual Studio Integration Program (VSIP) was open to the entire computer industry.

But although it was allegedly open to everybody who wanted to link Windows software to code for other platforms, Microsoft refused to allow Palm into the VSIP - until it heard that Palm was going to give evidence against Microsoft in the Nine States case.

At that point, said vice-president Michael Mace of Palm, things changed, and after two years of haggling, Microsoft suddenly sent the contract over. It was now close to being signed, he said.

The delay, he said, was because Microsoft was hoping to do a deal - it hoped to get Palm to adopt .Net, its rival to Java, in exchange for access to VSIP.

"Microsoft sent us the contract only after we had documented clearly that there was no resource barrier within the Visual Studio team itself," said Mace. Reuters reported him saying: "Microsoft had been using VSIP entry to get leverage over us in the .NET negotiations and after it was becoming clear that Palm was participating in the current court proceedings," Mace said.

Intriguingly, Microsoft's response to this in court was to point out that Palm dominates the hand-held market. Mace conceded that by his estimates, Palm had 80% of the personal digital assistant business, according to Reuters reports.

Apparently, it's OK to discriminate unfairly against someone who dominates a business you wish to dominate yourself.