A Microsoft, SCO link?: Memo suggests software giant is aiding lawsuit for rights to Linux system

A leaked memo appears to connect Microsoft to $86 million in funding for SCO Group, a Utah company waging a controversial battle for rights to the freely distributed Linux operating system.

However, SCO officials dismissed the e-mailed missive, claiming its author had misinterpreted a venture capital deal with BayStar Capital and others as being shepherded by Microsoft.

By Bob Mims
The Salt Lake Tribune

Linux is seen as a competitor to Microsoft’s dominant Windows OS. The "open source" community, a network of Linux proponents, long has speculated SCO’s yearlong battle over Linux has occurred at Microsoft’s behest.

SCO, which owns Unix and claims code from that program was misappropriated in the latest versions of Linux, has steadfastly rejected such claims. It did so again in downplaying the memo, which spread rapidly Friday on the Internet.

"The e-mail was simply a misunderstanding of the facts by an outside consultant," SCO spokesman Blake Stowell stated.

The consultant "was told at the time of his misunderstanding," he added. "Contrary to the speculation of [open source leader] Eric Raymond and others, Microsoft did not orchestrate or participate in the BayStar transaction."

SCO has enraged open-sourcers, beginning with its March 2003 federal lawsuit against IBM seeking up to $50 billion in damages over Big Blue’s alleged distribution of Unix code within Linux products.

SCO also has sought Linux licenses from corporate end-users worldwide, and recently sued two of them — AutoZone and Daimler-Chrysler.

Of the $86 million raised for SCO last year, BayStar reportedly contributed $50 million.

SCO did not challenge the authenticity of the memo, sent Oct. 12 by Michael Anderer, chief executive of Salt Lake City’s S2 Partners, to SCO Vice President Chris Sontag and Robert Bench, the company’s chief financial officer.

The e-mail, posted on the Open Source Initiative’s Web site, read in part: "Microsoft will have brought in $86 million for us including BayStar."

In his commentary, attached to the memo, Raymond declared, "This is the smoking gun. We now know that Microsoft raised $86 million for SCO, but according to the SCO conference call [on Wednesday] their cash reserves were $68.5 million. If not for Microsoft, SCO would be at least $15 million in debt today."

Microsoft insisted its only financial relationship with SCO has been to license Unix-related products.

"Microsoft has purchased a license to SCO’s intellectual property, to ensure interoperability and legal indemnification for our customers," spokesman Mark Martin said Friday.

"The details of this agreement have been widely reported and this is the only financial relationship Microsoft has with SCO," he added. "In addition, Microsoft has no direct or indirect financial relationship with BayStar."

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