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Red Hat Says No to Microsoft
Red Hat Says No to Microsoft 'Innovation Tax'

By Jennifer LeClaire
June 19, 2007 9:49AM

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Red Hat has dashed any hope of a cross-licensing deal with Microsoft, standing on its previous statements issued in the wake of the deal that Novell struck with Microsoft. "An innovation tax is unthinkable," Red Hat said. "Activities that isolate communities or limit upstream adoption will inevitably stifle innovation."

Controversy is erupting in the Linux community following news that Xandros and Linspire opted for a pact with Microsoft, while Ubuntu and Red Hat flat out rejected the advances.

The drama started last November, when Microsoft inked a deal with Novell to foster interoperability and technical collaboration between the open- and closed-source operating systems. Novell also got protection from possible patent suits as part of the agreement.

Soon after, Microsoft came out with allegations that the open-source camp is infringing on 235 of its patents, and the software giant began making moves to form alliances with other Linux providers. The company was successful in negotiating partnerships with Xandros and Linspire, but has hit a wall with Ubuntu and Red Hat.

Microsoft Deal 'Unthinkable'

Microsoft made its intentions clear on Friday: It wants to work out a cross-licensing deal with the largest Linux vendor on the market that would look much the same as its recent agreements with Xandros and Linspire.

Red Hat quickly dashed all hopes, standing on its previous statements from last November, issued in the wake of the controversial Novell deal. Red Hat left no room for misinterpretation when it said the company would not compromise on its open-source roots.

"An innovation tax is unthinkable," the company said in a statement. "Free and open-source software provide the necessary environment for true innovation. Innovation without fear or threat. Activities that isolate communities or limit upstream adoption will inevitably stifle innovation."

Novell's deal with Microsoft is worth hundreds of millions of dollars, an agreement that helped pull the SuSE Linux vendor out of financial straits. Xandros and Linspire are much smaller companies that might not have the financial resources to fight indemnification suits. Ubuntu and Red Hat, by contrast, might have the financial stability to weather any potential storm, said Dana Gardner, principal analyst at Interarbor Solutions and a former Yankee Group Linux analyst.

Where Is the Benefit?

"Because there's a difference in the field on a vendor-by-vendor basis, you have to wonder if this is about more than legal issues. You have to wonder if it also has a lot to do with plain old money," Gardner said. "If the largest distributors are not interested, then that leaves more of a question mark about what these agreements are really about. Is it about risk-reduction for the end users or is it about risk-reduction for the vendors?"

Gardner said he has plenty of questions about the deal. For example, he posited, if getting agreements with companies that are in financially precarious positions is Microsoft's way of bridging the gap between Linux and Windows, then how meaningful will these agreements really be?

"If Microsoft's goal is to bring a reduction in risk to those enterprises that have a mixed environment of Windows and Linux, then the deals with some of the larger distributors would seemingly make more sense," Gardner said.

"The motivations here can't be just about the welfare and risk-reduction of end users," he concluded. "There has to be some alternative motive and it's very likely that there's a hope on Microsoft's part that it can stem any loss of market share [to] desktop Linux."

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