Red Hat sues Switzerland for awarding Microsoft a no-bid contract

Red Hat is going after Microsoft's traditional, easy-to-win government business with a machete. But in doing so, it may discover it has opened a can of worms, not just a new market. The story is: Switzerland renewed a no-bid contract to Microsoft for desktop software licenses worth 42 million Swiss francs (US$39 million) over three years. The contract includes licenses for some client/server apps and maintenance, as well. But last week Red Hat said, not so fast. No bid contracts are only allowable by Swiss law if there are no competing products available. Red Hat has filed suit with the Swiss Federal Administrative Court, asking it to cancel the contract with Microsoft and call for an open bid.

In a press release credited to the Red Hat legal team, the team writes:

"There was no public bidding process. The Swiss agency justified this no-bid procedure on the ground that there was no sufficient alternative to the Microsoft products. Au contraire. Whatever one’s opinion as to Microsoft’s products, it is hard to ignore the existence of numerous competitive alternatives to them. Indeed, Kanton Solothurn, the City of Zurich, the Federal Agency for Computer Sciences and and Telecommunictions (BIT), the Federal Institute for Intellectual Property (IGE), and other Swiss agencies are already using some of those alternatives provided by Red Hat."

Red Hat is joined by sixteen other companies, mostly systems integrators, that also want to see Switzerland hold an open bid.

While we applaud Red Hat's bravado in trying to sue its way into a lucrative contract (lawsuit as marketing weapon ... a page right from a Redmond playbook), we question its methods. If Red Hat succeeds, it will still not likely get the Swiss to yank out its Windows desktops and applications and go through the work of rolling out new alternatives. While many circumstances exist where organizations can save money by using lower-cost alternatives to Microsoft's products, saving money isn't a given, especially when factoring in the costs of a cutover, costs involved in application customization, training, investments in network management products, and so on.

But the more curious aspect is a legal one. If Red Hat's suit succeeds, would it set some kind of a legal precedent in which Windows on the desktop is officially no longer considered a monopoly? Wouldn't this then undermine efforts in the U.S. and European Union to reel in Microsoft's marketing and bundling tactics because of its status as a monopoly?

For instance, the European Commission is right now in the process of ruling against Microsoft on a complaint filed by Opera Software (and others) that allege bundling Internet Explorer into Windows is an anti-trust violation. If Microsoft can point to a case in which a government officially ruled that Microsoft was not the only game in town, seems as if it has been handed a far-reaching defensive argument. Red Hat may gain the illusion that it has a shot at a new Swiss contract on which it has been allowed to bid, but it may open the door to less legal recourse by all of Microsoft's competitors down the road.

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