The Department of Justice (DOJ) has launched an investigation into the recently formed business partnership between software giant Microsoft and Corel Corp., as well as the buyout of Great Plains Software, the Wall Street Journal reported in its Wednesday online edition.
In a civil subpoena served on Microsoft three weeks ago, the DOJ demanded all internal documents on the software company’s US$135 million investment in Corel last October. At the time, the deal was labeled “a strategic partnership” — a Microsoft investment in Corel in exchange for Corel’s commitment to become an online partner in its .Net development platform, which will let customers “rent” software over the Internet.
The DOJ is looking into whether Microsoft’s stake in Corel could reduce competition in the market for office software products, the Journal said, citing lawyers briefed on the case. Federal officials are also examining terms of a contract in which Corel commits to develop software for Microsoft’s .Net. DOJ sources report Corel’s decision to end development of the Linux operating system shortly after Microsoft invested in Corel is also raising concerns.
As part of the Corel review, officials have sought documents from Borland Software Corp., sources said. Borland, once a fierce rival of Microsoft’s, last year accepted a $100 million licensing deal from the company.
In addition, the DOJ is investigating the $1.1 billion purchase of Great Plains Software, a maker of business and accounting software products. Few additional details were available in the inquiry, but the investigation is standard DOJ procedure under federal merger law.
The Corel investigation was unexpected because the alliance isn’t subject to an automatic review under the federal merger law. The Corel deal is seen as a test case for the new Bush administration in its handling of Microsoft given that the subpoena was signed by a Clinton appointee.