Microsoft and Dow Jones -- no love lost

Microsoft demands a retraction from Dow Jones, even as it joins the Dow Jones industrial average.

Published October 28, 1999 12:00PM (EDT)

In just a few days, Dow Jones will add Microsoft to the prestigious list of 30 key companies that make up the Dow Jones industrial average -- but behind the scenes, relations between Dow Jones and Microsoft are as strained as can be.

Last Wednesday, the Dow Jones Newswire ran a story asserting that Microsoft lawyers had been asking for language in recent contracts that would allow the contracts to remain in effect if the company were to be broken up as a result of the ongoing antitrust case.

The story, by Dow Jones writer Mark Boslet, quoted a clause from a Microsoft contract that let it transfer the rights and obligations of the contract to "any successor to its business that results from a reorganization required by court order."

Microsoft objected to virtually every detail of the story. Moreover, Microsoft accused Dow Jones executives of leaking the contract to a Dow Jones reporter while in the middle of negotiating with Microsoft. In a letter to Dow Jones dated Oct. 22, Microsoft chief operating officer Bob Herbold said that the clause was based on a draft contract, that it was proposed by a Dow Jones lawyer and that Microsoft had actually rejected the language.

On Monday, Dow Jones published a correction. In part, the correction read:

In a story published on the Dow Jones Newswires on Oct. 20 and repeated on Oct. 21, it was incorrectly reported that the clause was contained in more than one contract and that Microsoft lawyers insisted on the clause.

There is no mention in the correction of whether, in fact, the story did rely on a contract that Dow Jones itself was negotiating with Microsoft. "We don't reveal confidential sources," says Dow Jones managing editor Rick Stine.

The correction does not seem to have assuaged Microsoft's anger. Herbold's letter insisted on a "retraction" and a public apology. Herbold also said that Microsoft will suspend contract negotiations with Dow Jones until the situation is resolved. On Tuesday, copies of Herbold's letter and a Microsoft-authored news story about the incident were available in the press area of Microsoft's Web site.

On Wednesday, both items appeared to have been removed. However, Microsoft spokesman Jim Cullinan says that the correction that Dow Jones sent out is inadequate. Says Cullinan, "We would like a retraction of the story itself. We would like to know how this thing came about -- how a contract came to be given to a reporter. This raises questions for all of Dow Jones' customers."

Dow Jones managing editor Stine says that he has continued to trade phone messages with a Microsoft official about the story. "They seem to want something more," says Stine, "but I'm not sure what it is."

The story is unlikely to come to an end here. Quotes in the Dow Jones story from Palo Alto lawyer Paul DeStefano seemed to imply that similar language was in more than one contract his clients have negotiated with Microsoft. Microsoft's Cullinan insisted that the Dow Jones reporter had misunderstood DeStefano -- and said that DeStefano was a biotech lawyer who did not deal with Microsoft contracts. DeStefano could not be reached on Wednesday.

Undoubtedly, at least a few journalists are quickly brushing up on contract law in case they find any similar contracts -- if, that is, there are any to find.

By Mark Gimein

Mark Gimein is a staff writer for Salon Technology.

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