My Rebuttal to the Microsoft Letter of 5/21/2002

I received this today

Sure seems like somebody at Microsoft is unhappy with the facts coming out.

To be clear - so that there is nothing misleading on this site here are my responses:

1. Microsoft has every right not to renew any agreement. There is no representation on this site otherwise. What is at issue is not its right to discontinue service from RealNames, or the messages since March 2002 that this was likely, but the fact that it did not renew and the consequences of that decision. The final negotiation was on 7 May 2002. Only at that point was closure inevitable. The terrible consequences - primarily the closure of Multi-lingual naming for all non-english languages and the withdrawal of service to those who used Keywords 500 million times during Q1, and withdrawal of service from more than 100,000 RealNames customers - are Microsoft's responsibility alone. Good luck in trying to persuade anybody otherwise.

2. Microsoft was not just a business partner of RealNames it was a 20% shareholder. As a shareholder I expected it to behave like one. It did not. In fact it is currently behaving like a creditor and nothing more, although it is still a shareholder. Microsoft's offer to waive cash may be more genuine if it waived its rights as a creditor totally. The millions of dollars that it will get could be put to much better use with customers and partners.

3. The severance paid to RealNames employees was entirely consistent with previous packages paid to employees (actually the lowest ever). The company rehired, as consultants, a group of people who are charged with two things. Firstly, a wind down with customers and partners. Secondly, an asset sale (physical and IP). All of these consultants are being paid 2 times their normal salary for the number of weeks the process takes. This is consistent with industry norms in a closure situation. I am being treated no diffferently to any other consultant in that respect. The goal of this sale incidentally, is to raise more cash that it costs - and early indications are promising. Pointing to my salary - which is considerably less than Microsoft's CEO - really is just an attempt at popularism. Shame on you.

4. You also use the phrase "executive bonuses". There are no executives - all employees were terminated on 10 May 2002. Nobody received any bonus. A standard severance package was paid to all employees, irrespective of grade.  As you say, RealNames went through this plan with you on May 9th, at that time you made clear that you did not see it as Microsoft's business to comment on the plan and that you had no intention of making further remarks beyond what was raised on the call. It seems that your decision to comment now is prompted by some other events since the plan has not changed since that call.

5. As far as I can see the non-renewal of RealNames contract was because Microsoft wants former Keywords like "IBM Thinkpad" to result in an MSN Search page rather than going to the IBM Thinkpad site at And it wants control over the user experience. 500 million uses during Q1 suggests many people disagree. I am one of them. The browser is being turned from a conduit for a naming platform into a conduit for MSN Search. Once again, I do not dispute your right to do this. I do suggest it is wrong headed and narrow in its vision. Attempts to poison journalists with misleading stories about RealNames selling "generic terms" will not wash. especially when terms like "cars" and "software" consistently point into Microsoft properties. Tell me again, who is it that wants generic terms?

6. It now materialises that Microsoft has applied for and been granted a patent for "Flexible Keyword Searching". This strikes me as odd if Microsoft truly "doesn't believe" in the product as we are constantly told.

I intend to make sure many people see and understand this.  I made a bet on Microsoft. It failed. I hope I can make sure other entreprenuers learn the lesson of this before they repeat my mistake. I do not believe my individual rights, including my right of free speech can be stymied by bullying threats to me. Let me be clear is my sole responsibility and has been discussed with no third party. The RealNames board, incidentally, have no mandate to tell me what I put onto a server in my garage.