Investor To SCO: Stop Suing Linux Users

Apr 27, 2004 (04:04 PM EDT)

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Major SCO investor BayStar gave Linux users a big bouquet recently, when the company told SCO to stop suing Linux users.

Oh, that's not what BayStar actually said. BayStar told SCO that BayStar believes that SCO's entire future rests in its lawsuit against IBM.

BayStar has $20 million invested in SCO, an amount greater than SCO's entire earnings for the most recent quarter. So BayStar has a pretty big club with which to beat SCO into submission.

BayStar delivered a demand to SCO early this month to return BayStar's investment. In interviews a week later, BayStar officials said SCO could keep the money after all, but only on the condition that SCO make drastic changes.

Implicit in that ultimatum is BayStar's unstated demand that SCO stop doing the things that SCO is now doing that BayStar seems to believe are a waste of time. These include:

- Suing Linux users. - Getting into lawsuits with other Linux vendors, such as Red Hat and Novell. - Writing and distributing Unix and web services software. - Selling licenses to Linux users to allow the Linux users to use what SCO claims is its intellectual property. - Speaking out against Linux at conferences and to the U.S.Congress. - And in general stop being a colossal pain in the patootie to people who are trying to work for a living.

The whole thing was a big insult from BayStar to SCO, and it had Linux advocates trying to figure out how they could give each other high-fives over instant messaging. (Jabber IM, of course.)

BayStar piled on the insults when it demanded a change in management at SCO.

And BayStar stuck a big pin in SCO's believability. For the week between BayStar's delivering the demand for a refund of its investment, and explaining it, SCO said the ultimatum came as a complete surprise, that BayStar had never discussed issues with SCO before.

BayStar, on the other hand, says it did discuss these issues with SCO, in great detail.

I don't know for a fact who's telling the truth here, but I know which story makes sense. BayStar's ultimatum drove SCO's stock price down. BayStar has scared away future investors. Both these things hurt BayStar's own investment. BayStar must have known both these things would happen, and it's hard to imagine the investors would have taken the actions they did - publicly spanking SCO and inflicting damage on their own investment - unless they'd tried everything else first.

(This piece appeared in the Linux Pipeline Newsletter for Tuesday, April 27, 2004. It has been edited for the web.)