Microsoft promises not to take a cut from online transactions

Microsoft will not attempt to reap a fee for Internet transactions conducted using its software, according to Steve Ballmer, executive vice president for sales and support. Until now, such a scheme has been championed by many top Microsoft executives, particularly chief technology officer Nathan Myhrvold, as a way to tap into the rapidly growing online sales market. That prospect has troubled corporations and customers who potentially would have to pay such a 'vig,' short for vigorish, a gambling term meaning a bookie's cut of the action. But now, as it faces a US court battle over alleged anti-competitive practices, Microsoft is backtracking.

Microsoft will not attempt to reap a fee for Internet transactions conducted using its software, according Steve Ballmer, executive vice president for sales and support.

Such a scheme has been championed by many top Microsoft executives, particularly chief technology officer Nathan Myhrvold, as a way to tap into the rapidly growing online sales market.

That prospect has troubled Microsoft's rivals and critics, who have watched with alarm as the software giant expanded its reach throughout the Internet-related world. Also concerned are corporations and customers who potentially would have to pay such a "vig," short for vigorish, a gambling term meaning a bookie's cut of the action.

"If almost everyone must pass through a Microsoft tollbooth to use the Internet, it is not unreasonable to believe that Microsoft will impose its vig on most activity on the Internet," former US Senate majority leader Bob Dole wrote in a column last fall. Dole has been hired by Microsoft competitors to build a coalition to stem the company's influence.

Now, battling the Department of Justice over alleged anti-competitive business practices, Microsoft is toning down some of its statements.

"Does our company want a vig? No," Ballmer said last week. "That doesn't mean we don't want to do things on the Internet. Do we want to do Expedia (Microsoft's online travel service)? Sure we want to do Expedia. But if you type in www.infoworld.com into a Windows browser, people think we actually are going to demand a piece of whatever payments are going to be triggered by that?"

Once a hot topic on the Microsoft campus, the notion of collecting vigs has fallen out of favor recently, one analyst says.

"That dropped off their radar screen as undoable because of backlash from banks and consumers," says Rob Enderle, senior analyst at Giga Information Group in Santa Clara, California.

However, many believe the notion will not die.

"As time goes on, this is going to happen, and they are big enough to pull it off," said Marc Perl, business manager of a major credit card company's point-of-sale products.

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