Mr. Matthew J. Szulik

December 12, 2001

I would like to thank the members of the committee for allowing
me to contribute my views on a topic that I feel is of vital
importance to the future our nation. I stand before you today as
Winston Churchill said, "only to fight while there is a chance,
so we don't have to fight when there is none." Through your
actions, members of the committee can affect a remedy that many
members of the growing, global technical community hope will
restore balance and inspire competitiveness in a networked
society free of monopolistic practices.

I stand before you today as a representative of the open source
community. And as the CEO of Red Hat, Inc., generally regarded
as the most successful company that sells and supports open
source software. The Red Hat Linux operating system software we
sell is created by a global community of volunteers. Volunteers
who share their creation of intellectual property. The basis for
their work is an open license that requires improvements to the
technology be shared with others. Programmers submit their
software code, their creations to the scrutiny of a very critical
community of peers. The best code wins and is included in the
next version of the software. This open communication strikes me
as so perfectly American. I envision the early leaders of this
country drawing up the tenets of our constitution in much the
same way--in the open, in pursuit of a solution that is fair and
of benefit to all.

Some have called this the technology equivalent of a
barn-raising. Through this approach Linux software has grown,
improved and become one of the most stable, cost-effective
operating systems in the world. It continues to improve every
day.

The values and practices of Red Hat are in most ways antithetical
to those of the monopolist I am here to reference.

Much testimony has been provided on the practices by the
monopolist, which in my view have placed a technical and
financial stranglehold on the technology industry. Mr. McNealy
and Mr. Barksdale and others that have come before me have done a
good job of presenting the issues to the committee. I support
their conclusions that the software industry needs government
intervention. I support their requests for strong enforcement of
antitrust laws.

I would like to reaffirm their case, that innovation will occur
when there is a competitive environment free of monopolistic
practices.

Open source software arose because of a lack of alternatives that
allowed the individual to choose the best tool for the job. Over
the past 5 years, projects created by Red Hat and the open source
community have become solutions of choice in areas of
standards-based Internet software development, areas that the
monopolist does not yet control.

The growth of the Linux operating system is an example of this
acceptance. The Apache web server is another, it now holds a
market-leading position.

However, the Internet browser, desktop operating system and
office productivity software are areas that have continued to be
influenced by one vendor alone.

One of the reasons I am so deeply troubled by the consent decree
in this case is that it seems to run counter to things that are
fundamental to our identity as Americans. We value fair play,
ethical competition, abiding by the rules and fostering
innovation. The consent decree throws all of this away. It
acknowledges that my competitor has broken the law; that through
these violations it has built one of the most formidable
businesses in the world. Yet the consent decree does little to
prevent future misconduct. I feel if the antitrust laws are not
enforced, the will and spirit of the true innovators will suffer.

Lengthy legal critiques of the consent decree are already on
record. In the interest of time I will not subject you to more

this morning. I am sure you've heard enough legal arguments in
considering this topic. Rather, I want to make a few key points:

First, their growing monopoly power has seriously warped the
technology market. Now that my competitor is a convicted
monopolist, the world can see in the public record what those in
technology companies have known for years: they don't compete
fairly, they use their dominance in one market to dominate
others, and they stifle innovation in the name of competition.
The only way to stop this - to restore fairness to the market -
is a settlement of this case that denies the monopolist the
fruits of its past actions and provides remedial measures on the
monopolist for its violations of the law.

Second, the consent decree as it stands today, falls far short of
this requirement. Given the monopolist's history of skating up to
the edge, or over the edge, in not fully complying with prior
settlements, it will take very strong measures to change their
behavior. In the words of Massachusetts Attorney General Thomas
F. Reilly, commenting on the consent decree: "Five minutes after
any agreement is signed with Microsoft, they'll be thinking of
how to violate the agreement. They're predators. They crush their
competition. They crush new ideas. They stifle innovation. That's
what they do.''

Microsoft is deeply concerned about open source software and has
already making overtures on how it will use dominance rather than
technical expertise to crush it.

The CEO of the monopolist said, quote, "Linux is a cancer that
attaches itself in an intellectual property sense to everything
it touches."

The head of the monopolist's Windows Platform Group has similar
beliefs: He said publicly, quote, "Open source is an intellectual
property destroyer. I can't imagine something that could be worse
than this for the software business." He goes on further to say,
"I'm an American, I believe in the American way. I worry if the
government encourages open source, and I don't think we've done
enough education of policy-makers to understand the threat."

In my view, the consent decree should create a level playing
field between Windows and Linux. Because of their comments, and
their past actions, I believe the current consent decree is not
strong enough. They will circumvent it.

Third, we have all heard of the Digital Divide. It's the gap in
information and computing access between the haves and have nots
in our society. As many states struggle with declining revenues,
I believe these shortfalls will have a material impact on the
public funding of K-12 and higher education. The path to the
development of an information economy can not be limited to a
sole supplier, who in my view has seen education up to this
point, relative to its financial position as a market - not as a
responsibility. I believe the lack of choices and high recurring
costs is in part responsible for this growing chasm between the
two Americas.

I'm involved with North Carolina Central University - an
historically black university that cannot afford the monopolist's
restrictive licenses and forced upgrades. I see this sad
experience in schools throughout our country. Walk the halls of
schools in East Roxbury, MA or Snow Hill, NC and question how we
can expect, as a nation, to improve the future for our youth when
schools must allocate 30-40% of their IT budget for software and
hardware upgrades. Provided choice, these same dollars could be
put into teacher training and acquiring more technology.

The Chinese government understands this. The French and German
governments as well. They have stated that proprietary software
will not be used to develop government and educational
infrastructure.

But the monopolist has more than 90% of the desktop operating
system market and more than 70% of the Internet browser market.
What choices do our schools have? What choices do our citizens
have? As the monopolist extends its monopoly into additional
markets, largely unfettered by the legal system and apparently
immune to the consequences of their actions - the Digital Divide
widens.

Biologists know that an unbalanced ecosystem, one dominated by a
single species, is more vulnerable to collapse. I think we're
seeing this today. Under the consent decree, it will continue and
probably get worse.

In America, history has taught us that there is no mechanism more
logical and efficient and than a free and open market. Our
competitor's illegal monopolistic actions have significantly
reduced the open market in information technology. I believe that
in extreme cases like this, it is the role of the government to
step in and restore balance.

Thank you.