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Infighting unravels alliance seeking standard to protect Internet purchases Sandberg, Jared . Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]. 28 Sep 1995:

B10.

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ABSTRACT (ABSTRACT) The consortium brought together such top players as credit-card rivals Visa International and MasterCard

International Inc., software titan Microsoft Corp. and Internet upstart Netscape Communications Corp. But this

week, the alliance split because of tensions between Visa and MasterCard and their respective technology

partners -- Microsoft and Netscape.

Microsoft and Visa this week published a detailed description of a credit-card standard -- but with MasterCard

conspicuously absent. MasterCard and Netscape now argue, in essence, that the Microsoft-Visa team is

withholding the technical design to keep its approach "proprietary" and charge software developers and financial

institutions to use it.

"We're disappointed that Microsoft and Visa have opted unilaterally to take this approach," a MasterCard

spokeswoman said. She said the Microsoft-Visa details were incomplete, thwarting banks and software firms

developing new applications. MasterCard said it refused to take part in the Visa announcement because it is

"contrary" to the plans for a "single open standard."

ABSTRACT A consortium to develop a technical standard for protecting credit-card purchases on the Internet has unraveled

because of tensions between Visa International and MasterCard International Inc and their respective technology

partners, Microsoft Corp and Netscape Communications Corp. After Visa and Microsoft published a detailed

description of a credit-card standard, Mastercard and Netscape are arguing that the Microsoft-Visa team is

withholding the technical design. FULL TEXT NEW YORK -- A major alliance to develop a technical standard for protecting credit-card purchases on the Internet

has unraveled amid bickering between a handful of heavyweights.

The consortium brought together such top players as credit-card rivals Visa International and MasterCard

International Inc., software titan Microsoft Corp. and Internet upstart Netscape Communications Corp. But this

week, the alliance split because of tensions between Visa and MasterCard and their respective technology

partners -- Microsoft and Netscape.

Microsoft and Visa this week published a detailed description of a credit-card standard -- but with MasterCard

conspicuously absent. MasterCard and Netscape now argue, in essence, that the Microsoft-Visa team is

withholding the technical design to keep its approach "proprietary" and charge software developers and financial

institutions to use it.

"We're disappointed that Microsoft and Visa have opted unilaterally to take this approach," a MasterCard

spokeswoman said. She said the Microsoft-Visa details were incomplete, thwarting banks and software firms

developing new applications. MasterCard said it refused to take part in the Visa announcement because it is

"contrary" to the plans for a "single open standard."

The spat threatens to break down into an all-out standards battle over how to prevent hackers on the Internet from

filching sensitive financial data such as credit-card numbers. The losers could be legions of users and companies

eager to do business on the Internet.

Banks would be forced to accommodate multiple payment mechanisms, merchants would have to choose one or

another standard or incur greater costs obtaining both systems -- passing the costs on to Internet consumers.

"The growth of the industry is going to be impeded," said Robert Howe, a general manager at International

Business Machines Corp., which has all but sided with the MasterCard-Netscape team.

The dissension shows how, in high technology in particular, the vagaries of competition and ego can overwhelm

high-minded intentions to provide what customers need. Ego is at play in MasterCard's sniping at Visa, some

executives say. MasterCard didn't like Visa taking the lead in partnership with the industry's powerhouse,

Microsoft.

MasterCard "viewed it as a Visa-and-Microsoft deal. And to invite MasterCard in to participate now is awfully late,"

said one executive familiar with the matter.

Ego also seems to be at work in the Microsoft and Netscape face-off. Yesterday James Clark, chairman of

Netscape, asserted that Microsoft had demanded a 20% stake and a seat on the board of Netscape earlier this year

in return for giving Netscape important technical data on Microsoft's new operating system.

Mr. Clark levied the broadside during an otherwise low-key panel discussion at the Seybold Conference yesterday

in San Francisco. An audience member asked why Netscape and Microsoft are backing different standards for

commerce on the Internet, and Mr. Clark replied that Microsoft is hard to work with and detailed the equity demand

as an example.

The Netscape chairman couldn't be reached for comment, but Michael Homer, a senior vice president of marketing

at Netscape, confirmed that Netscape considered selling Microsoft an equity stake as part of earlier talks about

technologies that the two companies wanted to license with each other. "The equity part of the discussion never

went anywhere," Mr. Homer said.

Netscape accused Microsoft yesterday of withholding technology to extract hefty fees from any company hoping

to develop electronic-commerce software. "Microsoft is trying to funnel every electronic transaction through them"

and shave fees from each purchase, Netscape's Mr. Homer contended.

Mr. Homer added that if Microsoft were truly committed to open standards, it would simply hand over the software

code for all comers to use.

Microsoft said it licenses such code rather than giving it away. And it admits being interested in skimming a fee off

all the Internet transactions using the plan it unveiled with Visa this week.

"If we could do that, we will do it," said Warren Dent, director of business development at Microsoft. He added that

the cost wouldn't come from Internet merchants. Regarding Netscape, Mr. Dent said the firm's security

deficiencies that have recently come to light have "tainted" electronic commerce on the Internet. Mr. Dent also

noted that Microsoft yesterday introduced new security technology, including means to verify a user's identity, that

is much stronger than Netscape's.

Richard Lonergan, an executive vice president at Visa, said his firm remains committed to working on an open

standard for all players to unite current efforts that are "all over the map."

The winning standard offers potentially huge riches to the company that provides it. Though software firms

routinely commit themselves to so-called "open standards," competition often intervenes. "Software companies

are always playing games to gain advantage," said one executive familiar with the companies. "Visa and

MasterCard are caught up in this battle."

---

Joan E. Rigdon in San Francisco contributed to this article.

Credit: Staff Reporter of The Wall Street Journal

DETAILS

Subject: Standards; Internet; Consortia; Computer security; Credit cards; Software industry;

Service introduction; Open standards; Alliances

Business indexing term: Subject: Credit cards Software industry; Industry: 51121 : Software Publishers 54151

: Computer Systems Design and Related Services

Company / organization: Name: Visa International Inc; NAICS: 522210; Name: Netscape Communications

Corp; NAICS: 511210, 541512; Name: Microsoft Corp; NAICS: 334614, 511210

Classification: 51121: Software Publishers; 54151: Computer Systems Design and Related Services

Publication title: Wall Street Journal, Eastern edition; New York, N.Y.

Pages: B10

Publication year: 1995

Publication date: Sep 28, 1995

Section: Technology &Medicine

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

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Country of publication: United States, New York, N.Y.

Publication subject: Business And Economics--Banking And Finance

ISSN: 00999660

Source type: Newspaper

Language of publication: English

Document type: News

Accession number: 00270804

ProQuest document ID: 398462860

Document URL: https://www.proquest.com/newspapers/infighting-unravels-alliance-seeking-

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Copyright: Copyright Dow Jones &Company Inc Sep 28, 1995

Last updated: 2021-09-24

Database: ProQuest One Academic