From the issue dated April 24, 1998

Colleges Wonder if Microsoft Is Their Next Competitor The company says No, but its acquisition of intellectual property and its development of software with academic content leave some in higher education dubious By GOLDIE BLUMENSTYK The company line is unequivocal. Microsoft wants higher education's business, but Bill Gates isn't looking to get into the business of higher education. Microsoft, its officials say as often as they can, wants only to sell the "platforms and tools" of information technology, not educational content. That said, a lot of what Microsoft and A SPECIAL REPORT: Microsoft's reach in higher education Introduction Microsoft Marketing Brings New Business and New Skeptics Corporate Largesse: Philanthropy or Self-Interest? Microsoft's Campus Brain Trust: $10,000 a Year for Providing 'Input' Microsoft Pays $200 for Mentioning Its Tools Funds and Freedom Make Microsoft Nirvana for Some Researchers Colleges Wonder if Microsoft Is Their Next Competitor Microsoft Headquarters Evokes Ambience of Campus, but 'It's Just an Office Park' What you said: Is Microsoft's growing role on college campuses helping or hurting higher education? Does Microsoft have too much influence in academe? Read the responses we received in Colloquy. Mr. Gates, its chairman, have been doing in the way of acquiring rights to intellectual property and creating software that is rich in academic content suggests a more-than-casual interest in the realms of art and ideas. Already, Mr. Gates controls one of the world's great troves of photographs, the Bettmann Archive. In 1994, he bought his own little piece of the Renaissance, paying $30.8-million for the Codex Leicester, a notebook in which Leonardo da Vinci recorded thoughts and theories. At the same time, Microsoft itself has been been poking around -- very quietly -- on college campuses, inquiring about content it might buy and learning about techniques for teaching foreign languages. Little surprise, then, that the wealthy company and its acquisitive, billionaire chief executive are creating some slight unease among higher-education officials. "It does seem to be that he sort of looms out there," says Sandria Freitag, executive director of the American Historical Association. "We're wary and watching," says Virginia Hall, an art-history curator at the Johns Hopkins University. The unease takes several forms. Some academics fear that Mr. Gates will continue to buy important artistic or historic works and take them out of the public domain. A few also worry that the company he founded to collect and license digital images of artistic works, Corbis Corporation, will influence the direction of evolving copyright law in a way that would limit colleges' "fair use" rights to employ digital images freely for educational and scholarly purposes. Meanwhile, college administrators, nervous about competition for students, worry that the company might someday create its very own "Microsoft U.," despite assurances to the contrary. Microsoft has already positioned one of its CD-ROMs, Encarta Virtual Globe, for the postsecondary-education market through an agreement with John Wiley & Sons. Wiley, a publisher, will start selling the product with 10 of its college geography textbooks next fall. Microsoft officials also have begun exploratory discussions with Wiley and other college-textbook publishers about other subjects -- perhaps chemistry or engineering -- for which the software maker might produce materials. And the company has reportedly invested $1-million in a project directed by Harvard University's Henry Louis Gates, Jr., to produce a CD- ROM version of a new encyclopedia of Africa and the African diaspora. A few CD-ROMs and textbook tie-ins, of course, do not a university make. But trend watchers say competition-wary colleges shouldn't take any comfort in Microsoft's claim that it's interested merely in providing tools for computer users. "A wealthy 'platform and tools company' can go out and buy what we consider content," notes James J. O'Donnell, vice- provost for information technology at the University of Pennsylvania. That may well have been what Microsoft had in mind a year or so ago, when it entered into confidential discussions with Middlebury College about pedagogical techniques for teaching foreign languages, a specialty of the Vermont institution. At the time, there was talk of Microsoft's and Middlebury's working together to create CD-ROMs for teaching English as a second language, and products to teach French and Spanish to English-speaking students, but Microsoft apparently decided to pursue its language projects on its own. A company official says the work may result in a CD-ROM teaching English to non- English speakers that Microsoft would market in foreign countries. Last fall, a team of editors who work on Microsoft's Encarta Encyclopedia paid a visit to Stanford University. Andy DiPaolo, executive director of a distance-education unit called the Stanford Center for Professional Development, says the editors were inquiring about possible course content. "They were fishing, basically," he says. Mr. DiPaolo says he understood that the visit was one stop on a tour of colleges. The Encarta team plays down the significance of the Stanford visit. Denying that there was any formal "tour" of campuses, Vic Bondi, one of the editors, says that Encarta staff members did visit Stanford, but that "nothing came of it." He says the editors had heard that Stanford had "a pretty cool system" for delivering engineering courses, "so we wanted to check it out." Expeditions of that kind from the company's headquarters, in Redmond, Wash., aren't all that noteworthy, he adds. "Microsoft's got resources." Resources, indeed. The company expects revenues in excess of $13-billion this year, and has $10-billion in cash at its disposal. And as even the most casual reader of the business press knows, it harbors a seemingly insatiable urge to dabble in new markets. The company has a major presence in television news, with MSNBC, and in political commentary, with the on-line magazine Slate. It is also a major player in the exploding world of Internet commerce, with such World-Wide Web sites as "Microsoft Investor" and "Money Insider" for finance and banking, and "Expedia" for travel services. Its "Sidewalk" site runs entertainment listings and advertisements for 11 cities, much the way a newspaper's weekend section would. It even has a site for selling cars, "Microsoft CarPoint." Then there is Corbis, a privately held company that Mr. Gates founded in 1989 to be -- as he later told ARTnews magazine -- a pre-eminent electronic archive of great images "that will capture the entire human experience throughout history." Corbis owns the Bettmann Archive, a collection of 16 million images, including the famous Depression-era photographs by Dorothea Lange and shots of the exploding dirigible Hindenburg. Corbis also holds nonexclusive rights to sell digital images of more than a million additional works belonging to 15 museums and hundreds of private collections -- including images from one university collection, that of the architecture library at the Massachusetts Institute of Technology. In the early 1990s, Corbis sought arrangements with dozens of other museums, but many have been reluctant to commit. Corbis makes its money from licensing images for use by publishers and businesses. It also sells posters and other consumer products to individuals. It is primarily the licensing business that concerns academics, who are beginning to experiment with digital archives as teaching tools. The rules and costs of using digital images are quite fluid right now, notes Ms. Hall, the Johns Hopkins curator, who is also co-chair of the intellectual-property-rights committee of the Visual Resources Association, an organization of curators and librarians. Professors and librarians worry that corporate players will so influence the direction of the digital-rights business that academics will be priced out. The concern is that licensing will become expensive or become so accepted as a way of providing such images that "fair use" rights will be diminished, says Ms. Hall. "Certainly, Corbis raises that issue." The issue has yet to flare up, Ms. Hall notes, because most colleges are still years away from a fully digital teaching environment. But if a college did want an image from Corbis for use in a class presentation or a course Web site, it could expect to pay much more than than the $2 to $6 that professors are used to paying to buy a slide image. Corbis has no standard educational rate, but says its prices are based on the nature of the use. So the fee for a professor would be less than that for, say, Time magazine. Still, the company estimates that it could charge $100 to $300 for rights to use an image in an academic setting. So far, that hasn't been a problem for academics, who point out that much of what Corbis owns or has rights to is more commercial than scholarly, and that colleges can still get the images they need elsewhere. Corbis and Microsoft are separate corporate entities, and the digital-image company says Microsoft pays no less to use images than do other customers. Even so, the companies do collaborate. The new Corbis home page, for example, features a prominent link to Microsoft's "Expedia" Web site. Broader than the concern over images, however, is the general unease among academics that Microsoft might someday make a massive move into the substance of higher education -- building on its near-monopoly in computer operating systems and then perhaps developing software and a series of new and existing Web sites into course materials. After all, if Microsoft's Web browser can be "integrated" into the company's operating system, who's to say that eventually, links to Microsoft on-line courses won't follow suit? It's an idea that might have been deemed far-fetched even a few years ago but seems far less so today, as traditional colleges all across the country race to create similar courses themselves. At the same time, new institutions, like the "virtual" Western Governors University, are promoting the notion of marketing on-line education and training courses for self-motivated students. Microsoft is hardly the only business nosing around higher- education's tent these days. Jack H. Schuster, a professor of education and public policy at the Claremont Graduate University, is one of many who say it is only a matter of time before the giant "info-tainment" conglomerates, like Time Warner and the Walt Disney Company, along with Microsoft, start offering courses on their own, or in partnerships with leading universities. He and others point out that the newspaper, banking, and travel industries have already seen how many directions this "software" company is prepared to go in. Or, as Fortune magazine so delicately put it this month: "Microsoft: Is Your Company Its Next Meal?" Microsoft insists, however, that it isn't looking to compete with its higher-education customers. "We have no plans to be in the content business for colleges and universities," declares Joe Powell, marketing manager for on-line learning. It's "not in the cards." What Microsoft is interested in, he says, is selling software that colleges and third-party companies can use to deliver their courses. Microsoft will make a big push for such a product this spring with its latest version of a video- compression tool called "NetShow," which will compete with a more-established rival called "RealVideo" and a similar product from Apple Computer called "Quicktime." NetShow makes it possible to deliver sound and video images, either stored or live, over the Internet. It's a way of telecasting lectures or presentations. Microsoft has been selling NetShow since late 1996 but says this version is more sophisticated than the earlier ones, because it incorporates new technology developed by a Stanford computer-science professor, Anoop Gupta. To commercialize the idea, he had formed his own company, VXtreme, in 1995. Microsoft bought VXtreme last July, for a reported (but unconfirmed) $75-million. Mr. Gupta is now on leave from Stanford and is working in Microsoft's research division. As part of its distance-learning push, Microsoft has formed marketing alliances with companies that include ActiveClass, Convene, and Real Education. They sell on-line education services to colleges -- primarily sophisticated Web sites from which students can register for classes, buy books, and receive their course materials. Some of the sites offer streaming video, although most now use RealVideo, not NetShow. Microsoft hopes to change that. Microsoft is also working directly with several universities that want to create their own on-line programs without relying on such companies as middlemen. As for the courses themselves, Microsoft's Mr. Powell says the company's only curriculum is the one designed to educate information-technology workers for certification in deploying Microsoft products, such as managing networks using Windows NT. Private companies and community colleges offer the curriculum. Actually, that's not quite the only curriculum. The company also has a program of computer-technology instruction for college students who are preparing to become teachers. The program, called "teacher .training@Microsoft," makes Microsoft software available to school districts and schools of education, along with booklets of exercises and model lesson plans based on the software. A sample lesson for future middle-school teachers, for example, asks students to design, write, edit, and publish a brochure that sells a space-research project -- and to use Microsoft's Encarta, "Publisher," "PowerPoint," and "Word" to do it. Some 370 colleges participate in the teacher-training program, though it's unclear whether their students spend a lot of time using Microsoft's lesson plans. One technology instructor, in fact, says he hadn't even opened the cellophane seal on the Microsoft booklets. College participants in the "teacher.training" program say they take pains to insure that their students learn to use non-Microsoft software as well. But educators say that kind of corporate self-promotion is likely to become more commonplace as commercial providers assume larger roles in the education of students. Indeed, the college students who buy the Virtual Globe CD-ROM will encounter that phenomenon almost immediately. A prominent feature of the product -- in fact, one of the features that attracted Wiley, the publisher -- is the way it allow users to connect directly from entries on the CD-ROM to some 10,000 related Web sites. Although the software doesn't require users to make those connections with Microsoft's Internet Explorer Web browser, using Microsoft's browser makes the process much simpler than it is with the best-known rival browser, developed by Netscape. Indeed, Internet Explorer is packaged with Virtual Globe, and can be loaded easily from the same disk. Once connected with the Internet, users are presented with a list of links -- many of them home pages of cities, countries, or organizations with information about a particular geographic region. Lest users forget who's assembled those links, however Microsoft provides a gentle reminder: The list concludes with an invitation to visit "Expedia," the company's Web site for travel services. As Microsoft says, Where do you want to go today? http://chronicle.com Section: Information Technology Page: A33