A rchive Date
[ 10-06-2000 ]
Category
[ Information Technologies ]
sub-Categoy
[ Microsoft ]
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[A breakup is in the air
By John Dodge, PC Week Online
November 6, 1999 2:09 PM ET
I would like to think Judge Jackson's decision is a "victory for consumers," as so many lawyers for the government proclaimed Friday night, but how exactly? Should we expect a new PC operating system soon? Maybe the p-System and DR-DOS will return from the dead. Remember them from the PC's early days?
No doubt Microsoft is a monopoly, and I can understand the rejoicing by attorneys general and federal regulators. It's been a long, emotional battle, and one the government was expected to win. But a victory for consumers? Does tying Microsoft up in court for years to come represent a victory for consumers? Now there's a leap of logic.
Unless Microsoft and the government settle soon, there will be no triumph for anyone. The market moves too fast for an imposed remedy to achieve a desired result. Yes, we want a level playing field, but another desktop or server operating system isn't the answer. Does an untethered browser make it all better? I think not. The chance for such a solution passed about five years ago when Windows was so shaky you could feel the ground vibrating beneath it.
I haven't heard that IBM is clamoring to climb back into the PC operating system arena. Or anyone else with deep enough pockets required to launch such a risky venture. Who, I ask, is willing to step on that landmine? Netscape? Sun? Compaq? Dell? Sony? eBay?
What company wants to write a system with 70 million lines of code? What company wants to make thousands of PC devices and applications compatible with their software? What company wants to fight Microsoft -- or even a "Babysoft" after the company is possibly downsized? What customers want to entrust their applications to a new operating system? Am I missing something so revolutionary that Windows isn't needed anymore?
Writing an operating system will suck dry a company's resources so fast it'll make your head spin. Anyone considering that market would be hopelessly far behind from the start. Hence, no one wants to touch it. Perhaps the judge's ruling will eventually prevent Microsoft from wielding abusive monopolistic powers in the future. But what action short of a breakup will produce consistently tough rivals that will make all the legal battles worth the effort? It's not clear.
Linux, schminnix! Apple, crapple! It's not going to be them. They exist already and in many ways perform better than Windows. Do they matter? No. Digital Equipment has a better microprocessor than Intel. Did it matter? No. The time for many PC operating systems has come and gone.
Let's talk remedy
Few rationale beings would disagree that Microsoft has run roughshod over competitors and partners alike. It presented a weak case to Judge Jackson. The credibility of its executives and witnesses was suspect. Who at the trial's outset last Fall would have predicted Microsoft would perform so badly in court?
For anything positive to emerge out of the judge's ruling, Microsoft has to agree to a settlement. That means it must psychologically admit (maybe not publicly) that it has misbehaved and promise to conduct itself in a different manner. I argued a year ago that Microsoft should break itself into competing Babysofts. My mind has not changed. I ran the idea by a Microsoft arch-rival minutes after the decision was announced. His reaction: "I'd buy stock in all of the Babysofts." If I could, I would too.
Microsoft still holds many cards regardless of this fresh defeat. They can pose the question, "OK, we're guilty. What do you suggest?" That has to send shivers up and down the collective regulatory spine. Do they break up Microsoft and throw the stock market and the economy into turmoil? Or do they fine Microsoft, which might be far too light a punishment?
There's been precious little public discussion about a remedy. That needs to happen.
It is very much in the interest of the government, consumers, Microsoft and the nation that this dispute get resolved fast. Should this only be the seventh step (factoring in previous consent decrees, injunctions and overturned judgments) in what ends up being a long, drawn-out affair, the outcome will be irrelevant. After 13 years of antitrust wrangling, IBM wore down the government to the point where the case was dropped.
A more competitive landscape cannot be created at the point of a gun (although there is a precedent in the forced breakup of the Standard Oil Trust). Regulators might think they don't have to yield but if they don't, theirs will certainly be a Pyrrhic victory.
One analysis I read says Jackson's harsh language in his findings of fact was intended to motivate Microsoft into settling. That's smart. Early indications are Microsoft wants to. If so, Bill Gates should be prepared to make some sacrifices that he wouldn't have dreamed of a year ago.
And such sacrifices could very well call for a company breakup of one sort or another. ]
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