How a decade of antitrust oversight has changed your PC

It was 10 years ago this week that Judge Thomas Penfield Jackson issued his final judgment in U.S. versus Microsoft. Two months earlier, after almost two years of legal proceedings, the judge found that Microsoft had illegally abused its monopoly in the operating system market, and on June 7, 2000, he ordered that the company be broken up into two separate and completely independent companies.

That judgment turned out to be not so final, of course. The United States Court of Appeals for the District of Columbia circuit overturned much of Judge Jackson’s decision a year later, including the breakup provision. The appellate court also ordered him removed from the case, saying his secret meetings with the media and "numerous offensive comments about Microsoft" had tainted his impartiality. (If you're a law and technology geek, Dahlia Lithwick's dissection of the appeals court judgment is masterful and still hilarious.) Still, it was a loss for Microsoft and strong motivation to settle. After a few months of negotiations, the U.S. Department of Justice announced it had reached a settlement with Microsoft that severely restrained its behavior and placed it under direct oversight for years. Conveniently, that happened around the time Windows XP was released to the public in late 2001.

So, ten years later, with the gift of hindsight, how did that settlement work out? We don’t have the luxury of living in a parallel universe where we can see what the PC ecosystem in 2010 would look like if Microsoft had been allowed to go on its merry way without penalties or restrictions. But we can look at Windows and its competitors as they’ve evolved over the past decade and see how Microsoft’s behavior changed, and what that meant for the PC you’re using today.

Here are four significant developments that affect all PC users and in my opinion can be traced directly back to the antitrust case and its settlement.

#1: Thanks for all the crapware, Judge.

Throughout the antitrust trial, the word middleware got a serious workout. Originally, the DOJ used it to refer to browsers (specifically Netscape Navigator) and Java. But the judge’s ruling and the eventual settlement expanded the definition significantly, to include not just web browsers but also “e-mail clients, media players, instant messaging software, and future new middleware developments.” In the eventual settlement, Microsoft agreed to the following terms:

Freedom to Install Middleware Software--Computer manufacturers and consumers will be free to substitute competing middleware software on Microsoft's operating system.

Ban on Retaliation--Microsoft will be prohibited from retaliating against computer manufacturers or software developers for supporting or developing certain competing software.

The unintended consequence of allowing PC makers to substitute and support any software they want? Middleware became crapware. Desktops were splattered with icons for unwanted software. Preloaded media players and toolbars and add-ons and trial editions slowed PCs to a crawl. Even today, some retail PCs are crammed with so much third-party software that they take forever to start up. Microsoft still can’t legally do anything to make your overall Windows experience better when you buy a Windows PC sold by an OEM. All they can do is try to shame their OEM partners into doing the right thing.

In fact, the decision to block Microsoft from controlling preinstalled "middleware" founded a micro-industry of products and services that remove unwanted software from brand-new PCs, like The PC Decrapifier and the Geek Squad's "optimization" service.

As for the word middleware? I don't think I've heard anyone use that word since the antitrust settlement so many years ago.

#2: Competition among browsers? It took a long, long time.

This one's filled to the brim with irony. Microsoft's cutthroat battle with Netscape that began around the time of Windows 95 was one of the key complaints in the antitrust action, and Judge Jackson's original decision was scathing on this count. Yet the appeals court reversed Judge Jackson's decision that Microsoft had attempted to extend its monopoly into the browser market.

By 2000, Netscape was pretty well beaten anyway. Ten years ago, Internet Explorer ruled the web with an 80% market share, with Netscape Navigator in a distant second place. And by the end of 2003 IE had a share over 90%, according to one report at the time.

Mozilla Firefox was based on Netscape's source code, and has steadily increased its share since its launch in 2004. But it wasn't until 2008 that a really credible third-place browser for Windows appeared. And I think it's pretty safe to argue that the antitrust regulation had nothing to do with the rise of Firefox or Google Chrome. It's even possible that the antitrust settlement was part of the reason behind Microsoft's decision to completely stop developing IE. If there's no competitive advantage, why sink the development dollars into it? Even now, Microsoft's 2001-era browser, IE6, still has a usage share that puts it above all but two non-Microsoft browsers.

Although it took a long time, the good news is that competition in the browser market is pretty much assured for the next five years. Microsoft long ago lost any claim to a monopoly position in browsers, and it looks like two or three well-funded competitors are in the game to stay.

Next page: You're less safe online -->

#3: You're less safe online.

In a sane world, Microsoft would have added basic antivirus protection to Windows at least five years ago, as part of its overall Trustworthy Computing initiative. Microsoft has owned excellent antivirus software for at least that long. They released a consumer antivirus product in 2006, Windows Live OneCare, which wasn't free, and an enterprise product called Forefront in 2007, which also wasn't free.

Microsoft finally released a free, simple, consumer-focused antivirus product last year based on the same Microsoft Antimalware engine it uses for its Forefront enterprise product. Microsoft Security Essentials is available to any Windows PC as a free download, but it's still not available as part of Windows itself. The Windows 7 Action Center will warn you if you don't have antivirus software installed, but clicking the Find a Program Online button takes you to this page, where Microsoft's free offering is one of 23 options, most of which are paid products.

And there's the rub. As my CNET colleague Ina Fried noted around the time Microsoft Security Essentials (then code-named "Morro") was announced, antitrust issues were on everyone's mind. A spokesman for a competing  security company agreed that antitrust was probably not an issue "provided Microsoft does not bundle 'Morro' in with its operating system." And when asked directly whether Microsoft would ever consider bundling these security features directly into Windows, a Microsoft spokesperson said, "I can't foresee such a time."

In this case, I think the mere threat of an antitrust complaint from a big opponent like Symantec or McAfee has been enough to make Microsoft shy away from doing what is clearly in its customers' best interests. Although Microsoft Security Essentials is free, it's not included with Windows. And ironically, even though Microsoft's offering is free and gets excellent reviews, you're unlikely to find it on a new PC. Why? Because those competitors who sell antivirus software actually pay PC makers to preload their products, banking, literally, on the fact that a significant percentage of them will pay for an annual subscription.

#4: You want software with that OS? Go download it.

Microsoft is about to release an impressive update to its Windows Live Essentials program, but none of its components are included with Windows. Some of them, in fact, like Windows Live Mail and Windows Live Photo Gallery, are successors to utilities that were included with Windows as recently as three years ago, when Windows Vista was released. Strangely, Microsoft now offers the only major operating system that doesn't include an e-mail client.

So what happened? You can blame this one directly on United States versus Microsoft, as far as I'm concerned. There's no doubt that Microsoft wants every Windows user to install the Windows Live Essentials package, but after several hundred million dollars in legal bills, fines, and business disruptions, there is no way in hell that they're going to tie those programs to Windows and risk being hauled back into court for another beatdown.

The good news for anyone planning to buy a Windows PC is that Microsoft is likely to have considerable success getting not just the Windows Live Essentials package but also its Office Starter 2010 onto new PCs. With those pieces preinstalled, you'll have a pretty decent collection of consumer software, good enough to go head to head with a Mac running iLife. Because Apple isn't a convicted monopolist, though, they're free to bundle all those products on the same hardware without any fear.

In fact, as I realized while researching this piece, we now live in an era where, arguably, three companies have effective monopolies in different corners of the technology industry. Microsoft still has an overwhelming share of the PC market, although that share is under attack as alternative devices begin to do what used to require a PC. Google has a stranglehold on search and online advertising and is doing all it can to extend that monopoly into new markets. Apple has a Microsoft-like share of the market for digital music and portable devices and is reportedly under antitrust scrutiny by two agencies of the United States government.

Three monopolies, but only one of them regulated. That makes for a very interesting competitive landscape. Sometimes I think Microsoft might have been better off if they had agreed to break themselves up.