Microsoft has changed (some of) its monopolistic ways

Microsoft has changed (some of) its monopolistic ways

Summary: Having reported on Microsoft since the early 1990s, I can say I've seen a lot of change, regarding Microsoft's business practices and behaviors. These changes aren't, for the most part, voluntary; many are happening because times have changed. But Microsoft also has altered some of its less-than-ethical ways as a result of court rulings in the U.S. and overseas.

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TOPICS: Windows, Microsoft
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On September 17, the European Court of First Instance will decide whether or not to overturn the European Commission's 2004 antitrust ruling against Microsoft. A number of company watchers are painting the ruling as a watershed event that will have lasting impact on Microsoft and its customers.

Microsoft MonopolyI disagree. Despite Microsoft flying lots of its legal and marketing teams to Europe to prep for potential PR damage, I think Monday's ruling won't have much, if any, new impact. And I also disagree with Microsoft competitors like Salesforce.com's CEO Mark Benioff who claim little, if anything, has changed and that Microsoft would like to halt innovation, if it could.

Having reported on Microsoft since the early 1990s, I can say I've seen a lot of change, regarding Microsoft's business practices and behaviors. These changes aren't out of the goodness of Microsoft's heart; many are happening because times have changed. But Microsoft also has altered some of its less-than-ethical ways as a result of court rulings in the U.S. and overseas. (Do you think Microsoft wanted to institute a flat price list for Windows among the Top 20 PC makers? Voluntary principles spin aside, they had no choice.)

I'd also argue that Microsoft has changed as a result of the departure from the company of a number of Microsoft managers who believed Microsoft was above the law. Some of those who stayed seemingly have gone to charm school to undo old habits.

Today's Microsoft isn't yesterday's. Sure, there are still a few of the old Microsoft guard left who think customers and partners are so dumb and scared that the Redmondians can get away with anything. Microsoft's vague threats of Linux patent violations meant to scare customers, and its refusal to make Open Document Format (ODF) support a built-in Office feature right alongside its own Office Open XML (OOXML) prove that these attitudes are still alive and well at Microsoft.

Oftentimes, Microsoft's weak communications skills make the company look even more sinister than it is. A couple of recent examples: The recent Windows Genuine Advantage (WGA) outage and this week's disclosure that the company has been updating Windows Update on users' machines without their knowledge/consent.

But the "cut-off-their-air-supply" Microsoft just ain't what it used to be. If today's Microsoft were the same unbowed and unbridled company it was back in the 1990s, I think we'd see some very different business practices in place. A more cutthroat Microsoft would:

  1. Create a super ad-blocker that would thwart Google and install it by default on Windows users' desktops (Windows Connected came up with that one.)
  2. Bundle the Windows Live suite on every new PC and make sure, by license and design, that OEMs couldn't remove it
  3. Bundle SQL Server in Windows Server
  4. Penalize PC makers who offered Linux on any of their machines by charging them more per copy for Windows, refusing to provide beta Windows code, etc. -- all the things it did to OEMs during the Windows 95 era
  5. Bundle its Flash competitor Silverlight with every copy of Windows and Internet Explorer

Microsoft is still a desktop operating-system monopolist. But it's not the runaway leader in a number of other categories in which it's playing (search engines, MP3 players, game consoles, mobile operating systems). To assume that Microsoft can wield its desktop Os power to unfair advantage in these areas just because Microsoft is Microsoft is a big leap of faith. At the same time, independent software vendors are a lot more leery these days, in terms of showing Microsoft their products and roadmaps, which should lessen the Redmondiands' long-favored practice of "borrowing" cool concepts and features to incorporate in their own wares.

Whatever the European Court rules won't change the market dynamics in place. Whether or not court oversight is extended or new antritust cases are lodged against Microsoft -- which they undoubtedly will be -- Microsoft execs have been forced to realize they always have to operate with an assumption of illegal monopolistic behavior working against the company. Microsoft brass know that every product development and marketing decision Microsoft makes for the rest of the time it is in existence will be scrutinized for possible lawsuit opportunities.

Couple that realization with changing market dynamics (and Microsoft's frequent inability to get out of its own way), and I think it's fair to say that Microsoft has changed -- at least to some degree. There's no way I'd advocate rechristening the company the "Ethical Empire." But the Microsoft of 2007 is not the Microsoft of 1997.

Do you agree?

(Image: Courtesy of SplitReason.com)

Topics: Windows, Microsoft

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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135 comments
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  • Kerberos

    Perhaps the new, ethical Microsoft will publish its modifications to Kerberos so that Windows clients can use non-Microsoft autheneticaion servers. They agreed to this in 1997 (http://www.usenix.org/publications/login/1997-11/embraces.html) but nothing ever came of it. So it seesm to me that they aren't changing their atitudes, they are just being coerced by governments.

    Kerberos was developed and peer-reviewed at public expense. Microsoft't modifications basically prevented this protocol from working with a Microsoft client unless you also used a Microsoft authentication server. In my opinion, they poisoned the commons. Perhaps you are right that MS is changing its spots, but I remain skepical.
    shis-ka-bob
  • DNA

    The "convicted but unpunished" (in the US; Europe seems to be tougher on them) Microsoft has anti-competitive behavior in its DNA.

    Absolutely, the clamps need to stay on. As soon as restrictions would be removed, the old "cut off their air supply" Microsoft would return - in an instant.
    hairyR
    • Yep

      Microsoft has lost its EU appeal - the Court of First Instance has upheld the EU
      Commission's decision regarding Microsoft's anti-competitive behaviour.

      So how much have they changed? Mary Jo can only offer "well, they [i]could[/i] have
      been worse".

      I think that's called being damned by feint praise.
      Fred Fredrickson
    • so....

      because Microsoft did better than you could ever hope to do, you want to kill them off? Yeah, that's fair. Microsoft would be able to produce much better desktops than anything made by Dell. Had Microsoft been able to pair up better with Intel, we'd also see much better processing power. But no, instead people filed suits because they couldn't keep up with Microsoft. Microsoft started off with nothing, a bunch of nerdy losers who took on the giants of Apple Corp and IBM, and kicked them to the curb. I'm assuming you don't see it that way, since you are so happy that Microsoft is being held back.

      Double standards are ridiculous: "blah blah blah windows sucks and microsoft won't fix it." "blah blah blah Windows has too much power and needs to be stopped."

      If you halt the forward push by a company, and then complain it's not moving forward, you're just a hypocritical imbecile.

      Good Day To You Sir.
      evilkillerwhale@...
      • MS is not in trouble for doing well

        I am really tired of ignorant ranters simplifying antirust to make it sound antit-comeptitive, anti-innovative, and anti-freetrade. It is not. Oh poor little being targeted for being a success. No. No. No. Not even close to reality.

        Article 82 of the EU is not outlawing success. It does not even outlaw monopolies. It outlaws predatory monopolistic tying to create durable monopoly--which happens to also be illegal in the US as well. And in both the US and EU, MS was found guilty of doing this numerous times. they used illegal means to extend and preserve their monopoly and got caught and now, at least in the EU, they are being punished. Good. Actually, Great!
        Res Ipsa Loquitur
  • It must be a money thing for Mary Jo.

    She used to be so aware of the MS program to take over world computing. Now that she is on their payroll her stories have become just another avenue for Microsoft propaganda.

    Mary Jo, you are so disappointing.
    nomorems
    • You must not know the Mary Jo I know

      I wouldn't defend Mary Jo if she were GOD, but she's no Microsoft employee nor on their payroll. If you have ever read anything other than THIS ONE ARTICLE you would know that. Articles like this from MJ come maybe once a century. She's been reporting on MS since the 1890's. (yes 1800's) LOL
      andrej770
    • not helpful

      Personal attacks are merely polarizing. I assume that ZD Net bloggers have developed thick skin, so I hope that name calling doesn't bother her. But you are just giving the regular pro-Microsoft commentors a chance to convert this article into a flame war. Sure, it can be fun to exchange insults, but all that does is polarize. I think you would be more effective if you would give counter examples or refute specific claims. Instead, you claim her to be on Microsoft's payroll. This is not only a falsifialbe claim, it is a false claim.
      shis-ka-bob
      • Thanks for your opinion.

        NEXT!
        andrej770
  • Staid middle age.

    The software industry has matured to a few large players, and Microsoft is the largest. That situation would by itself cause changes in how the company behaved; holding a market is different from winning one.

    And then, the market Microsoft sought to win had competition which was no larger, had no more momentum than Microsoft itself. Having gained and held its original target markets, the company is moving into areas in which Unix and other software already exists, and has to be overcome gradually, with greater consideration for customer attitudes.
    Microsoft has little to teach and much to learn.

    Then too, new approaches to software distribution and use are not as significant as announced by advocates and those who would benefit from change. But they do exist, and Microsoft is far from the only player. Making a profit, eventually becoming the predominant source for such technologies will require restraint.


    So the conclusion in the Comment is correct, but the situation is more subtle than a simple "Microsoft has been burned" approach would indicate.


    Two more specific caveats:

    - Microsoft's insistence that patent infringement - its own and other companies' patents - has been successful. Open source is now being considered another method of development, rather than a Get-Out-of-Jail-Free card for customers.
    Customers were not meant to be "scared", just mindful. Why would Microsoft scare its own customers?

    - Microsoft need not penalize any OEM for offering Linux. Microsoft knows and the OEMs know that the desktop issue is settled. The OEMs may gain some gratitude from open sourcers, but they will not be tempted to break out Linux-based devices as a new and significant source of profits.
    Tolerating PR efforts costs Microsoft little.
    Anton Philidor
  • Mary Jo has changed (some of) her completely biased ways

    It good to see change in MS. Changing with the times keeps you hip, informed and able to objectively conversate with people who think in the now. Oh yeah, welcome to that world, too, Mary Jo. An unbiased, clearly objective artcle is CHANGE for you. It's welcomed too. Now, the European Court of First Instance might not agree :-), but I see your change; its subtle change, but a change all the same. I felt the same when I listened to Bush last night. He's starting to come around. It's a subtle change, brought on by more than his own choosing, but change all the same. Welcome!
    andrej770
    • Change

      Hi, Andre. I am not trying to write unbiased blog posts. Blogs are all about bias: Stating your bias and explaining your views.

      But that Bush comment is a low blow! Being put in the same sentence with him is something that gets under even MY thick skin! :)
      Mary Jo Foley
      • See! MJ WAS biased against MS and is now biased FOR MS!

        The only thing that does that (when MS is concerned) is money!

        Spend it well MJ! You have lost all respect from 20+ years of reporting the evils of MS!
        nomorems
  • RE: Microsoft has changed (some of) its monopolistic ways

    The market rules in the end and Microsoft has finally woken up to that fact.
    dahowlett@...
  • The web has hurt MS

    Way back when, you had to rely on print and broadcast media to find out about any MS missteps. Today, there are thousands of voices online to almost instantly jump all over MS. MS marketing can do nothing to control this, as opposed to only having to deal with a relatively small number of reporters in the past.

    The kerfuffle about the secret updates to Windows update illustrate that. One guy puts it on the web and a whole bunch of others, including ZDNet, pick it up. I saw a link to it on a general news site yesterday afternoon.

    Unfortunately for MS, they have managed to antagonize enough people over the years that they?ve created a veritable army of people who dislike them and will go after them with a vengeance ? on the web ? almost instantly. That cuts down on any ability to pull dirty tricks.
    j.m.galvin
  • Changed? No, but they have hired more and better lawyers

    Yes, times have forced MS to alter course but the destination remains the same, "Windows Everywhere". If you look at the new breed of MS products you begin to see that there are more version of "server" than you can count and many (most) products they produce are dependant on running MS servers. As to Silverlight being bundled, wait for Office 14 and you will see how it will be dissiminated to end users. (A hint: Office PowerPoint will be all about Silverlight.)

    Another way Microsoft is using (abusing?) thier market dominance is with developers. Under the cloak of "security" Microsoft is backing third party developers into a corner. As an example, in Vista try to force IE 7 to install an activex control that doesn't have a certificate. Yeah, it can be done, but you better fully understand how to set IE settings (and if your in a corp world with polices forget it). If you are running One Care it isn't going to happen no matter what you do.

    Why is this a hardship? First, certificates are expensive and currently the only certificates that work as they should come from VeriSign. There are others but Vista/One Care rejects them and they don't carry the "Vista Logo" that users look for. Of course Microsoft has a very close relationship with VeriSign and your certificate can be invalidated with a phone call from Microsoft. (Lots of horror stories out there on this.)

    Microsoft is also creating other ways to control third party developers. In Vista you have what they call the Digital Locker. It's s special place used to store product registration keys. Say you buy a third party app or add-in and register it. The registration key is kept in the digital locker. All well and good, but... In order for a thrid party to use it you must use Micrsoft's code signing (I believe Mary Joe just wrote and article on this) and have a Verisign certificate.

    Also in Vista you will see that Microsoft has what they call the "Windows Marketplace". Obviously end users will see this as a Micrpsoft endorsment of the product and its "security" if its in the Windows Marketplace. Of course Microsoft will be tracking what sells well, who is buying it, etc. Hmmm, this thing is selling like hotcakes, we need to build a product like it... Of course MS will also get a piece of the sale for transaction fees.

    As I said, Microsoft has changed its course (how it gets there) but the goal remains the same. What I really see is that with more/better lawyers they very carefully avoid anti-trust actions. Not by not doing something, but by finding clever ways of doing it without getting their teat in the wringer while they do it.

    In my humble opinion, I hate saying it but the only thing that will force Microsoft to truely change is for them to be broken up via anti-trust or by stockholders demanding it. (If MS were broken up or spins off divisions the stockholders would see a HUGE increase in the value of their stock.)
    No_Ax_to_Grind
    • But, but...

      you don't BELIEVE in anti-trust law! Who are you and what have you done with No_Ax?

      Yes, MS needs to be broken up. This would have been the result of the US-DOJ anti-trust trial if the regime had not changed.
      nomorems
      • MS gives to both regimes

        like most big companies. How exactly did the trial change once the republicrats took over?

        Should the govt really have the power to break up a business? Should Apple be broken up too?
        otaddy
        • Oh thats easy...

          "like most big companies. How exactly did the trial change once the republicrats took over?"

          The DOJ staff/budget was immediately cut.

          "Should the govt really have the power to break up a business?"

          They have had that power for a very long time. May I remind you that a corporate entity exists at the leisure of the government and US citizens.

          "Should Apple be broken up too?"

          With such a small percentage of the market I don't see why they should but in any case this is not about Apple.
          No_Ax_to_Grind
          • even easier

            "The DOJ staff/budget was immediately cut."

            Nope, the budget increased.

            http://www.usdoj.gov/jmd/budgetsummary/btd/1975_2002/2002/html/page2.htm

            "May I remind you that a corporate entity exists at the leisure of the government and US citizens." Just because the govt does something for a long time does not mean it is constitutional. What gives govt right to do this?

            " With such a small percentage of the market I don't see why they should but in any case this is not about Apple. "

            I want to know when you think govt should act and if there are any limits to govt action. Apple has a large market share in mp3 players, is this justification for govt action. If not, why not?
            otaddy