CCIA's solution: Break up Microsoft

A major computer industry group has added its voice to those calling for a breakup of Microsoft Corp.

In a White Paper due for release later this spring, the Computer and Communications Industry Association (CCIA) will argue that the courts must break Microsoft into several pieces or face yet another round of protracted antitrust litigation sometime in the near future.

More specifically, the CCIA warns that Microsoft's stated intention of merging its consumer-oriented Windows 98 into its commercial-strength Windows NT will be the next battleground in a nine-year, on-again, off-again conflict between the world's most valuable company and the world's sole remaining superpower.

Though final recommendations are not yet finished, CCIA President Ed Black said his organisation will likely argue for both a breakup along product lines as well as the establishment of several rival companies in similar businesses. In addition, he said, the group will ask for some judicial oversight, but rely chiefly on remedies that do not require heavy-handed supervision. "What we're trying to do is make people understand the reality of how this industry is working," Black said. "The unifying of these markets is of tremendous importance."

Others, including the Software and Information Industry Association (SIIA), have recommended the Justice Department, 19 states and the District of Columbia restructure the company in order to avoid what it says is clear recidivism at Microsoft. The SIIA also recommended last year that the Justice Department expand its antitrust investigation to cover the server market before the antitrust suit was ever filed.

The CCIA, however, is the first group to make the increasingly important market for computer servers the centre of its analysis. The group argues that Microsoft will continue to leverage its dominant position in the PC operating system market into new areas even if stopped from restricting further innovation in PCs. "Microsoft is applying to the $30 bn network market the strategies and tactics it used to gain a monopoly in the desktop market," the report says. "The network market is clearly Microsoft's next offensive strike. Microsoft is following the money to another monopoly opportunity and hoping that its antitrust case will cause enough distraction to keep most people from noticing its next step."

Quoting Gates in a 1997 Fortune interview, the CCIA adds: "We are a predictable company. What we did with Windows on the desktop, we are doing with Windows NT on the server. What we did with Office on the desktop, we're doing with BackOffice on the server." By themselves, admonitions about future monopoly power could easily be dismissed as mere speculation. But CCIA officials say Microsoft's alleged disregard for past antitrust rulings proves the company will not stop at simple oversight by federal judges or regulatory bodies.

In 1995, for instance, the company agreed not to tie purchases of its operating systems to other products. Yet by 1997, The Justice Department was back in court, arguing that Microsoft had done just that when it required computer makers to distribute its Internet Explorer browser as part of the Windows 95 operating system. Microsoft subsequently beat the Justice Department's efforts to find it in contempt of that order, but not before it "complied" with Judge Thomas Penfield Jackson's order to separate the browser from the operating system via a product that would not even start.