Steve Malone: "IT's Like This..."

The antitrust case against Microsoft hasn't told us much we didn't already know. But there are more reasons for being sleepless in Seattle than we might think. Steve Malone explains...
Written by Steve Malone, Contributor

The great Microsoft/Department of Justice paperchase is finally wending its way to the finish line. As with most long running sagas, pretty well everyone, everyone except those with a professional interest in the case, will have long since decided to get on with their lives and will check out the result at the bottom of the business pages.

If nothing else, the case has at least alerted the wider world to the facts that have been obvious to industry watchers for years. Microsoft has a monopoly of desktop operating systems, an unhealthily large share of the office applications market and is capable of using those positions to bully its way to grab market share in those areas where it doesn't have a commanding lead.

The use and possible abuse of Microsoft power has become the environment in which everyone works. Everyone has their favourite war stories about how Microsoft has used its position in this or that market to elbow its way forward in another and how the various hardware vendors have been played off against each other depending on how much they were willing to advance Microsoft's cause. There has been a constant trickle of such stories so no-one was much surprised when the rumours emerged over the arm twisting concerning bundling Netscape Navigator.

The reason is simple. Most people -- especially among the sharks that inhabit silicon valley -- would do the same. Just for a moment, put yourself in Bill Gates well-heeled shoes in late 1996. The previous year, you had badly misjudged the impact of the Internet and needed to catch up quickly. You have heard that Netscape is conspiring with the likes of IBM and Sun to add a disc operating system to the Navigator browser and outflank Windows in the emerging Internet age. You know that a lot of the hardware vendors whinge about the cost of Windows and totally lack loyalty even though you have made them billionaires. They might well jump ship to a cheaper alternative if it gained momentum. What the hell are you going to do? You are going to use Windows licencing to push forward Internet Explorer to crush Navigator. I'd do it, you'd do it.

But, the question really is, not whether Bill Gates did it. Its whether Microsoft has the power to be tempted to do it. I don't believe the DoJ has proved Microsoft to be a monopoly which systematically abuses its power. Clearly, the email conversations between Microsoft executives discussing business strategy don't look too good in the bright lights of a courtroom. Bill Gates evasiveness on videotape didn't show him up to be business genius that his supporters claim. At the same time, I also believe that Judge Penfield Jackson, often irritated by Microsoft's arrogance and legal hair-splitting, will find broadly in favour of the DoJ.

But this is still only round one. Already, as was widely predicted when the DoJ papers first landed on desks in Redmond, the industry is moving too fast and the market then is different from the market now. The browser wars are pretty well over. Microsoft managed to outspend and outmarket Netscape so it could never develop a competing operating system and has now been consumed by AOL. At the same time Microsoft has been unable to hijack the Internet browser to the extent that it can dictate the direction of the Internet economy. In this respect, Sun's victory over Microsoft over the Java Virtual Machine is far more important than anything the DoJ case might achieve. It means that Microsoft will have to learn to be a team player in the Internet space and not dominate as it is accustomed.

Elsewhere Microsoft's all powerful reach may be crumbling. The delays in Windows 2000 when the blue chip hardware vendors queue up to offer Red Hat Linux on their machines must be causing as many sleepless nights in Redmond as Netscape Navigator ever did. On top of all this there is a general reluctance by IT Managers to gobble up copies of Windows 98, Office 2000 and Windows 2000. The result? Microsoft starts to look vulnerable.

What Microsoft must fear most is not outright defeat at the hands of the DoJ, but a hamstringing of its room to manoeuvre and constant legal surveillance at a time when it needs to be able to move fast. Such restrictions on IBM followed similar anti-trust hearings in the late 70s and went some way to bringing Big Blue almost to its knees a decade later.

Bill Gates knows this better than anyone. It may be the reason he has declared he wants out in a couple of years. Knowing that Microsoft has reached its zenith he wants to retire with his place in history intact and not as go down as someone who presided over the slow crumbling of his empire in the early years of the 21st century.

Take me to the DoJ/Microsoft page.

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