United States v Microsoft

Jim Blasingame When John Cage, aka, "The Biscuit", finds himself in a quandary on the Ally McBeal show, he says, "I'm troubled." I know how he feels. I continue to be troubled by my attitude about the U.S. v Microsoft case. I recognize that when companies misbehave, those who have been harmed should have an opportunity to take their case before the authorities for possible redress. But at the same time, fundamentally, I want government out of the marketplace. My staunch laissez-faire friends would say, "Jim, you can't have it both ways." As I say, I'm troubled.

The Verdict
You no doubt know by now that in the U.S. v Microsoft anti-trust case, two days after the breakdown of the settlement pow-wow, Judge Thomas Penfield Jackson dropped the gavel on MS by delivering his ready-and-waiting final ruling which found them guilty of violating the Sherman Anti-Trust Act. Here is the essence of Judge Jackson's verdict, clipped directly from the document:

"...the Court concludes that Microsoft maintained its monopoly power by anticompetitive means and attempted to monopolize the Web browser market. Microsoft also violated...the Sherman Act by unlawfully tying its Web browser to its operating system. The facts found do not support the conclusion, however, that the effect of Microsoft's marketing arrangements with other companies constituted unlawful exclusive dealing under criteria established by leading decisions..."

Sounds serious, doesn't it? It is serious: For Microsoft and, I fear, for the Information/Technology industry, and for the marketplace. Stand by for the remedies component, which is yet to come.

Two Camps
This is an extremely controversial case and verdict, which not only divides the marketplace, but actually divides the I/T industry itself. I don't mean divided down the middle - 50/50 - but there are enough in both the pro-MS camp and the anti-MS camp to definitely make this a bona fide polarizing issue. As with most arguments, there are two primary camps. What makes this case especially interesting to me is the constituent stratification within each of the camps.

1. The pro-MS Camp

a) Obviously, Microsoft, itself, plus its 30,000+ employees.

b) The extended family of MS partners and developers who are true and total partisans, possessing an unabashed conflict with any decision that hurts Microsoft's present and/or future success and operations.

Recently, I spent a couple of days with some of the members of this extended family. The Association For Competitive Technology asked me to broadcast my show from their "Let's Talk Technology" conference in Washington, D.C. My host and ACT president, Jonathan Zuck, introduced me to a number of software developers who use the MS Windows operating platform to create high tech application solutions, like crop management software for farmers, and high tech kiosks that can be used by an employee to check and select their benefits options without having to involve a personnel staff member, just to name two applications. Most of these guys are small business owners operating companies they founded, and most of their customers are small businesses.

c) Also in the MS camp are millions of Windows users (MS sells 100 million copies of Windows operating software annually), who are not so much devoted to MS itself as they are loyal to Windows. This loyalty is a result of Windows being the only operating system most of this group has ever known and which, warts and all, has contributed to their success. But be not deceived! Offer these guys another operating system that works, that integrates with existing applications and files, and is competitively priced, and the MS loyalty will evaporate like fog in a sunrise.

To some degree, I fit in this MS product loyalist category, but not as a Windows devotee. I have been a Macintosh user and snob since Mr. Jobs rolled out the first 128K RAM Mac (no hard drive) back in '84. Microsoft's collaboration with Apple over the years has resulted in some handy Mac programs, including one of my personal favorites, MSWorks. Claris makes a pretty good integrated applications system, and I own a copy Claris Works. But I like MS Works better. By the way, I also have chosen to use Netscape's Communicator over Internet Explorer. And as you may know, we produce archives of our shows using streaming audio technology. I chose Real Audio over the MS product. And I use Eurdora email software instead of MS Outlook Express.

d) The laissez-faire camp, which is not so much in love with Microsoft, per se, as it is dedicated to, well, laissez-faire: Anti anti-trust, anti tariffs, anti trade barriers, etc. I work and play well with these guys, as long as I don't talk about being troubled. True free marketers are never troubled, and they keep their argument simple: Microsoft, Mattel, or Ma's Fruit Pies, they don't care - hands off, government! Period!

2. The Anti-Microsoft Camp

a) On top of this list, obviously, is U.S. Attorney General Janet Reno's Justice Department, more specifically, her anti-trust shop, led by Assistant AG, Joel Klein, plus 20 something state attorneys general who not only participated in the MS prosecution but, some observers have said, may have contributed a degree of difficulty in the attempt at a settlement.

b) Predictably in the anti-MS covey are those who think Microsoft is Big Business Establishment, and anything the government does to beat up on a mean old BBE bully, (which by definition, according to this crowd, MUST be hurting consumers), is fine by them. Ralph Nader's nattering nabobs come to mind here. The NNNs never met a government regulation they didn't like.

c) Also throwing in with the anti-Microsoft camp, ironically, is a rather large contingent of the I/T industry. Either as a result of some good clean, but very hardball competitive practices, or because of some of the violations Judge Jackson cited in his ruling, Microsoft has accumulated what I consider to be more than it's share of industry enemies. Indeed, this anti-trust case's origin can be found in Netscape Communications Corp.'s complaint that Microsoft "bundled" its Internet Explorer browser in the Windows operating system, creating an unfair advantage.

Creating A Monster
Many of you know that I've covered this case on my show a number of times over the past couple of years. On one of my recent shows where we covered the verdict and what was ahead, my anti-MS guest was Glenn Manishin, who represents the Software & Information Industry Association (SIIA). Glenn was the principal author of the SIIA's February, 1999 white paper titled "Addressing The Microsoft Challenge - Restoring Competition To The Software Industry." The essence of this document advocates, among other things, the break-up of Microsoft either along product lines, or into several so-called "Baby Bills", a la the AT&T dismantling.

Here's an interesting piece of the SIIA's white paper: On page 25, the authors make this statement, "SIIA does not believe the Microsoft litigation should become a means for transforming DOJ and the courts into de facto software regulators." Yes, friends, these are the same people who feel vindicated that the DOJ has prevailed in getting the courts to rule against their fellow I/T member. As my free marketers would say, "Glenn, you can't have it both ways." That's not how the government works. Once they're in, they tend to stay in.

I have to question participants in any industry who invite the government to come in and police their world. And more than any industry I know, the I/T industry can ill-afford to have government mucking around in its business. It seems to me that most bureaucrats barely understand how the old economy works, let alone the dynamic new economy.

Gleeful Government
With regard to my being troubled - in the end, it seems, my laissez-faire genes appear to be dominant. Here's the reason:

When the MS verdict was announced, Ms. Reno, Mr. Klein, and others in their camp, stood before the cameras exhibiting an attitude that was nothing short of gleeful - like their dreams had just come true. More than anything else about this case, the silly smiles on their faces, and the high fives all around that day bothers me most. More than the Judge's finding against Microsoft, I believe these guys were giddy because they had successfully accomplished what government inherently wants to do: gain and maintain control. It's one of the natural laws. And when government is actually invited to come in and gain control, to a bureaucrat, well, it just doesn't get any better than that. Government 1 - Marketplace 0.

Regardless of your attitude concerning Microsoft, pro or con, there is nothing in this case, the verdict, or the ultimate outcome, to be gleeful about. I'm not worried about Microsoft. In one form or another, MS will live to fight another day. But think about this: Within 3 months of climbing aboard a new millennium train full of hope and excitement about where the twin turbos of technology and the new economy will take us, we may have tossed the keys to a bunch of bureaucrat lawyers.

Pardon the mixed metaphors, but when you invite the government in to police your industry, it's like bringing a rattlesnake into your house to get rid of a mouse. Once the dirty work is done you are rid of a pesky varmint, but you now have to live with a dangerous and undiscerning house guest that won't leave.

Write this on a rock... .Long after technology and the marketplace has rendered the Microsoft case moot, which is already happening, I fear all of us, pro-MS, anti-MS, and those who don't care, will still be living with this obnoxious house guest, who now has the keys to our vehicle.

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