Deciphering the code behind the Microsoft monopoly suitOf late, Microsoft has been lambasted as Beelzebub himself, with head honcho Bill Gates poised to take a fall from grace which could have an effect on personal computers more lasting than the infamous year 2000 bug.
At the root of such complaints and projections is the widespread fear that the company is just too big for everybody else's own good, with tentacles potentially reaching into every home with a computer, punishing the same consumers who have put their trust in the software giant. But if the federal government gets its way, Mr. Gates will not have a chance to compete with UN forces as the latest incarnation of Big Brother.
Last month, the U.S. Department of Justice (DOJ), in a joint action with the attorneys general of 20 states (but not Montana), and Janet Reno, filed suit against Microsoft for unlawful business practices. The charges stem from existing anti-trust laws created to rein in monopolistic practices. Microsoft says they're just trying to make quality products available to consumers.
The DOJ maintains that Microsoft has illegally stifled competition, harmed consumers and undercut innovation by using the latest version of its Windows operating system to gain an advantage in the Internet browser market.
So who's right? It's a tough call. Simply put, Microsoft does have a virtual monopoly on the operating system market. That's not illegal in and of itself. But what may be illegal is their attempt to use that powerful position to enter and conquer the web-browser market and other commercial arenas.
Not surprisingly, Microsoft's competitors laud the DOJ's suit as being overdue and entirely appropriate. Computer makers and some software vendors could stand to benefit significantly if Microsoft's sphere of influence is reduced. Sun Microsystem's CEO Scott McNealy has gone so far as to say that Microsoft should be broken up into various competitive entities, like AT&T was in the '80s.
Only two such anti-trust suits have been brought by the government in the last half century. One resulted in the aforementioned breakup of AT&T. The other, against IBM, dragged on for 13 years before the government dropped the case.
According to some industry analysts, if Microsoft loses this case, the fallout could be the most dramatic corporate America has ever seen. Worst case scenarios for Microsoft include a recall of Windows 98 (due out June 25), a DOJ-mandated breakup of the software giant, mass defections of Microsoft engineers and other employees, and the possibility of a collapse of Microsoft sales in the face of public outrage.
Some have even suggested that Bill Gates himself, Microsoft's multibillionaire CEO, may throw up his hands and quit.
But is all that really likely? And is Microsoft really the evil empire that its competitors make it out to be?
The new version of Microsoft's operating system, Windows 98, bundles the Internet Explorer web browser with the system, integrating the company's application so that consumers have no say in the matter. Examples of the integration include a reported a web view option, which allows users to view all of their files-word processing, email, spreadsheets, images-through their browser window, as well as expanded system bookmarks, links, and "forward" and "back" buttons.
From subpoenaed Microsoft memos and emails, it seems clear that the company's top brass were fully aware that only by leveraging the dominance of Windows would they conquer the browser market. One states plainly, "It will be more important to leverage the [operating system] asset to make people use [Microsoft's Internet browser] instead of [competitor Netscape's] Navigator."
Says Janet Reno: "Microsoft has engaged in practices designed to continue its operating system monopoly, and has attempted to extend that monopoly to the Internet browser market." And in the suit, the DOJ is making the following demands of Microsoft:
¥ That either Microsoft's Internet Explorer web browser product be unbundled from the operating system or that Netscape's Navigator web browser be included as well.
¥ That vendors (such as Compaq, Gateway and Dell) be allowed to add their own marketing messages in the boot-up sequence.
¥ That contracts with Internet service providers and computer makers which force them to play down other browsers be amended to be more free-market friendly.
Of the DOJ demands, Gates appears willing to make some concessions. Microsoft recently reached agreements with computer manufacturers Gateway and Packard Bell to allow alternative marketing messages during the Windows boot-up sequence. Of the demand that Internet Explorer be unbundled from the operating system, however, or the mandated inclusion of the Netscape's browser, Gates scoffs, likening the latter to Coke being forced to include a six-pack of Pepsi in every case.
The question remains whether Microsoft is trying to gain a monopoly in another market or just trying to compete in an open market.
It seems apparent that Microsoft planned to use its monopoly to break into a new market-and that's illegal under anti-trust laws. The browser market isn't the only area Microsoft is moving into either. Acquisitions of WebTV and various content providers show that Microsoft is becoming a full-tilt multimedia company.
Still, just because a computer comes with Internet Explorer doesn't mean that users don't have choices. When you buy a car, nothing stops you from removing the factory-installed stereo and replacing it with the brand of your choice. The same holds true for computer software. You can log on, download Netscape or another browser, and never use Explorer again.
For computer programmers, even home hobbyists, these sorts of changes may be second nature. But for many computer users, the machine and the system which runs it are as mysterious as the forces which allow jet planes to fly. And that appears to be the reason why the feds are taking on Gates Inc.
Don't expect a decision any time soon, but it's worth keeping an eye on this fight as the fortune of the world's most famous and richest nerd remains in the balance.