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Window Manager
Brian Livingston
Earth to Department of Justice: Don't create three new monopolies to replace the old one

JUDGE Thomas Penfield Jackson's findings of fact, released Nov. 5 in the antitrust case against the Microsoft Corp., are bound to remain controversial as the case winds toward a settlement or an appeal.

Thousands of words have already been written about this case, and I have no intention of repeating them here.

But an important question remains unanswered in all the words I've seen. Say a verdict of "guilty" is rendered against Microsoft. (The actual verdict itself is not expected to be handed down for several weeks.) What remedies would be in the best interest of Windows users and others whose livelihoods depend on Windows?

We hear plenty about what would benefit "consumers" or "the market." But most of this talk seems to miss the point that specific people and companies use Windows in very specific ways -- and these users could be seriously hurt if anything hindered the operating system's continued availability and support.

The federal government and the 19 states that are pressing the case seem little interested in so-called "conduct" remedies. These remedies instruct a monopolist to refrain from anti-competitive conduct in the future. Since Microsoft's executives assert that their conduct is merely "aggressive competition," the government doesn't believe Microsoft would act much differently under any kind of decree. A conduct remedy would also require intensive government supervision of Microsoft's future business practices. Few people think this kind of supervision is a good idea for Windows.

This leaves "structural" remedies. The most commonly mentioned is to break up Microsoft along the lines of its three main businesses: operating systems (Windows, Windows NT, Windows CE, etc.), applications (Microsoft Office), and Internet services.

The problem with this breakup is that the new Windows company and the new Office company would each still have a 90-percent market share. (The Internet company would be no slouch, either.) This wouldn't provide any more competition than we see today.

Judge Jackson's findings of fact describe an "applications barrier to entry" for companies other than Microsoft. This barrier, Jackson wrote, "would prevent an aspiring entrant into the relevant market from drawing a significant number of customers" away from Microsoft.

To foster innovation -- which leads to better products and services for all PC users -- new companies must be able to easily enter the Windows and applications markets.

InfoWorld columnist Nicholas Petreley proposed last week that the court "make it illegal for Microsoft to produce Windows or any reasonable facsimile as a product," with a nonprofit standards group gaining control instead. It appears unlikely that such a remedy, which is without legal precedent, would be imposed.

What, then, would most stimulate competition and most benefit Windows users?

I've spoken with a number of legal experts on this exact point. Most interesting was Scott Stempel, an antitrust litigator at the law office of Morgan, Lewis & Bockius, in Washington. Years ago, Stempel worked with the Open Software Foundation, an early attempt at a "shared" operating-system standard. He continues to represent companies whose interests complement or conflict with Microsoft's.

The government's main intent, Stempel believes, is to restore competition to the market for Windows applications as well as for Windows itself. This means having many different companies selling Windows word processors and spreadsheets and many companies selling something called Windows.

In this view, the ideal remedies require, at a minimum, two simultaneous steps.

* Divide Microsoft into at least two separate companies, with Windows in one and applications in another.

* Require Microsoft to license the source code for all its operating systems to anyone who pays a fair license fee, determined by the court. (Stempel didn't suggest this, but the same remedy could also apply to Office applications.)

This would create a market for other companies to sell Windows, Word, Excel, and so on. Consumers could select whichever company provided the best service. Importantly, all the versions of these products would remain compatible with each other. Microsoft would continue to write unified source code. But others could fix its bugs because the source code would be visible to all.

In this scenario, a nonprofit standards body could very well play a role. Millions of people successfully use international standards such as TCP/IP and HTML, which are not perfect but are at least open.

I'll continue this topic in a future column. If you have other ideas, send them with "remedies" as the subject line. Thanks.


Brian Livingston 's most recent book is More Windows 98 Secrets (IDG Books). Send tips to brian_livingston@infoworld.com. He regrets that he cannot answer individual questions.



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