The Case against Microsoft

The antitrust case against Microsoft is sure to be back at the top of the newscasts this week, as it is widely anticipated that Chairman Bill Gates will take the stand to testify.

The four-year old antitrust case culminated last year with the decision of trial Judge Thomas Penfield Jackson to break Microsoft into two companies after concluding that it illegally stifled competitors. However, an appeals court reversed the breakup order and appointed a new judge, Colleen Kollar-Kotelly, to determine new punishment.

The Justice Department and half of the states that were party to the original lawsuit have recently settled with Microsoft for lesser penalties. States that rejected the government's settlement with Microsoft and are continuing to pursue the antitrust case are Iowa, Utah, Massachusetts, Connecticut, California, Kansas, Florida, Minnesota, and West Virginia, along with the District of Columbia.

The nine states want Judge Kollar-Kotelly to force Microsoft to create a modular version of its Windows software that could incorporate competitors' features. The states also want Microsoft to divulge blueprints for its Internet Explorer browser.

During the Microsoft trial, Judge Jackson angered Microsoft by comparing the software company to John D. Rockefeller's 19th century Standard Oil monopoly that was broken up by the U.S. government over 90 years ago.

"Mr. Rockefeller had fee simple control over his oil," Jackson said. "I don't really see a difference."

Standard Oil once controlled 90 percent of the U.S. oil market and was sued in 1906 by President Theodore Roosevelt's administration. In 1911, the U.S. Supreme Court settled the case by splitting the company into 30 separate firms.

Standard Oil began to buy up oil refineries, oil wells, pipelines, and other production and distribution channels to the point that it effectively controlled the flow of oil in the U.S. from the ground to the end user. It attempted to buy all competition, and when that failed, it usually ran the competitor out of business.

The Supreme Court's 1911 opinion gave a brief background to the Sherman Antitrust Act of 1890:

The evils which led to the public outcry against monopolies and to the final denial of the power to make them may be thus summarily stated: (1) The power which the monopoly gave to the one who enjoyed it, to fix the price and thereby injure the public; (2) The power which it engendered of enabling a limitation on production; and (3) The danger of deterioration in quality of the monopolized article which it was deemed was the inevitable resultant of the monopolistic control over its production and sale.

Microsoft vehemently disputed any comparison to Standard Oil. MS has maintained that they are in no way analogous to Standard Oil. I tend to agree. Their monopoly is far worse.

In the case of Standard Oil, the primary harm to the public was increased prices for petroleum products. The public was essentially getting the same product they had always gotten, but now they were paying more (see point 1 above). The potential harms espoused in points 2 and 3 were never real issues in the Standard Oil case. Since Standard was, for all practical purposes, the sole producer of petroleum and could control prices at its pleasure, there was no real benefit in limiting production. There was also little evidence that the product ever became substandard.

With Microsoft, however, the evil prophesied in point 3 above is very real. With Standard Oil, the consumer was paying more for the same product; with MS, the consumer is paying more for an inferior product.

Recent history gives us several examples of Microsoft using its dominance in the desktop OS market to foist its other substandard products on consumers at the expense of the superior products of other companies:

• Internet Explorer vs. Netscape
• MS Word vs. WordPerfect
  To this day, you cannot format different parts of a single line with different alignment characteristics in Word. The entire line has to be left, center, right, or full-justified. In the legal profession, virtually every court document has a heading that has to have the first part of the line left-justified, and then additional text right-justified on the same line. With WordPerfect, you type the initial text, press a single key and the cursor moves to the right margin to type the remaining text. Perhaps this is one reason why WordPerfect retains overwhelming market share in the legal community.
• Excel vs. Lotus 1-2-3
• Windows NT Server vs. Novell, OS/2
  NT Server introduced the apparently much-demanded feature of being able to play Solitaire and Minesweeper at your server console.
• Exchange Server vs. Lotus Notes and Novell GroupWise
  In 12+ years of work in the IT field, I rate Exchange as perhaps the most buggy and unstable product I have ever used in a production environment. It should be noted here, however, that Exchange still lags behind both of these other fine products in market share.
• Internet Information Server vs. Apache
  Although, as above, the MS product's market share is still very small.

The opinions expressed herein are just that: opinions. In a free society, everyone is entitled to theirs. Your experience with some or all of these products may be different from mine. I do believe that each person should be free to form opinions in as free and unbiased a manner as possible. If someone evaluates WordPerfect and Word and finds that Word better suits their needs, I have no problem with that and am happy for them. The problem comes when a consumer is saddled with one product or another and denied the chance to evaluate competitors. Preventing a PC manufacturer from including certain programs preloaded on their PCs is, as a practical matter, tantamount to denying many consumers a chance to evaluate these programs on their merits.

Computer manufacturers should be free to not only preload Netscape, but to also make it the default browser if they see fit. Similarly, they should not be punished for packaging Corel WordPerfect Office (or even Lotus SmartSuite) with their PCs instead of MS Office or MS Works. Experience shows us that if a product is not preloaded on a PC, most consumers are unlikely to download it or buy it.

In the past, Microsoft has attempted to discourage PC manufacturers from including these competing products by implying that such a practice could lead to their being prevented from including the Windows OS on the PCs. If a PC manufacturer could not preload or sell Windows, they would most likely go out business in short course. These are the practices that the court must end.

Contrary to what my opinion of this case may imply, I do believe that Microsoft produces some fine programs. Games like Asheron's Call, Flight Simulator, Links, and Age of Empires would flourish regardless of the organization of the parent company. PowerPoint is an outstanding presentation tool. Virtually every program produced by the Macintosh Business Unit has been of exceptional quality.

I agree with the original court order that the most appropriate remedy is to split Microsoft into at least two different companies. This would at least force the Microsoft application programs to compete on a more level playing field, without riding the coattails of the Windows OS. The better apps would continue to flourish, and the fate of the substandard programs would be determined by the market, as it should be. With the evolution of the KDE and Gnome desktops for Linux and the rapid acceptance of the ultra-stable Mac OS X, market forces may yet determine the fate of the Windows OS itself.