Life After the Antitrust Trial: Business As Usual?

After more than 4 years of litigation, the Department of Justice's (DOJ's) antitrust suit against Microsoft is nearly over. And the net result? Almost nothing—at least for now.

At the beginning of November, US District Court Judge Colleen Kollar-Kotelly handed down a decision that appears to be the last word on this particular round of "Microsoft versus the Feds and a bunch of states." The decision was everything that a Microsoft shareholder could ask for (not that I'm a member of that crowd). At one point in the legal wrangling, an earlier judge decreed that Microsoft be split into two companies—an astounding if not well-thought-out move. In contrast, Judge Kollar-Kotelly basically required only that Microsoft offer the same contract deals to all vendors and let OEMs customize Windows by disabling certain desktop middleware applications such as Microsoft Internet Explorer (IE), Windows Media Player (WMP), Windows Messenger, and Outlook Express. The judge also seemed to reveal a sense of humor and irony by ruling that a committee would oversee the 5-year restrictions—a committee, believe it or not, that Microsoft will fund.

A light "sentence," indeed. Microsoft's past anticompetitive practices crushed Netscape's Web browser product and hindered other companies' development ventures, but the final judgment offered no remedies, nor did it ensure that Microsoft won't engage in similar activities in the future. For example, Microsoft was supposed to make removing IE from Windows simple; however, its Windows XP Service Pack 1 (SP1) fix simply rearranges a few icons and associations. IE will still be alive and well on a "de-Microsofted" XP system.

Let me point out what I think are the greatest weaknesses in the judgment. First, the settlement isn't very prescriptive. With regard to the Netscape situation, the judgment tells Microsoft "don't do that again," but it doesn't identify exactly what the company isn't supposed to do or what will happen if it does. All Microsoft did was compete—albeit a bit more strenuously than the law allows. Clearly, having a top executive say that the company would do whatever was necessary to "cut off Netscape's air supply" was out of bounds—but how far out of bounds? Must Microsoft simply stop competing in any way if it wants to avoid another 4-year lawsuit? Suppose a traffic officer pulled you over for exceeding a speed limit that wasn't posted and didn't tell you what that speed limit was. How would you avoid another ticket?

And Microsoft probably can't expect much guidance from the oversight group. Heck, if the government can't enumerate what Microsoft isn't supposed to do, how can the oversight people do so? I don't think Microsoft will cede any competitive field willingly, nor should it. Microsoft is a publicly held profit-making corporation, and as such, it's supposed to compete.

Second, perhaps as a side effect of the government's seeming inability to formulate guidelines about what is and isn't acceptable corporate behavior, this case has failed to change Microsoft's attitude about its past wrongdoing. Punishment for illegal behavior is supposed to deter future illegal behavior and teach the wrongdoers why what they did was wrong. None of that happened here. In fact, I suspect that a large portion of the US public thinks that Microsoft did nothing wrong.

Third, a look at the "de-Microsofting" tool in XP SP1 might offer a glimpse into Microsoft's strategy for staying within legal lines: Do whatever you want to do, then just declare that you've observed the legal limits. I guess that's one way to make a silk purse out of a sow's ear—just say you did. (Stay tuned while I turn common household aluminum foil into gold, then sell it to you at gold's current market price.)

In any case, I'm glad the lawsuit is nearly over. I never understood what the big deal about Web browsers was in the first place—after all, they're free; no one is stopping consumers from adding Opera, Netscape, or Mozilla to their desktops. (Yes, I know the lawsuit involved more than that—but not a lot more.) Something that might have made sense was if Corel, IBM, and Borland Software had sued Microsoft for giving its Office developers the inside track on Windows programming back in the Windows 3.0 days. These companies were badly hurt by losing the markets for their WordPerfect, Lotus 123, and Paradox products, respectively. But that suit never happened.

In the end analysis, I fear that the indistinct nature of this judgment will lead to only one thing: round two of DOJ versus Microsoft in a few years. I can hardly wait.

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