by Brian Grainger: brian@grainger1.freeserve.co.uk

On the 5th November, US District Judge Thomas Jackson gave his 'finding of fact' ruling in the case against Microsoft by the US Government and 19 US states. The ruling has generally been regarded as a victory for the Government. Since that time an outbreak of glee has taken place amongst Microsoft haters. I was beginning to think that I was the only one who felt that Microsoft was being hard done by. However, a Gallup poll in the US found that 72% of computer users had a favourable opinion of Bill Gates, against only 55% at the start of the trial. As the Department of Justice, (DOJ), brought the case to ensure the consumer benefits, there appears to be a contradiction here. Now, is a good time to reflect on the findings and what has been said since. I am going to give my own personal comments as well so expect some favouritism towards the defence in this case.

Does anyone remember how this case started? Apparently origins go back to 1994 when Microsoft signed a decree with the US Government to the effect that Microsoft would not force computer makers to license its word processor and spreadsheet software if they wished to supply Windows. This is the first time I have heard of this but I guess I agree with it.

It was in 1997 that the US Government accused Microsoft of breaking the agreement because they bundled Internet Explorer with Windows 95. This they believed prejudiced Netscape. An injunction was raised in 1998 which sought to stop Microsoft bundling Internet Explorer with Windows 98 or supply Netscape Navigator as well. It also asked Microsoft to end contracts requiring computer makers NOT to load rival products software on the machines. In my opinion providing IE is a different kettle of fish to demanding the licence of a word processor or spreadsheet package. IE was provided free. Microsoft had decided, rightly or wrongly, that web browsing was part of the operating system. Personally I think it should be separate but I cannot see that it is legally wrong to decide otherwise and I do not think the Government should be telling Microsoft how to design software. No matter how bad Microsoft are perceived to be at software design the Government would be worse. I think Bill Gates gave the perfect answer to the proposal to bundle Netscape Navigator with Windows 98. 'Would you tell Coca-Cola to bundle 3 bottles of Pepsi in every six pack of Coke'. I consider ending contracts which demand that rival products are not loaded is just but then I have seen no evidence that this occurred anyway. Many PCs are sold with Windows loaded but also Lotus SmartSuite or Corel Office which are rivals to Microsoft Office.

I am not going to go through the details of the trial. However, I will make the following points:

• The Judge wanted to speed up the trial. His reason was that if it was too slow then in the quick moving IT world the conclusion might be irrelevant, even if Microsoft was guilty. My personal feeling here is that justice demands that sufficient time is given to hear the case properly. The Judges action is akin to a guillotine applied in the House of Commons. When it is applied it is so that the Government can get its own way despite the opposition.
• Every competitor of Microsoft was called to give evidence against them but none of the consumers, who were supposed to benefit from a guilty verdict, were asked for their opinion. This, of course, is a fault of the defence.
• I believe Microsoft has suffered in the trial because Bill Gates is a classic computer nerd and not a politician. Like the mass of the population, politicians do not understand nerds when they exhibit their nerdy tendencies. However, that does not mean that nerds are wrong, just different.

Let's now discuss the Judge's ruling. First, it is important to say that this is not a verdict. That comes later, if necessary. Apparently the ruling took 207 pages but I have only seen what has been reported in the papers I read and the Internet sites I visit. The tone of the reporting varies according to where the sympathies lie.

The major finding appears to be that Microsoft is a monopoly. However, I am not sure that this is what the Judge said. The most level headed report I read stated that Judge Jackson concluded that, because there was no significant commercial alternative to Windows in the PC Arena, Microsoft was free to set prices without taking into account what its rivals charge.

As I have said in the past Microsoft is not a monopoly. There are alternative operating systems (OS/2, Linux, BeOS, Apple, UNIX). There are alternative Office packages (Lotus SmartSuite, Corel Office). There are alternative browsers (Navigator, Opera). The Judge appears to be very careful in his wording. In mentioning the PC arena it makes it that Apple cannot be regarded as a competitor. Because he mentions 'commercial' he ignores the non-commercial Linux. I believe he has chosen the words to fit the judgement he wants to make, i.e. find against Microsoft. Even then it is not true. OS/2 is/was a commercial alternative. Is it justice to penalise Microsoft just because the large majority of PC users seem to want to buy their operating system. In any event the original trial was about browsers and trade agreements. What relevance has the position of Windows got to do with it?

The Judge also ruled that 'through its conduct toward Netscape, IBM, Compaq, Intel and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products'. This conclusion was based on the following rulings.

Microsoft prohibited computer makers from customising or changing Windows even if it made the software easier to use.

What's wrong with that? It is Microsoft's product. Why should they allow third parties to tamper with it. How does one define 'easier to use'. What may be easier to one group, e.g. non technical users, can be a pain in the butt for techies. Is it OK to tamper with Windows if it makes it harder to use?

Microsoft threatened to stop making the Macintosh version of its popular Office software if Apple did not adopt IE as its default web browser.

This may be a harsh business practice but surely Microsoft can stop making a product if they want to. What they make and don't make is surely a business decision. If Apple did not like Microsoft's terms they could go to Lotus or Corel and try and encourage an alternative. If they did not do that then why blame Microsoft for poor Apple management.

Only when AOL agreed to promote IE to the exclusion of Netscape did Microsoft agree to display the AOL logo on the Windows desktop.

Another business decision. If AOL think there is benefit on being on the desktop then they have to abide by the conditions. They had the option of saying no and trying to pay for the advertising that they were getting free this way.

Companies that did not license Microsoft applications suffered. IBM chose to preinstall its own SmartSuite instead of Microsoft Office. The decision lost 7-10 large accounts amounting to £112M lost revenue.

I do not know the background to this. Is the Judge saying that because IBM installed SmartSuite Microsoft personally terminated the 7-10 accounts? More likely the accounts did not want SmartSuite in the first place. How can you blame Microsoft for providing a product that people want?

The company tried to turn the Internet into something that would not work as well if it was accessed through a non-Microsoft system.

I do not think the Judge understands the Internet. No individual company can turn the Internet into anything. It is uncontrollable. Perhaps he was referring to the additional web features that IE could display but Navigator could not. If they improved the web then Microsoft have done the web surfer a good turn. It is up to Netscape to get Navigator to cope with the new features. It is called progress! In any event I believe there are some features that Navigator renders that IE does not.

WHAT HAPPENS NOW?

The next stage is for the Judge to issue a 'conclusions of law'. This is effectively the verdict in the case. Following that will be the decision about what penalties will be put on Microsoft. This is expected to take a few months during which the Government and the 19 states can attempt to get an out of court settlement with Microsoft. If no settlement occurs then there is bound to be an appeal.

What a settlement or punishment might entail is subject to speculation and much vilification.

Microsoft want to settle but it is key that they can continue to innovate with their software. The head of the DOJ would need a settlement that produces consumer choice, innovation and competition in the market. Some commentators say it will be impossible to get an agreement with so many parties involved. A final possibility is that Microsoft could play for time. The Presidential elections take place next year. If a Republican is returned the anti-trust case may fizzle out in the same way that the case against IBM did in the Reagan years.

What punishments have been suggested?

The most draconian is to split Microsoft into competing separate companies, the so-called Baby Bills. This solution was used against ATT Bell, when they were judged to have a monopoly in the telephony market, and the Baby Bells were formed. There have been suggestions that there should be an Operating System company, an Office products company and an Internet company. Some analysts think this may not be to the detriment of Microsoft. Microsoft has doubled in value since the court case began and the value may actually increase if Microsoft is split up!

My opinion is that it could well be to the detriment of the consumer. The cross fertilisation of the product teams must lead to quicker innovation and helps the products to work together.

Sun Microsystems, recognising that Microsoft have recently been buying into telecommunications services, say Microsoft should be prohibited from buying the future distribution channels and from buying, rather than inventing, technologies. They also want Microsoft to be forbidden from entering into exclusive agreements.

This is ridiculous. Sun just wants to cripple Microsoft so that they can have one less competitor. How will this serve the consumer? Let the same rules apply to Sun so we have a level playing field!

Another suggestion I have read is for Microsoft to make its code open source, in particular the 16-bit code.

I certainly do not agree that all Windows source code should be open. That is like saying that someone who writes a book is not allowed to have royalties, or someone can come along and rewrite it. I must admit that limiting it to 16-bit code would be interesting. Superseded products from virtually every manufacturer EXCEPT Microsoft appear on cover disks. Imagine if Microsoft Office 4.2 was available this way. It would certainly benefit consumers. I know that this is not quite the same as making source code open. Another advantage of open source code would be that support could be given to the older products. I have always found it irritating when certain bug fixes to version x of a product are only available if you buy version x+1. Having open source code could enable an independent to provide the fixes for version x.

THE LAST WORD

I have been very pro Microsoft in my comments above. That is purely on the basis of what I perceive is justice. I am getting increasingly disillusioned with Microsoft's latest products, but I do not believe that my situation will improve by finding Microsoft guilty. I just want different products or preferably the older products with the bugs fixed! Why don't the competitors listen? Similarly, all the Mac users who are overjoyed at the moment will not find their world will improve if Microsoft is found guilty. Apple failed to achieve the status of Microsoft because their product was proprietary (and expensive). They are still guilty of this failing with their latest products. Getting vengeance over Microsoft is no answer to that problem and neither is it justice.

According to the DOJ the outcome of the trial is to benefit consumers. It may be worth finishing with what some consumers have said.

'People wanted to get away from the expensive proprietary systems of IBM, Digital and H-P. They are buying NT over HP-UX because it's doing what they want.

'The culture of religious devotion to computing in the US coupled with widespread hatred of Bill Gates had led to the trial and verdict.'

Alistair King, Chairman of the UK Digital User Group

'I find the judgement perverse. Microsoft has done more than anyone else to make a difference and change computing. Web development only really took off when Microsoft got involved. The way they built up the server side and data access gave us a platform to work with.

'Nissan was being advised to run applications over the Internet and Intranet but found it too difficult before Microsoft entered this market, but they get no recognition for it.'

Steve Last, Technical Manager, Nissan Motors GB

'As a business user and buyer of products we see the benefit of software that comes from one supplier, as it can offer integrated software and a reliable level of service. To see that broken up and standards proliferate wouldn't be welcomed.'

Toby Rowland, Chief Operating Officer, On-line Health Specialists Clickmango.com

 

(If you have any comments on the 'Findings of Fact' ruling or this article then Readers Write)