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DOJ Wary Of Breaking Up Microsoft
Tava passed along a
Washington Post article
in which unnamed "people familiar with the discussions" in the Justice Department suggest the government is worried about overplaying its hand. If these rumors are correct, we won't be seeing any bold strokes taken against Microsoft - and apparently, breaking up the company would be considered very bold, whether into identical "BabyBills" or distinct companies for OS and apps. The DoJ's recommendations to JudgeJackson are due by the end of the month.
(Oh, and a point of English for the folks at the Post: the opposite of "leaningtoward" is not "leaningagainst.")
Here, in Microsoft, we have a convicted "criminal organization" that is a monopoly in the world, let alone in the US, and the government seems all of a sudden loosing it's nerve.
I've heard some rumours that the US government is actively studying the impact of completely abandoning Microsoft and going elsewhere, and Linux was definetly being considered.
Here in Canada, the same thing is happening. The governemnt has several pilot projects running Linux and there are currently several configurations being considered running the Federal Parlamentary networks as well as in the Bank of Canada and the Department of Defence.
Furthermore, we have no vested interest in keeping foreign companies that don't benefit our economy as viable entities in Canada.
Your analogy is accurate, but not for the reasons you think. Dinosaurs did not die out because of any intrinsic inferiority, and not all of them were "slow and lumbering". The mammals which were scampering round at that time had no very obvious advantage in terms of intelligence over some of the smarter dinosaurs. Dinosaurs, never forget, lasted on the earth for several times longer than mammals have; it is distinctly too early to tell which was the better design.
What happened was that a catastrophe happened for which the mammals happened to be suited, through blind chance, and for which the dinosaurs were not suited, again through blind chance. If the asteroid had taken a slightly different path, it is extremely probable that to this day, mammals would still be scampering around, trying to evolve better strategies for not getting stamped on, while dinosaurs continued to rule the earth.
Open source can be analogous to mammals, and Microsoft to dinosaurs. But the DoJ is analogous to that asteroid, and it has not struck yet.
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I think that there's gonna be problems no matter what they decide to do. Had they figured this out back in 96 there wouldn't be as many problems as there is going on today.
MS obviously thinks that they're immune to whatever the DOJ has planned for them. They've tightly integrated even more stuff into Windows than before, even in the midst of the legal battle.
They've also hired a political guy to rally to the other political guys and get them to do what MS wants. They think that they have money and are more powerful than the government.
Breaking up MS will cause some problems, namely because unlike AT&T, there isn't any real obvious way of doing the breakup. The different parts of MS compete against each other even today (from what I heard... which is why WebTV isn't obligated to use Windows as their platform) and even being part of the same company.
I think MS should go the way of IBM. IBM has to publish specs for whatever they do, if people could make their own platforms & file formats TRULY compatible with the Microsoft ones, the world would be a much better place.
As it is, what MS publishes now, only are sorta kinda like the real deal, and anything compatible that people want to create, they have to do a lot of guesswork, and even then there still are problems.
Another thing that the DOJ could do would be to make MS sell a version of their OS without all the little wingdings and dingdongs. No IE, no media player, etc. No links to service providers, and especially no hard-to-get-rid-of link to MSN. Sell it for $30, and then sell your everything-plus-the-kitchen sink version for the $99 "upgrade" cost.
If a "Micrsoft Standard" dominates some sector, the it should be FORCED to be opened, with complete documentation. This includes file formats as well as protocols.
2. No exclusionary contracts.
We should also study why the 1995 consent decree failed, because it was supposed to stop this, and didn't.
3. No gag orders in the license.
If a product is #$%^, the knowledge needs to flow in order to allow the market to correct.
The foundation of capitalism is the free market.
The foundation of the free market is the informed consumer who can choose. Restraining either the information or the choice is bad for the free market, and turns the economic system into something other than capitalism. It both proves and disproves Karl Marx, because it leads to the fate he describes, but I assert that it's no longer capitalism.
My suggested remedies apply to Microsoft at the moment, but they are equally applicable to any business. Consider the market dominance AOL is achieving, yet at the same time their wire protocols are closed. They are now big enough that this may need to change.
But then again, there'd be other changes, as well, if I were IN CHARGE.
The living have better things to do than to continue hating the dead.
I have a question about these so-called state lawsuits and/or class-action lawsuits. Are any of these lawsuits for the benefit of anybody besides the lawyers and/or possibly the state's coffers?
I mean, ok, there are smoe very anti-MS sentiments here at Slashdot, and then there are some who are not zealously anti-MS. And many people would like to see MS being eaten alive by the sharks. But seriously, how may we be served by these lawsuits except to be treated to a spectacle and (possibly) see a (again possibly) former glorious company limping into the future?
This is just like the big tobacco suits. While I applaud the original intent, I fear that all the sharks circling out there readying to pounce and to fatten their own wallet will do the public disservice.
Or am I completely wrong?
One of Microsoft's favorite tactics is to annouce vaporware 5 years before they have a product with half the features they said would be in it. And the companies just love that, put it in their strategic plans and wait for it.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Whatever the government ends up doing in this case, they should not force the removal of Internet Explorer from Windows. This would be a bad thing for a couple of reasons:
I am all for reigning in MS, but the government needs to be very careful about how they do it. If they mess it up it could be totally ineffective, or worse, set a bad precendent for the whole technology industry.
Eliminate Microsoft's copyright on operating systems they've brought to market. All of them, from DOS to Win 3.1 to Win 98 to NT to Win2K. Require them to publish the source code on an FTP server for a minimum of one year. Future operating systems would retain a MS copyright as usual.
With the code available, no doubt one or more companies would take the opportunity to run with it and develop new OS's compatible with legacy Windows products. Microsoft remains free to "innovate", whatever that means, and everyone else remains free to do so also. Maybe someone starts a GPL fork of the code. Maybe someone else starts a BSD-type fork of the code. Maybe someone wants to make a closed-source version.
The only thing they lose is their government-granted monopoly on the Windows source code which is what they abused in the first place. If you abuse it, you lose it. Simple and direct.
--
Michael Sims-michael at slashdot.org
Look -- why does Microsoft NOT want to be broken up?
One word: synergy.
However, synergy is the one thing they can't legally use when it comes to maintaining monopolies, however fairly they came by them.
So, without a breakup, we will be asking the company to fight an irresistable urge to use synergy a hammer to crack open new markets and as a bulwark to prevent entry of competition. They will skate as close to the edge as they think they can get away with, if not brazenly step over it, unless draconic and intrusive regulation is employed. That's a loss all around -- the taxpayers will pay for ongoing oversight and future lawsuits, the company will be hobbled by interfering and hostile lawyers poking their noses into every decision they make. And taking them to court.
There are two kinds of breakup scenarios, both of which are preferable from the stockholder's point of view to hyper-regulation.
The first is the breakup of the company into directly competing, homogeneous units. This is bad because most of the value in these competing units will quickly be destoryed, and one victor will eventually emerge, using synergy to crush all of its competitors -- probably the one who gets the most credibility, the one headed by Mr. Bill. This is obviously bad for competitors because maybe 2/3 of the value of their stock will just evaporate, but over the long term they will end up with a company just as powerful as the one they enjoy today, enjoying monopoly profits. A few years of compound interest growth and they're back on track.
I obviously don't support this scenario, since in the end it accomplishes nothing. A humungous fine would be faster, simpler, and Uncle Sam walks away with change in his pocket instead of pouring money into lawyers and beareaucrats to accomplish essentially the same thing.
The second breakup scenario is to break Microsoft into different companies based on product line. In this scenario, the stockholders continue to enjoy their OS and office suite monopolies, plus a very strong back office product line. No shareholder value goes away, except that which comes from the forbidden synergy. The companies are free to maintain their monopolies by dint of superior features and simple market share, but cannot erect extraneous barriers to entry such as secret APIS.
As far as this affecting open source, the status quo with a few provisos on opening and documenting APIs would be ideal. Right now, companies like IBM support open source becasue the barriers to entry into the software market posed by Microsoft power is too high -- better to destroy the market in software and remain unbeholden to Redmond. A defanged Microsoft would probably dampen their enthusiasm. This is another reason that MS stockholders should probably prefer the functional breakup, since it strengthens the existence of license based markets in software on which their profits depend.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
That's what Microsoft would like you to believe. There really is no telling what would have happened had there been no Microsoft. Apple, Commodore, Atari, were really the PCs that made computing viable for the average consumer. Granted they weren't "open" platforms, but Microsoft wasn't the company that created the idea of open hardware, it was IBM that (pretty much accidently) started it. Microsoft didn't "innovate" or "invent" anything, most everything they have they either bought the rights to, or outright copied from other sources. What does this mean? This means that everything you have today you would still be able to get, without a Microsoft! Maybe it would've been OS/2 that would've proliferated, or maybe Apple would've seized the opportunity to make a Mac-like OS for the IBM compatibles. Who knows.
.DOC, yadda yadda yadda. If there wasn't Office, there would be Corel or Lotus and they probably would've eventually made their file formats compatible had the market asked for it at the time. You act like Office and DevStudio are the be-all, end-all to applications when there are OTHER vendors that sell programs that are just as good! You've been drinking the Microsoft Kool-aid for too long.
They also didn't introduce any real standards, the standards you're thinking of are "a world with only Microsoft" standards. ASP, J++, COM,
The fact remains that MS didn't innovate squat, and you need to read up on your computer history, and read the findings of fact, and then maybe you wouldn't be prone to believe every little bit o' garbage that MS feeds the consumers via the full page ads in USA today and the commercials with Bill Gates.
The Congressional representatives from Washington (who reap alot of financial campaign benefit from Microsoft support, BTW) will use their political power to try to minimize damage to the "home team", so to say. So I'm not surprised that Of course attorneys are going to try NOT to hit Microsoft too hard -- there's way too much money and power on the table.
A structural breakup works because securities law forces each of the so called baby bills to maximize profit individually -- even at the expense of other M$ operations. While the gov't attorneys wonder if "breakup plans, such as dividing Microsoft into an operating-system company and a software applications company, might be ineffective in breaking the company's lock on the market for personal-computer operating systems.", I personally don't see any other way.
Anyway, I hope that Judge Jackson understands things well enough to see that unless a breakup is the remedy, M$ will attempt to go on with business as usual, like was mentioned in a C/NET Article on Monday -- bundling as usual in Windows ME (Millenium Edition's new name).
My hope is that the judge chooses the remedy, then implements it in a way that will minimize the risk of it being overturned.
IMHO This doesn't have to be a win-lose for anyone -- the M$ stockholders could benefit, each M$ division would be free to innovate, and yet the playing field for the rest of the world would still be more level than it is now.
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
First of all, I have the distinct feeling that this was leaked out by Microsoft in order to help out their plummeting stock price. But let's assume it's true, and the government is being a wuss about this whole debacle.
Now, I'm no fan of governments, far from it. However, I'm also no fan of huge corporations. A couple centuries ago, some of the insanely rich people who ran our country realized that sometimes it's good to restrain other insanely rich people from becoming increasingly insanely rich. The reason, is that if those ambitious businessmen (read: greedy assholes) who were already insanely rich started proceeding in an unsporting way, they may keep the others from being as insanely rich as they are. Thus, we have the antitrust acts.
But here's the deal: The rich created the government, including the whole *concept* of government in the first place. No poor farmer in the middle of revolutionary America thought "Yes, let's overthrow the British aristocracy, and replace it with something a little more close to home." Jefferson, Washington, Franklin, Madison, etc., were the bourgoisie of the time, and thus imposed their ideas of a government on people who had just helped them revolt from the last one.
And so, Microsoft benefits greatly from the advantages of having a government around to do it's bidding. How? Well, there's the obvious IP laws. Who does MS go to when they find somebody who is pirating their software, en masse? The government. They also have other advantages that they get from the government, including the use of prison labor to package their software, and I'm quite sure that the cities of Redmond and Seattle, as well as the state of Washington, have gone to great lengths to accomodate them in any way they could (corporate welfare, repealing of land development laws, etc).
But now, the government feels squeamish about angering Microsoft? Why? Microsoft only exists because of the government, why are they scared?
Well, here's my little conspiracy theory:
The insanely rich of our time (C. Wright Mills called them the Power Elite, but I prefer Marx and Bakunin's term, the Ruling Class) have two conflicting problems in Microsoft: First, Bill Gates is not a part of the ruling class, despite his wealth. The reasons are that he did not go to (and graduate from) the right schools, his parents are merely upper-upper-middle class, and his wealth is mostly stock value, not hard, concrete, built-off-the-labor-of-slaves-and-immigrants wealth like that of the DuPonts or the Vanderbilts. Because of this, and because Bill Gates has tried to enter into the ruling class, the DOJ case is a matter of showing Mr. Gates where his place is in the social darwinist jungle.
On the other hand, what we've found amongst the ruling class/power elite is an interesting progression of capitalism. It's nothing really new, globalisation, it's basically a mixture of laissez faire theory, colonialism, and a little bit of fascism mixed in for good measure. The basic idea is, however, that government intervention and interference is not a good thing. So what you have is a generation of the ruling class who hasn't read their history properly. They don't remember the causes of the great depression, or any of the various recessions. They simply read their Friedman or Rothbard and insist that those theories are implemented.
Remember, capitalism is highly unstable. Think what would happen if Microsoft were to continue growth unchecked, without fear of government intervention. They could grow to huge proportions, encompassing massive industries and markets. Then, when they're valued at about 3 trillion dollers, their stock value plummets. How would that affect the economy? Exactly. So, we have governments and certain restrictions to make sure that that doesn't happen (unstable economy == popular revolution, usually).
But now, like I said, we have a generation of the ruling class that hasn't learned from history. They're doing things like repealing the glass-steagall act. They're allowing the CBS/Viacom and AOL/Time-warner mergers to go through without so much as a peep. They may talk about "getting government off our backs", but in reality, they keep increasing our military, increasing the police force, and increasing corporate welfare. Why? Because when the second great depression hits from all this unchecked capitalism, they'll need a strong military and police force in order to preserve "peace".
Republican rhetoric about small government sounds well and good when you're listening to Rush Limbaugh, but the reality is that although personal welfare has been reduced and limited, schools are underfunded, and health care is expensively privatized, the government will still be doing it's best to break union strikes, beat down inner city rebellions, pepper spray peaceful protestors, as well as spreading this form of American "democracy" across the globe. And at the same time, they'll be cutting a check to GM in order to keep them from moving yet *another* plant down to Mexico so they can exploit cheap labor. And then GM will move down anyways.
So, what am I getting at? Well, basically, my point is that we should be worried. Worried, and angry, because the government would dare be scared at the prospect of breaking up Microsoft, when almost all of Microsoft's wealth has been acquired with the help of the government and government intervention.
What have we gotten ourselves into?
Michael Chisari
mchisari@usa.net
That's a bad analogy because you can take the radio you got with your ford out and replace it with something better. By having IE so deeply integrated with the OS, it is impossible to remove without breaking a few things. Would your ford break if you took the radio out and replaced it? I didn't think so. Sure you can use a different browser, but IE is still there. Would you like to have to drive around with two radios just because you couldn't take one out because the car company decided to tightly integrate it with the rest of the car? I didn't think so. If I don't want to use IE, I shouldn't have to have it taking up space on MY hard drive on MY computer.
>Twenty years ago, AT&T was broken up into Baby Bells, now we're back to "medium sized" AT&T's
(Bell South, Bell Atlantic, Pacific Bell.. etc..)
Not sure I agree with your analogy or your conclusion.
Yes, the "Bell System" was broken into seven regional "Bell Operating Companies" by Judge Greene's MFJ, but more importantly, the judgement delineated the services that could legally be provided by the BOC's (local service only) and by the Interexchange Carriers (Longdistance by AT&T, Sprint, MCI and anyone else who wanted to play).
So the analogy of breaking Microsoft up into identical Baby Bills and how it compared to the breakup of AT&T might be a little off.
The telecom act of 1996 set the stage for Local Exchange Carriers to offer in-state long distance (the exclusive business of the IXC) and for IXC's to get into local service.
So far we have seen Southwest Bell gobble up PacBell and Ameritech, and Bell Atlantic has merged with NyNex. The original 7 are now down to 4. So far, the FCC hasn't let them into the LD business and the IXC's aren't exactly pouring into the residential local service business.
So the "Baby Bells" are indeed merging and becoming larger, but they are not becoming "Medium-sized AT&T's".
(er, what was my point? I had a point when I started this ramble.. oh yeah.)
So saying we have a re-assembly of AT&T's isn't entirely accurate. They (the Baby Bell's) are getting bigger than they were, but the "compettitive landscape" is far different than it was 20 years ago and the companies that have merged look very little like AT&T did 20 years ago.
I think it would be even more different for Microsoft. Breaking Microsoft up into smaller companies that all look the same is not as attractive to me as splitting them up along functions. Consumer OS, Business OS and Server, Handheld OS, Business office apps and e-commerce apps, consumer applications, etc would make more sense to me. Make the OS companies fully document the API's and force them to offer shrink-wrapped SDK packages at a reasonable price to all comers with no strings attached. Forbid these spin-off companies from forming bundled license agreements where OEMs have to include certain software with th OS in order to get a price-per-unit discount. Restrict Microsoft's licensing altogether. Give them very little lattitude to make deals on anything other than volume discounts.
Seems like something along these lines attacks the root of the problem, which I think is that Microsoft holds all the keys to making a product work on their 95% monopoly OS, and they abuse this position by withholding information needed to make products work on windows when it suits their goals. They hold the treat of raising their price on OS licenses unless an OEM bundles other software. Take these two weapons away from Microsoft, and I think you've fixed a lot of what they we able to use as unfair tactics.
There is much cruelty in the universe, John.
Yeah, we seem to have the tour map.
Folks,
I think the DoJ may NOT recommend a breakup for these reasons:
1. The horrid AT&T breakup experience. That breakup caused years and years of confusion by customers who needed integrated voice and data communications services (because they had to go to multiple vendors), and didn't really settle down until only a few years ago.
2. Lawrence Lessig--the legal advisor for the DoJ side--has said that he's not in favor of a breakup.
3. One Albert Gore, Jr. may NOT want to provide easy ammunition for one George W. Bush, especially during the Presidential debates.
4. The ultimate solution--namely separating system sales from operating system sales--may be the easiest and best solution for everyone involved.
Gawd, the DoJ spends over US$40 million dollars for a solution (separating OS and system sales) I suggested two years ago! They could have saved themselves a ton of money if the DoJ had pursued this course.
Raymond in Mountain View, CA
MS is found guilty of bundling. Government says, "Stop that!" Hardware makes say, "Uh, yeah, stop that!" MS says "Okay. ;-)"
Everyone says, "Hey, didn't we tell you to stop?" MS responds, "Yes, and we did." "Then why are you bundling IE?" asks the government. With a sly smile, MS responds, "Its not bundled, its integrated."
In unison, the entire industry shouts, "What's the difference?!" Unfazed, MS responds, "I don't know, you tell me." "Uh, well, um... we'll get back to you."
The government sues, "wins", then asks "Now what?" In the face of immanent breakup, MS responds by proclaiming, "The best is yet to come."
Meanwhile, in Redmond, the following conversation was taking place... "Have the marketing guys got it together yet?" "Yes, we're ready regardless of what happens. If they break us up, we release the source to everything but Win2k. It will only be a matter of days before the hackers exploit all the security holes and thousands of companies, and the government itself, will be faced with either replacing all their software, retraining their staff, and hiring competent admins, or upgrading to win2k. We estimate that 50% will upgrade in the first 2 months, another 20% in the next 6. We estimate a 25-30% loss." "And if the don't break us up?" "The slpashscreens have been removed from all our MS Office apps and the all references to Office have been replaced with Win2k Office. Our marketing guys should be ready to roll with the new campaign within a couple of hours after the announcement."
There have also been rumors of what sounds like laughing emanating from the MS's Redmond compound.
All the OS company and the Web apps company have to do is buy full-disclosure source access license agreements from each other. They can let any company in the world buy one too, on the open market--for one hundred and fifty billion dollars. It's a high price, to be sure, but if you can raise it, you have full access. Remember that Microsoft is presently worth over half a trillion dollars. The only other company with nearly that much market cap is Cisco.
If we cut MS into two quarter-trillion dollar companies, then Company A licenses something to Company B for price X, and B licenses something back to A for the same price, and both companies' books are in balance. Price X is in both companies' accounts payable and accounts receiveable, and the money goes around in a circle, payable over X/min(annual_revenue_of_A, annual_revenue_of_B) years. Hell, they can even charge each other interest on the outstanding balance.
And with a good enough set of lawyers, you fend off another company seeking equally favorable terms for years.
--
This is not my sandwich.