ABCNews:Potential Recommended MS Break-Up

ThaJungle was the first to write us with the news that the U.S. Government may recommend a drastic remedy against Microsoft in its anti-trust suit. This would be the recommedation from the DOJ and the 19 states involved in the suit, not necessarily what Judge Jackson would recommend.

Comments

A better break-up

[Anonymous Coward]

Everyone has been talking about two possible breakup senarios- "vertically", producing multiple companies with the same product lines, and "horizontally", multiple companies, each with a different product line.

I say ... why not do both; make multiple companies for each product line. If we take the catagories from the article, we could have two Windows companies, two applications companies, and two internet companies. That way, not only will tying be reduced, but also each company would have to fight against another one, and we could avoid subversive, under-the-table dealings between the companies.

neither drastic nor a remedy

[jetson123]

Being broken up would probably be one of the better things to happen to Microsoft: the individual companies could work more independently, their "top management" could focus on just one market, their stock prices would soar, and they would still end up dominating each market and cooperating.

Something similar goes for the other often-discussed remedy, open sourcing Windows (without making it freely redistributable). That would simply entrench Microsoft software further.

Good remedies I can think of would be:

• Supervise Microsoft's business and accounting practices and get them to agree explicitly not to make "precompetitive announcements". This worked for IBM (IBM is very cautious about product announcements even today because of past justice department investigations), and it ought to work for Microsoft.
• Limit Microsoft's ability to manipulate earnings through creative accounting.
• Prevent Microsoft from buying or investing in any other companies for the next five years. Microsoft has been buying up lots of companies that threatened to compete with them, limiting consumer choice and limiting the availability of technologies for other platforms.
• Impose a stiff fine for their past misconduct, both to reimburse society for the financial losses and lack of innovationresulting from Microsoft's past misconduct and as a penalty; something of the order of Microsoft's cash reserves ($18b) would seem appropriate and would further limit their ability to engage in creative accounting and buy out competitors to extend their monopoly.

Microsoft has been squashing the competition not through better technologies but through misleading marketing and announcements, forcing unfavorable terms on others, and buying out competitors, a direct result of their market position. That conduct has denied consumers better technology and choice, and that conduct needs to be addressed directly.

Corporate "death penalty"

[Zach Frey]

I am not a fan of giving a lot of power to a government. However, I do believe that the government must have the power to trump a corporation. Otherwise, the Bill of Rights may one day become a EULA.

IANAL.

My understanding is that the State that a corporation is charterd in does have the authority to invoke the "death penalty" by revoking a corporation's charter. The Feds do not have this authority, nor should they.

However, (fortunately or unfortuantely, depending on your perspective), this ability of the States to demand good corporate behavior from their corporate "citizens" has been pretty much a dead letter. Politicians need (advertising) dollars to get elected, and corporations have those dollars. And if enough politicians did have the collective cohones to stand up to that, corporations can always punish the local constituents by moving jobs over a state line, which tends to make politicians unpopular with the voters, and thus ex-politicians.

Men are ruled, at this minute, by the clock, by liars who refuse them news, and by fools who cannot govern, and therefore wish to enslave.
-- G. K. Chesterton, "Utopia of Userers"

An even better solution

[FascDot Killed My Pr]

We all know that Microsoft maintains it's position not by superior products but by simple marketing. We also know that many other companies hold on to their (non-monopoly) positions the same way. In fact, decisions made on the basis of marketing rather than quality can be blamed for a lot of our problems, including Congress.

So I propose the following remedy: Kill the idiots. We all know several idiots. Kill them. These idiots may include your boss (who decided to use MS PPTP for the corporate VPN), your coworker (who laughs when you can't configure a winmodem, and then goes back to installing Service Pack 6), your ISP (who asks if you run a Mac or a PC "You know...Windows"). Kill them all.

Just think what a wonderful world it would be where you wouldn't have people claiming that "NT is standards compliant" or "Best viewed with [insert browser name here]".
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Let's get this straight

[FascDot Killed My Pr]

I see a lot of comments about "how will a breakup keep the baby bills from conspiring together?" It won't--because it won't need to. Regular old market forces will do the work for us.

For instance, let's say they break into OS, Apps, Publishing, Hardware. First move by Apps is to port Office to Linux. Countermove by OS is to remove optimizations for Office, making WordPerfect (and all the others) run equally well. OS also probably publishes API spec to lure developers back (who are leaving in droves right now). Publishing and Hardware, now free to jump on the Linux bandwagon, do so. Etc etc etc.

Sure, they could all work together--but simple game theory predicts they won't. Together they could make a killing (just like they are now), but as separate companies the lure to "defect" (break the cartel) would just be too strong.
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Re:Let's get this straight

[michael_cain]

I worked at Bellcore after AT&T was broken up in 1984, in an organization that wrote requirements for the regional Bell companies' networks. We were required to make those requirements available to all parties on an equal basis. Another part of Bellcore wrote support software based on those requirements in competiton with other companies. Naturally, the Bellcore developers wanted access to early versions of the requirements, and knew the people writing the requirements, so we got lots of calls from the developers.

Under the terms of the breakup, we had to keep copies of every version of every document we wrote for seven years. These records, as well as people's paper and computer files, were subject to legal search in cases where we were accused of providing early information to any vendor, including the Bellcore developers. Failure to keep the records properly was a criminal violation. Giving out early info was a criminal violation.

Everyone who was hired at Bellcore received training about these conditions within their first 10 days on the payroll. Everyone received annual training, just to refresh our memory, and the instructors always closed the day with the reminder, "If you violate the law, you go to jail." The DOJ did come in and check records in response to complaints by outside parties about improper Bellcore behavior. The threat of 18 months in a federal prison and a felony conviction on my record provided added incentive to behave properly.

If a Microsoft breakup requires that the different parts do not share private information, it is certainly possible to establish record-keeping practices that will make it possible to track down illegal sharing. And after the first set of developers go to jail for either (a) improper sharing or (b) improper record keeping, I'll bet that it never happens again.

One of the problems with the Bellcore situation was that with potential violations occuring because of the interactions between two parts of the same company, the DOJ and the court were in the long-term business of watching what was going on, which they did not like. I believe that the market forces mentioned above will work against conspiring by multiple former-Microsoft companies within a year or two, but only if they are different companies! If they are just different divisions within the same company, where there is a possiblity of increasing total profit by reducing the profit of one organization (ie, don't publish Office for Linux because the increased Office profits are less than the losses suffered by Windows), then the DOJ and court are stuck in the long-term auditing business.

If a breakup is not the solution, what is?

[remande]

There are a few discussions here suggesting that, were MS to be broken up, the pieces would merely ally with themselves. This, of course, would be patently illegal itself as part of the ruling. The problem is: that hasn't stopped them before, why should it now? Remember, this trial is about a contempt of court proceeding; Microsoft is guilty of disobeying a court order. There is no reason to believe that another court order, of any sort (even a breakup) will resolve the issues.

The real question to me is: what do you do with a rogue corporation? Microsoft's monopoly doesn't scare me half as much as their total disrespect for the law. The government can fine you and I, and throw our collective butts in jail, for committing crimes. They can't fine Microsoft enough to make them feel the pain, and they can't really incarcerate them.

I don't believe in the death penalty for people, but I do believe in it for corporations--less bloodshed. The courts need the rights to do real damage to a company, possibly pulling their papers of incorporation or simply denying them access to stock markets such as the NASDAQ. Remember, these are govenrment-granted priveleges, not inherent rights (corporations have no inherent rights; no matter what the Supreme Court says, they are not people).

I don't suggest that the courts try to do either to Microsoft...yet. However, I do believe that the courts need this sort of power, to be used only in the most extreme of circumstances, in order to give their rulings teeth.

I am not a fan of giving a lot of power to a government. However, I do believe that the government must have the power to trump a corporation. Otherwise, the Bill of Rights may one day become a EULA.

What they need is a combination...

[signe]

Breaking up Microsoft is a good step. Frankly, it's one of the only ones that could be taken. However, It's not going to be enough. Instead of one big company holding 80% of the OS market and 80% of the desktop suite market, you'll have 2 smaller companies, one holding the OS market and one holding the app market. It's not much progress.

At the same time Microsoft is broken up, the court should open the source code. Perhaps a new open source license would have to be devised for this, but it wouldn't be that difficult to come up with. By doing this, the court will cause competition to return to the market.

Let's all get over our irrational thoughs of "Windows is evil!" It's not evil. It just performs poorly. Windows is not a bad OS, what's bad is that it's monopolized by one company. By opening the source, other people can work on making it better, less bloated, and more cooperative with other apps. And the code line will fork and be sold by different companies. It would also provide a huge jump to windows emulators.

And what about the poor broken up Microsoft, which is now left with a pile of code that they have to share with everyone? Well, they keep claiming that they're innovators, that they drive technology. If that's the case, I'm sure they'll come up with something new pretty quickly. If not, and they were just lying to everyone, they'll dissapear. And of course, they could still provide a paid support structure for Windows and Office for those people that really like that security.

-Todd

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Telephone anyone?

[Duxup]

I'm somewhat disturbed by the sighting of sources here. ABC news reports that The Washington Post and USA Today published 2 different accounts of possible action against MS. I would at least like to see them note that they have a source that can confirm this, or have some sort of source in the DOJ or something. For all I know the Post and USA Today are reporting that ABC is reporting that they reported . . .

It sort of reminds me of that game where you whisper a message to the person next to you and they to the person next and without fail the message gets screwed up. I wouldn't be shocked if this all started with some attorney asking another attorney "Hey, do you know where I can get some really cool clip art?"

More Details...

[buzzcutbuddha]

It was also announced that Microsoft will have to return the souls of all of the companies they have acquired during the years. No word yet as to whether or not they will return all of the spines collected from their employees...

Simplistic thinking

[Spoing]

After reading the ABC/Reuters report, it got me to thinking. [takes puff off of virtual ce-gar]

Ya see, not counting the myth and inerta around Microsoft, what do we know about the rest of the industry?

Operating systems are commodities.

Services dominate, not shelfware.

90% of all software is custom.

UNIX = lingua franca; All major and most minor operating systems -- including embeded ones -- are based on some variant of Unix or are moving to it.

Application vendors like Corel, and IBM's Lotus division aren't raking in money hand over fist.

Most software companies have one-product or have a very limited focus.

Most software companies have competitors, in the real sense of the word.

Now, back to Microsoft...let's take it as a given that they will be split up. How much is are the parts of Microsoft actually worth?

OS: Windows OS -- including W2K -- has a necessary limited lifespan as a profit center.

Service: The poor service and arrogance -- second only to IBM of the 70s & 80s -- will have to improve, or the services will have to be charged for in inventive ways.

Custom development: The language division becomes more important, as it will switch to reselling the unbundled GUI, API, and specialized modules.

UNIX: If you can't beat them, join them. Watch those unbundled modules from the Windows client and server move to other operating systems.

Applications: The application division will spin off many of the different parts to boost share value. I doubt that Office will be broken up, but FoxPro and other programs built in-house or bought along the way might pop up again as mini-Bills.

Limited focus: With little to bind the "baby Bills" together, and stockholders demanding increased returns, MS's parts will disintegrate into the general computer software market to the point where it won't make any difference that it is or isn't a Microsoft product.

split by product lines?

[Nilz]

And I thought MS will be divided into 'sales', 'marketing' and 'legal' ...