Will The DOJ Split Microsoft In Three?

cbull writes: "Yahoo! has an article that indicates the judge in the Microsoft case thinks splitting Microsoft into three companies is attractive to him. This is based on a friend-of-the-court brief filed by the Computer and Communications Industry Association and Software and Information Industry Association." And mfinke wrote: "Just saw the CNN article here about Judge Jackson's ruling that DOJ's proposal to split the company will still be considered when he rules. " Finally, mizhi pointed out this ZDNet coverage of the proceedings, saying "Basically, the government says that instead of splitting Microsoft into an operating system company and applications company, it should also split it into a third independent company for Internet Explorer."

Comments

Re:Microsoft should be divided into 15 companies

[Robin Hood]

You forgot: One Company to rule them all, and in the...

Oh. Wait. That's what we've got already and are trying to get rid of. My bad.

So why hasn't anyone suggested tossing them into Mount Doom? :-)
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The real meaning of the GNU GPL:

Need to prevent desktop to server monopoly!

[dublin]

To a large degree, what DOJ and the states are doing here is slamming the barn door shut with authority years after the horse disappeared over the horizon. Trying to fix the existing desktop OS/apps monopoly is a low return deal. Preventing MS from extending its monopoly into the server space is possible, but only if the correct remedy is employed, as MS is now using its desktop monopoly to achieve monopoly on the server side as well.

Don't believe me? Have a look at the number of attractive features in Windows 2000 that don't work unless you also have Windows 2000 servers. This matters! As much as the crowd here likes to bash MS, Win2K is a pretty damn good OS, and the things it offers when deployed on both servers and desktops are things like TCO that companies care about right now. (And, sadly, the things I see the Linux community ignoring...) As a practical matter, deploying W2K on the desktop demands its deployment on the servers as well, or there's no point in migrating. (As one industry pundit has noted, the ugly secret of W2K is that its great so long as you don't mind replacing all of your software and hardware.)

Microsoft is using its desktop monopoly to deadly effect to ensure that it controls the servers too - all the way up to the datacenter, through Active Directory, Intellimirror, Terminal Server, and the bundling of dozens of apps that are "just good enough" to prevent "competitors" from making a living selling them. (Go do the math - there is a very long list of products displaced by Win2K, many of which provide functions not commonly part of any OS distribution today.)

Until and unless Microsoft is prevented from using its desktop monopoly to drive a server monopoly, nothing the government does will have the slightest effect.

Note that splitting Microsoft in *either* of the ways proposed does not eliminate this problem. Since this is driven primarily by the OS monopoly, any split that allows the OS company to operate across desktop and server platforms is ineffective, as are the "baby Bill" scanarios like Ellison's in which Microsoft is split vertically (not horizontally as a poster says elsewhere) into three or so companies containing all of MS's assets. Any effective remedy must prevent MS from using is desktop monopoly to force customers into giving it a server monopoly as well.

This may be the only aspect of a structural remedy that matters, but it looks like it's not going to happen, and Microsoft will laugh all the way to the bank again...

(Note: these comments are mine and may or may not represent my employers' views.)

This is what

[tcd004]

Microsoft will do.

Yep, I've been waiting a long time for this one! tcd004

Third Company should have more to it

[Durrik]

The third company should have more then just internet explorer. How is that one going to survive with just IE? After all shipping IE for free is what started this, if they up the price and netscape is still free, who's going to get all the market share? With just IE in this company then this one will fail faster then a Art's major taking a quantum physic exam.

The third company should have IE, and all the Internet products. Like IS, Exchange, and anything else they have dealing with the internet. The other two companies should probably stay the same, one OS, and the other Applications and the rest. For the third company to survive they /NEED/ a product they can sell, and they can't sell IE.

I can actually see a forth company coming out of this, one dealing with hardware. They keyboards and mice are actually quite good. That way you'll have four baby bills: OS, Internet software, General Software, and Hardware. Each of them have products that they can use to make money on.

Just my 2 cents.

The hammer will fall.

[Animats]

Well, this resolves any question about which way Judge Jackson is going. He told DOJ to go back and come up with a more severe breakup plan. He also rejected Microsoft's bogus motion, but that was expected.

The key point to realize is that the interim conduct restrictions DOJ proposes (which, note, Judge Jackson did not ask DOJ to remove) kick in while appeals are pending. The rationale here is that Microsoft is engaging in ongoing illegal conduct, and it's appropriate to stop that while appeals are pending. If Microsoft wins on appeal, maybe they get to resume their monopolistic practices at some future date. Meanwhile, Microsoft is going to have to start disclosing those hidden interfaces. Probably by fall, the way things are going.

This is great for the Open Source community. Among other things, the WINE people will finally get the info needed to make it work right. One of the big Linux players may pick up on WINE and do the grunt work to make it run Microsoft Office. At that point, Linux on the desktop looks a lot more attractive.

As for the breakup, the financial community seems to agree on what the applications part is worth, but estimates of the value of the OS part are all over the place. This reflects reality - Microsoft Office is a good, useful product that sells on its own merits, and Microsoft's operating systems require coercive, monopolistic sales practices to sell them.

FYI

[extrasolar]

Richard Stallman has his own views on what should happen to Microsoft, which seem a lot more reasonable than simply splitting up the company.

What needs to be done is to get beyond the "We must *hurt* Microsoft" mentality into the "How will doing this to Microsoft effect the industry in the long-term?" mentality. Splitting the company up just seems like an appealing way of hurting them. It doesn't seem like it is doing anything constructive.

Splitting seems like changing one successful company with popular products into three.

IE would not be a viable company.

[hey!]

The answer is you can't make money selling a browser. Netscape sold their browser for a while, but almost everyone downloaded it for free. Splitting IE off makes no sense at all. Such an entity would simply not be viable.

I don't see any problem with Microsoft giving away its browser. You get netscape and lynx with Red Hat, and konquerer with KDE, and nobody is complaining. It isn't the giving away for free that's the issue, its unnecessarily tying the software into the system in a way that makes it non-trivial to replace, and bullying its OEMs into installing their browser exclusively. I use Notetab for editing text on the PC; I'd hate to see notepad tied deeply into the guts of the operating system. It just doesn't make technical sense and doesn't benefit the user.

IE's tight integration with windows is because the browser is the linchpin in Microsoft's strategy to leverage Desktop dominance into dominance in the server market, on to content creation and ultimately to content itself. It is critically important to thwart the use of monopoly power to implement this strategy. If MS sucessfully ties even two of these areas together it would severely restrict customer choice.

If I were to go to more than two companies, I would split off these areas:

• Operating Systems - Windows and OS utilities including browsers.
  
• Desktop Applications - Office, Frontpage etc.
  
• Server Applications - Exchange, SQL Server et.
  
• Content - MSN, Encarta, Multimedia, Games.
  

In other words, force each of these strategic areas to cooperate via public standards.

Re:Doctor, I've got Breakup Fever!

[Danse]

Look, we, as a country, have set up a fairly decent market system that tends to accomplish at least the majority of what we'd like it to accomplish. This system is defined by countless regulations that must be obeyed in order for the system to continue to function properly and serve the needs of the people of this country. Many of these regulations are common sense to most people, but many are the result of lessons we've learned along the way, and are not so intuitive.

Now, Microsoft is accused, and this has been upheld by Jackson's court, of breaking some of these regulations. They've probably broken many more regulations, and probably many more times than they will be convicted of, but they have been found guilty of at least some violations. Just as anyone else would have, Microsoft has had it's chance to defend itself in court. They did a pitiful job. This could be considered the fault of their attornies, but I don't believe that, and I doubt anyone else here does either. Microsoft hired very good attornies. I think that it's because it's usually a lot tougher to defend a client that is actually guilty, especially when the prosecution has a mountain of evidence that proves it and your own defense witnesses get caught contradicting themselves and each other. Implying that the case is meritless is just plain wrong. There are laws on the books. The DOJ proved to the judge that Microsoft violated those laws.

Now, you could protest on the basis of the belief that anti-trust laws are wrong. In that case, consider this. Microsoft is a corporation. Corporations exist to make money. The owners face no liability for anything their corporation does. That is a privilege granted to corps by the government, and one that the average person does not have. It would be insane to grant such immunity to prosecution without also setting down some hard, fast rules about how things will be done. Thankfully, the government did this, and will continue to do it as we continue to build experience in dealing with the market system we have created. With such laws on the books, they must be enforced. This can be difficult, as the government often actively fights the enforcement of these laws. It just depends on who is in power.

It's hard to judge the validity of your examples. Perhaps something should have been done about them. But often they didn't have the power to commit the kinds of violations that Microsoft has, or to have such a significant effect on their markets. (The exception being IBM, but then they did get dragged into court, where they stayed for over a decade). We could probably analyze each situation and try to determine whether there was really any cause to charge any of these companies with anti-trust violations. Please go right ahead if you wish to do this. I'm game.