Second Thoughts: Microsoft on Trial

On this website, Microsoft-bashing almost approaches a religion. And why not? It's hard to think of a more arrogant, greedy or deserving target. But after a careful reading through the transcripts of the Microsoft anti-trust appeal now underway, I'm having some second thoughts about the break-up order, about Judge Thomas Penfield Jackson's ruling and the way it was decided and delivered. Please join in. (Read more)

Microsoft's gargantuan and controversial presence triggered a techno-social revolution over the last decade. Microsoft's dominance -- and as some describe it, predation -- helped shape the computer revolution and the new economy. It was also instrumental in spawning Open Source, Free Software and the related individualistic, decentralized media that may well have saved the Net from the corporatized fate of much of the rest of the non-virtual information culture.

One of the problems is that our media has become a mob, lurching one way, then the other.

Perspective and clarity is hard to come by.

For more than a decade, the popular press uncritically accepted just about every single thing Bill Gates and his company said or did. Big media were instrumental in uncritically promoting products like Windows 98 and in establishing the notion of Microsoftian omnipotence. Gates couldn't have done it without them. They slobbered over his bland pronouncements, his shamelessly excessive mansion, his inane books, and his company's workable but decidedly uninspired and proprietary software.

Now, by and large, they've turned, and just as uncritically accepted the notion that Microsoft is an illegal and predatory monopoly and that the company needs to be broken up. Gates' astonishing arrogance -- lying to a federal judge comes to mind -- is much to blame for this change. But monomania isn't a crime.

Some articulate federal appeals court judges -- the case is before the United States Court of Appeals for the District of Columbia -- appear to be challenging the finding in the Microsoft trial, although they've yet to make their ultimate findings. And they and others are raising some troubling questions about the conduct of Judge Thomas Penfield Jackson, who has himself told interviewers he knows little about the issues involved and believes there are good grounds to appeal his ruling. (The transcripts are available from the Federal Document Clearing House, a private subscription service that is not online, and from various online news sites. They make compelling reading).

I was always uneasy about Jackson's ruling and posture. To me, Microsoft's crimes were arrogance, mediocrity and greed, the hallmarks of our corporatized culture -- none of them, alas, illegal in our business world. Much as people fault the quality of Microsoft's software and decry its practices, the truth is that tens of millions of people have used their products successfully to access the Net and the Web and run their PCs. And the idea that a Microsoft break-up would enhance competitiveness and creativity have always seemed dubious, even menacing. The Net has been so creative and explosive in part because the government didn't know enough about it to mess it up. That's a dangerous precedent to change.

I'd rather see MS challenged creatively in the marketplace, or by the generous spirit of movements like Open Source, than by a bunch of admittedly clueless federal bureaucrats, or an erratic judge. It seems clear that no one in the federal government from Congress to the regulatory agencies to the White House -- is in a strong position to oversee or regulate the Net or the increasingly disparate tech nation.

The appeal raises a host of complex issues, many of which fly well over my head. But the heart of the government action against Microsoft is clear enough: the U.S. accused the company of paying ISP's and OEM's (original equipment manufacturers) hundreds of millions of dollars to shut down Netscape's distribution channels. It also accused Microsoft of illegally tying its browser to Windows; of predatory pricing, and of exclusive dealing. But several questions about the government's case seem legitimate, even troubling, and it seems both fair and appropriate to launch an open discussion about them, to see whether they have any merit -- or not.

First:

Antitrust law says that for a company to behave illegally, it must establish a monopoly (not in itself illegal), engage in anti-competitive practices, and perhaps most importantly, harm consumers. Were consumers demonstrably harmed by Microsoft? If so, how?

Did government antitrust prosecutors actually prove that Microsoft prevented Netscape, or any other rival, from bringing new products to the marketplace?

According to unchallenged testimony in federal court this week, Netscape distributed 160 million copies of Navigator in l998 alone. At the time, according to the appeals court testimony, there were approximately 100 million Net users, which means every one could have acquired Netscape's product if they wanted to. Is it true that these users were not free to choose Netscape?

In ruling against Microsoft, Judge Jackson defined the "relevant market" that Microsoft controlled as operating systems and replacements to operating systems. He then found that Microsoft's admittedly aggressive tactics harmed Navigator. But Microsoft's lawyers have repeatedly argued -- correctly -- that Navigator isn't an operating system, and that Netscape had neither interest in nor means to supplant Windows. Was Judge Jackson wrong when he concluded that there was a direct link between Microsoft's bullying tactics and direct harm to consumers in the "relevant market?"

Judge Jackson also found that Microsoft had violated Section 1 of the Sherman Antitrust Act by tying IE to Windows. Appeals Court Justice Stephen Williams sharply challenged that view in court this week. Whatever Microsoft's conduct was, he argued, "it's not tying." Several other justices said they were sympathetic to Microsoft's argument that it integrated IE with Windows because there was little or no real market for computers without browsers. Isn't that so? In this time period, as the Web was exploding, why wasn't Microsoft justified in integrating Windows with its much-hyped OS? Wouldn't doing otherwise prove corporate suicide? Was Microsoft really supposed to sit back and allow competitors to dominate this critical market, surely threatening Windows in the process?

The Justice Department has been struggling in the appeals testimony to respond to arguments that computer operating systems by their very nature might have to be standardized, and that as a result a monopoly was inevitable. If Microsoft didn't create one, its lawyers claimed, somebody else would have and at least some of those potential "other" monopolies had a vested interested in seeing a divided and weakened Microsoft.

Plenty of questions remain about Microsoft and its practices. Did the company ruthlessly, or illegally, discourage competition? Did Microsoft make it too difficult or in some cases, impossible, for consumers to remove IE from their desktops? Did Microsoft unfairly -- or, more to the point, illegally --wipe out or damage potential competitors? But there are civil, criminal and other remedies for this behavior, if it occurred, short of chopping up the company.

The truth is, there is a fine but important legal line between ruthlessness, avarice and illegality. There are also profound implications for the tech world if Microsoft does, in fact, break apart, especially if it happens for the wrong reasons.

Now there is also the question of judicial bias. Some legal ethicists -- including nearly all of the appeals judges -- have sharply criticized Judge Jackson, whose dislike for Gates sometimes appeared personal -- in one interview, Jackson linked Microsoft to drug gangs -- and who made critical comments about Microsoft and its founder to reporters while the appeal process is still underway. The appeals judges are so upset with Jackson that they are reported to be considering sending the case back to a different judge. Jackson's behavior is considered grossly unprofessional, especially in the federal judiciary. Something seems off about this judge. The final decision in the Microsoft case will shape software and new economy laws for decades -- the ruling ought to be credible and beyond doubt.

Another problem is the selective nature of the Justice Department's prosecution of Microsoft, which suggests the government is regulating predatory corporations when it certainly is not. In the Corporate Republic, the land of AOL/Time-Warner and the Disney Corp., is Microsoft really that unusual, or even particularly predatory?

Are other giant theme park operators really free to create new versions of Disney World, whose synergistic marketing "tie-ins" would seem to a non-tech layperson to dwarf the alleged linkage between IE and Windows? Can new information content and delivery providers possibly compete with the monster that is AOL/Time-Warner, a truly awful merger with dreadful implications for privacy, free speech and competitiveness; a link-up that the very same Justice Department only recently approved with hardly a blink? This is a company crying out for a break-up from the day it merged.

Microsoft appeals trial transcripts are available on almost all major news sites -- USA Today, CNN.com, the Washington Post and the New York Times. People can reach their own conclusions about the testimony, and the appeal court's questioning of lawyers for both sides. It's implicit that your comments are always welcome on this site, but your thoughts about these questions would be particularly welcome.

Comments

My biggest nit on the hearings

[Masem]

One of the things that annoyed me over the course of the two day hearings was what timeframe they were looking at. On Day 1, the court and the gov't argued over the value of a 'browserless operating system'. In 2001, there is none; nearly every PC bought new is connected to the internet at some point. But at the time at when these events occured, say 1995-1996, using the internet was not necessary a primary use of a home PC, and thus, the browser could have been unnecessary for many people. And *this* is the timeframe in which this trial is about, not what happened since that point.

Similarly, how the judged seemed to downplay Netscape as a competitor -- certainly not now, but in 95-96, they could have been big. I remember distinctly Netscape and Sun saying that with the browser and Java, you could have your own operating system, and they were pushing that as the Microsoft killer. However, when MS included IE and their specialized Java VM (which they have already been punished for branding as such), they broke a lot of Java code, and since "everyone" was using IE, Netscape could not break into this market further.

Plus, you need to consider that Netscape at one point was payware for commercial use -- they only dropped the fee when IE started to gain market ground. That's rather strong evidence of a monopoly using their power. Of course, nowadays, a non-free browser that doesn't have something extra (read: Opera) is considered laughable.

Re:Demonstrating harm is tough. Or is it?

[Roofus]

Machines that you expect to have to reboot every day.

This is where I have a big problem with your post. Yes, MS products in the past have had really shoddy stability. But NT 4 works well, and 2000 is even better. If you are using 95 or 98 in the office, you deserve to have to reboot it every day.

I've got two servers at work. One is running NT 4, and I never mess with it. It's a PDC for a small network. I've been ignoring it for months, and it's still going.

My other server is running W2K. It's a domain controller, DNS server, SQL server, and IIS server. I hammer on it every day. It's current uptime is about 52 days. So far this semester it's uptime is 99.995% and counting. That's not bad considering it's not on a UPS, and I'm just a lowly undergraduate student without any professional supervision.

I'm not MS fan. I run FreeBSD in my apartment, and I love it. I won't try to defend Microsoft's idealology or actions. But to say "oog, I reboot windows every day" or "oog, blue screen!!!!" just shows ignorance and the inability to think objectively for yourself.

Jackson and the DOJ blew it...

[sterno]

After watching this case unfold, I get the sense that the DOJ chose the wrong target. Netscape was certainly trounced by Microsoft, partially because of Microsoft using their dominance, but also partially because Netscape got behind the 8 ball (witness Real Audio's continued existance as evidence that just Microsoft monopolistic power isn't necessarily enough).

What further doesn't make sense about this whole situation is that Jackson seems to be targeting the ties between Office and Windows as the big threat. This is Microsoft's current power base and Jackson realized this, but I think the leap of logic to say that because of the netscape debacle they should break up the office products from the OS is pushing it. The great danger with IE has nothing to do with office, but rather that they can leverage that monopoly to push a monopoly in the server realm (proprietary ties between IE and IIS that push people away from open platforms). In fact, if you look at Microsoft's current models it looks like they want to get rid of the traditional packaging of Office and replace it with pay-per-use on-line software driven by a Microsoft server and browser.

So, I think that the DOJ and Jackson really dropped the ball on this one. I think that Microsoft is a dangerous monopoly, and once this suit falls apart (which I think is an almost certainty), Microsoft will feel free to start using both hands again to strangle competition. Microsoft won't really learn anything (except that it's a good idea to send large checks to politicians) and we'll continue to have a Microsoft dominated industry for the foreseeable future.

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Re:Demonstrating harm is tough. Or is it?

[dmorin]

No. You're mistaken. You compare "install Linux" to "use Windows". You think most people can install Windows themselves? They can't. They rely on whatever comes with the computer. Many don't even differentiate the OS from the hardware. And MS created a monopoly for itself at the computer manufacturer level back in the late 80's early 90's with the predatory practices that eventually caused them to settle their original DOJ case.

Demonstrating harm is tough. Or is it?

[dmorin]

What bothers me most is when people point to the popularity of Windows as a way of saying "Look, Microsoft was good for the people." The only reason that this is demonstrably good for the consumer is because there's nothing else to compare it to! Let's look at what else MS has given us:

• The ILOVEYOU virus and its infinite children. Though MS didn't write the virus, the existence of the hole combined with the monopoly they have in the OS market are what really caused the problem. If somebody wrote a virus for a tiny hole in BeOS would it have affected the world like this one did?
• Incompatible file formats between its own products year after year. I love it when Office97 tells me "Oh, not everyone has Office97, you should save in Office95 format."
• Machines that you expect to have to reboot every day.

People *ignore* these things, because they figure that it is just par for the course. Know what? It's not. I call it demonstrable harm to the consumer. People hate Windows, we know that. All day, on the subway, at lunch, in meetings, you can hear people commiserating over their latest crash or virus. But they never blame Microsoft. They never say "I'm not going to use MS products." Why?

Because they don't even know that other options exist, for the most part.

Why? Because MS is a monopoly.

Isn't that demonstrable harm to the consumer? This is not a case of "what they don't know won't hurt them". They don't know that better solutions exist. It's hurting them, they just don't know it.

I do not run Microsoft products. I pay less for hardware and software, my computer runs faster, and crashes less. That, too, would seem like demonstrable harm by Microsoft. When I point out Linux to users of Windows they do not argue the qualities of the software with me. Know what they say? "I have to run Office2000 because everyone else does." That, again, is a sign of the monopoly that MS has.

Re:Demonstrating harm is tough. Or is it?

[macpeep]

dmorin writes:

"Let's look at what else MS has given us:
The ILOVEYOU virus and its infinite children.
Though MS didn't write the virus, the existence of the hole combined with the monopoly they have in the OS market are what really caused the problem. If somebody wrote a virus for a tiny hole in BeOS would it have affected the world like this one did?"

Oh come on! You can't show that Microsoft "harms consumers" because some idiot wrote a worm and other idiots helped spread it by executing a script file attachment to an email. It's not like the thing just auto-spread. There was a lot of stupidity involved. You could as easily send a Perl script to any UNIX out there ask the users to save the attachment and then execute it. Same result. Granted Outlook didn't have enough warnings about executing scripts but to say tht it shows that *Microsoft* has harmed consumers is just plain stupid. I mean really, wake up!

"Incompatible file formats between its own products year after year. I love it when Office97 tells me "Oh, not everyone has Office97, you should save in Office95 format.""

Incompatible file formats is nothing Microsoft specific. If you wrote something with the latest version of Word Perfect, you can't open it in Word Perfect 4.2, nor can you open it in emacs or possibly in Star Office (not sure about that but you get my point). Yes, Microsoft isn't any better than the rest, and quite possibly is the worst of them all, but again, it's nothing that Microsoft introduced. The same problem has always been there. And at least Office supports a ton of formats so you can communicate with the rest of the world if you know what you're doing.

"Machines that you expect to have to reboot every day."

We have shitloads of servers at work - both Linux and NT, about 50% of each.. We run pretty similar stuff on them; a database (MS SQL and Oracle mostly), a web server (IIS & Apache), a Java servlet engine (JRun) and a variety of other stuff like SMS gateways, SMTP servers, LDAP servers etc. etc. and uptime is not a problem for any of these machines. Yes, the Linux boxes have less problems but we consistently have uptimes of several months on all of the machines. Rebooting typically happens when we need to do some major upgrage - not when something crashes.

As workstations, we have NT4's and Windows 2000 and there too uptime and crashes are not a problem. I can't remember when I would have rebooted my NT4 workstation last - must be several months ago. On my laptop, I have Windows 2000 and I haven't seen a single blue screen of death or OS crash.

To say that crashing machines and daily reboots are such a horrible problem, caused by Microsoft, is just a plain lie - or maybe you just haven't used anything Microsoft has made in the past couple of years. Maybe you should try so that you know what you're talking about.

Please people, realize that this isn't some blind pro-Microsoft post. I would just prefer that people stick to FACTS when they post their anti-Microsoft ramblings.

And you know, there are always two sides on the coin. I had HUGE problems with various Linux distros some time ago on my desktop machine at home. It would freeze every once in a while (maybe every 2-3 hours or so) under X, no matter what I tried. I changed hardware, changed my motherboard, CPU, memory.. no change.. Finally I installed Windows 98 on it and I had no problems. Sure, typically it would be the other way around, but if you have had 100 blue screens of death in one day on a Windows box, remember that there are people who have had similar experiences with other OS's. It's nothing Microsoft specific.

ctrl-alt-del to login

[CrayDrygu]

I heard a good explanation for the control-alt-delete to login thing. Whether or not this was MS's intention, I'm not sure, but it certainly works out well.

Using that key sequence to bring up a login dialog effectively prevents the "false login screen" style of password sniffers. If one of those were running, you'd press C-A-D to login, and get the wrong screen, so immediately you'd know something was wrong.

--

Second Thoughts...

[Arker]

Microsoft's gargantuan and controversial presence triggered a techno-social revolution over the last decade. Microsoft's dominance -- and as some describe it, predation -- helped shape the computer revolution and the new economy. It was also instrumental in spawning Open Source, Free Software and the related individualistic, decentralized media that may well have saved the Net from the corporatized fate of much of the rest of the non-virtual information culture.

A number of errors here. Microsoft certainly triggered no such revolution - it rode a wave that was well underway, and excelled at profiting from it. At most, one might argue that they accelerated a revolution that would have happened no matter what. Microsoft certainly did not in any way "spawn... Free Software" - the GNU project started when MS was still a very small player, providing an early and primitive version of dos for IBM, along with their basic engine and the like. Free Software was a reaction, yes, but to the actions of the likes of SUN and DEC, not MS.

While I think I agree with the overall point of your article (certainly I agree that "One of the problems is that our media has become a mob, lurching one way, then the other. Perspective and clarity is hard to come by." and that Jacksons decision has some flaws...) I really can't imagine that you would want to spread such misinformation as this.

As to the judgement, a deeper issue that you don't mention is that antitrust law itself is a tangled mess of subjective criteria to begin with. Monopoly is a concept solid enough to be fairly useful in economics, but not quite solid enough to be objectively definable in law. A monopoly is a single supplier in a given market. In order to determine whether or not MS "is" a monopoly, one must define the relevant market. Personal computer software? Not a monopoly. Desktop x86 computer software? Not a monopoly. MS-Windows compatible software? There they are a monopoly, and given the share of the total personal computer market that represents, that makes them a juggernaught, for sure, but there are some definate reasons to find such a narrow definition of the market for legal purposes quite troubling - it nearly makes them a monopoly by definition. By that criteria, Apple must be a monopolist (just a monopolist in a smaller market) and so is SUN, and hell, Symantec has a monopoly on Norton Utilities, right?

So I've watched this whole story with very mixed feelings. Microsoft has a tremendous market clout which they've used in VERY questionable ways. They do stifle innovation, they do harm consumers, and it's tempting to view anything that strips them of a little part of their all too great and all too often abused power as a good thing. But antitrust law is just as scary and abusable.

At any rate, a thought provoking article. Please do correct the factual errors before publishing an article like this in the future though - it's bad enough that an army of MS Marketdroids are out there misinforming people about the history of computing - the last thing that should happen is people like you helping them.

"That old saw about the early bird just goes to show that the worm should have stayed in bed."

Re:Demonstrating harm is tough. Or is it?

[f5426]

Your examples are too recent. M$ brought much more to us:

Basic everywhere. At time of smalltalk and lisp, they pushed basic. Thanks for that. They ruined my life.

DOS, EMM, XMS, 640Kb limit, A20 gate. The whole DOS api. It was not at stone age, folks, it was in the 80's. This harmed a lot of children, that ended-up re-developing unix in the 90's. Digital civilisation lost about 10 years in the process.

The paperclip. This harmed millions of users.

The login panel that is dismissed with the escape key. The 'control-alt-del' to login. Someone should pay for that.

Winmodems. Don't forget winmodems.

Oh, and the 10bits in the cylinder number. The 504Mb limitation of hard drive ? And the 8Gb limit ?

And FAT, the Fragmented Allocation Table ? Who should pay for the countless hours morons spend looking DEFRAG.EXE painfully moving blocks around ?

And the windows API ? Winsock ? The API where you need a hidden window to receive data on a socket ?

Oh my god. I don't want to break microsoft apart, I want to dissolve bill gates in an acid bath.

Cheers,

--fred

Re:yes.. capitalism

[cyber-vandal]

Capitalism does not reward innovation in anything but marketing. The best car is not always the best-selling car for example, it's an image thing. Capitalism only works properly when the consumers have all the information required to make the correct choice. Only then is innovation rewarded. The idea of marketing is to prevent this from happening. Letting the market decide has produced so many monopolies and cartels in the past 150 or so years that there has to be a balance, and the only organisation big enough to take on an abusive monopoly is a government.

yes.. capitalism

[wishus]

I'd rather see MS challenged creatively in the marketplace, or by the generous spirit of movements like Open Source, than by a bunch of admittedly clueless federal bureaucrats, or an erratic judge.

Yes, it's not the government's business to mess around in the marketplace. Capitalism rewards innovation. Letting capitalism take its course may not produce results as quickly as the government would, but it will produce better results in the end.

And "Open Source" fits in with capitalism nicely (though RMS would disagree).

wishus
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I think MS has been the victim of hypocrisy.

[Jon Erikson]

Recently Microsoft has been claiming that the Judge was biased during the trial, because afterwards he said a few choice words about the company. Their Lawyers are trying to use this to wriggle out of the judgement, however the simple fact is that once the judgement has been reached by due process in a court of law then the judge is allowed to be predjudiced - he has to sentence them, after all.

Having said that, some elements of this trial do worry me. As an American ex-patriot, now living in London, I am worried about the ideaology that this trial represents. It didn't seem to be about Justice, it seemed to be about the government imposing its economic ideals.

Since I have lived in Britain for a few years, I have come to think that in affairs like this expediency is often the best way. Idealogy should be left to students and High School pupils - there is no place for it in the grown up world, because it leads to a divorce from reality/

Also, the hypocrisy of many people in the tech industry worries me. It seems that they are libertarian in their outlook everywhere, except for when it comes to Microsoft. Why the two-faced attitude? It is emotion clouding their viewpoint.

I am an expatriate; events like this are turning me into an ex-patriot.

Re:Demonstrating harm is tough. Or is it?

[onion2k]

Because they don't even know that other options exist, for the most part.

Why? Because MS is a monopoly.

And thats Microsofts fault? No, its the fault of the ignorant consumer. If you don't research your options you're going to have to put up with what you're given. For the 'average' user at home Windows is the best operating system. Most people couldn't even install, for example, Linux. Its simply not as obvious and easy to use as Windows. Consumers are a stupid bunch. They tend to like little paperclip assistants, 'Wizards', and autorunning CDs. It doesn't require any thought. That suits most people fine. Microsoft have dumped vast amounts of money into simplifying computer systems so that they can sell to as many people as possible. Maybe one day Linux will be as easy to use as Windows. Until then though Microsoft will not have a rival in consumer operating systems, irrespective of what the US courts rule.

Re:Harm to consumers

[rabtech]

But the big difference is that with AT&T, you really DIDN'T have any other choices!

With the Open Source movement, there are plenty of non-MS alternatives. No one is twisting your arm here. Even before Linux became the hot buzzword of the day, there were other alternative platforms and systems, some of which are still around today.

Microsoft may have used dirty business practices in promoting Internet Explorer, but I don't know anyone who would argue, in their right mind, that Netscape 4.x is better than IE 5.x; even NS6 doesn't have the polish and features that IE has.

I only hope that the rumors of IE being ported to Linux systems is true.... that would ease my pain and suffering when dealing with Linux machines quite a bit.
-
The IHA Forums

Re:Microsoft are good for consumers and society

[mkoenecke]

The problem with this entire comment is it is only accurate when referring to Microsoft's behavior *before* it had acquired its monopoly. Low prices? Everything else in the computing world has demonstrated consistently dropping prices, *except* for Microsoft products. Priced Microsoft Office lately? Priced Windows, period? How come they're more expensive than they used to be? How come OS alternatives (read: Linux) are so much cheaper (read: free)? I won't say that Microsoft software is total garbage, but I will say that if it weren't for the monopoly they wouldn't be getting a 100% premium in price for it over products as good or better. That, simply, is harm to the consumer. And Microsoft had nothing to do with hardware prices. And Netscape wasn't beaten "fair and square." READ the findings of fact. READ the testimony in the trial court! What Microsoft supporters don't seem to be able to answer is: Why exactly did Judge Jackson, a Reagan conservative appointee, develop such an animosity towards this successful company which has supposedly brought so many benefits to the country? Why? Sure, he expressed his loathing for the company: but how did he come to feel that way? Read the transcripts.