Microsoft Antitrust Update

You can't help but know that Microsoft and the Department of Justice (plus several of the states that joined in the suit) are attempting to settle their antitrust dispute. The rest of the states are holding out for a settlement with more teeth, or a continuation of the case. A few links from the past few days: The LA Times looks at the states still opposing Microsoft. Microsoft defended the settlement before a Senate committee, which was crippled by political maneuvering (see also the NYT story). The speech given by the CEO of Red Hat is online. Microsoft filed a brief with the court, unsurprisingly urging the court to accept the settlement. The Register has a story on the proposed settlement, which is available at the DOJ Antitrust website. Linuxplanet has some advice for people who want to comment on the settlement - you've got 60 days from November 28. Finally, Microsoft has named two people to help it comply with the proposed settlement.

Comments

Senate Hearings

[PoiBoy]

Based on the few excerpts of the Senate hearings I heard on TV yesterday, I would be surprised if in fact the proposed DoJ/MSFT settlement is allowed to go forth. It was rather clear to me that most Democrats as well as Republican Orrin Hatch (from Novell country) are outraged.

IANAL, but I wonder to what extent the presiding judge pays attention to the media and how this will affect her decision. On the one hand, judges are not supposed to be swayed by media reporting, yet the judge is supposed to consider public comments about the proposed settlement. To the extent that Senators represent their constituents' beliefs and needs, the judge may give some weight to these types of Congressional hearings.

The settlement isn't so bad

[Erich]

Read part B:

(from the settlement)

B. Microsoft's provision of Windows Operating System Products to Covered OEMs shall be pursuant to uniform license agreements with uniform terms and conditions. Without limiting the foregoing, Microsoft shall charge each Covered OEM the applicable royalty for Windows Operating System Products as set forth on a schedule, to be established by Microsoft and published on a web site accessible to the Plaintiffs and all Covered OEMs, that provides for uniform royalties for Windows Operating System Products, except that:

1.the schedule may specify different royalties for different language versions;

2.the schedule may specify reasonable volume discounts based upon the actual volume of licenses of any Windows Operating System Product or any group of such products; and

3.the schedule may include market development allowances, programs, or other discounts in connection with Windows Operating System Products, provided that:

a.such discounts are offered and available uniformly to all Covered OEMs, except that Microsoft may establish one uniform discount schedule for the ten largest Covered OEMs and a second uniform discount schedule for the eleventh through twentieth largest Covered OEMs, where the size of the OEM is measured by volume of licenses;

b.such discounts are based on objective, verifiable criteria that shall be applied and enforced on a uniform basis for all Covered OEMs; and

c.such discounts or their award shall not be based on or impose any criterion or requirement that is otherwise inconsistent with any portion of this Final Judgment.

This is the most important provision of the entire settlement.

This eliminates Microsoft's ability to use strong-arm tactics in the ways it has been doing -- not giving special pricing to vendors who don't stay in line with what Microsoft and friends wants to do. It says that if you buy (OEM) licenses from Microsoft that (almost) no matter what you do as long as you buy the same number of licenses as someone else you'll get the same price.

The only thing that I would like better is for the Microsoft License Schedule to be applied uniformly to all customers, regardless of OEM status. Without that, Microsoft may find loopholes to force companies out of OEM status and buy retail licenses (or whatever) but this is still a huge step.

There is lots of talk about MS Word for Linux and such, but I think that would only further the monopoly, and I just don't think it's right for the government to mandate a product line. I think that fair pricing, however, is something totally reasonable and that will, in the end, hurt Microsoft more than most unfair measures we could add.

Having uniform licensing to all (not just OEMs) would be the one change I would make if I got one choice, but if I got two changes I would make Microsoft release all the API specs in a public forum and make them freely available, instead of just on MSDN. Say, on their web site and with the clause that they must be freely distributable in an unmodified form.

I think that those two things would make this settlement even better, but as it stands I think that the settlement is a fair solution.

At least for the abuse of monopoly in the OS realm, which is what this is all about.

Re:No Competition?

[ethereal]

Look at this the other way - pretty much the only successful competitor to Microsoft is giving away their product for free. The big reason that Linux is such a competitor is because the normal Microsoft tactic has failed: undercutting the competition by subsidizing their new market-breaker with money from the other parts of their empire. Also, there's no way for Microsoft to completely buy up Linux and Open Source, so they can't remove a competitor that way. You can't undercut or buy out "free", and so Microsoft is temporarily stymied, but they still have vast marketing and lobbying muscle.

Does it strike you as a particularly healthy industry if you can only gain marketshare by giving your product away? Is it reasonable that the only way to protect your product is to create it via a group of people who aren't even a company, just to avoid being swallowed by Microsoft?

Now, of course I know that RedHat charges money for some things, and they may even make a profit pretty soon, and Red Hat is in fact a company that Microsoft could buy. But Microsoft's competition isn't so much Red Hat as it is the Linux and Open Source movement. And taken overall, Linux and Open Source are largely free, and are largely producted by individuals and representatives of many companies who collectively could not be bought out. Those are the only reasons that Microsoft has any competition, and those reasons still do not add up to a healthy software industry.

Re:I just want to know...

[theantix]

I just want to know... how the DOJ (and by extension everyone else)can possibly see that MS is anything BUT a monopoly. They're growing, not shrinking, and the government seems to detect no problem with this.

For starters? The economic concept of monopoly power holds that a "monopoly" is not an absolute, it is a point on a scale. Where they are on the scale is uncertain.

Microsoft is not only company in any market segment they are in, thus they are not an absolute monopoly like the power companies are (and how the phone and cable companies used to be). However, because of their dominant share of the desktop PC and office suite market they have a fairly high degree of monopoly power. The barriers to entry in the industry are the entrenched applications using the the Win32 API, and the implementation of the MSOffice file formats. That being said, there are many factors that limit their monopoly power.

The internet and java are (were?) starting to make client less important. This limits the impact of the dominance of the Win32 API. Pirating is rampant. This limits their monopoly power over pricing especially in the home market (*YES IT DOES*). Crossplatform development is progressing as people can write QT applications that can be ported to several platforms including Win32. Again this reduces the the dominance of the Win32 API. Viable free alternatives are emerging (StarOffice 6, Netscape 6.1, Mandrake 8.1). Again this reduces the the dominance of the Win32 API. File format filters (In StarOffice6 for example) are getting extremely good at reading .DOC and .XLS which limit the impact of the MSOffice monopoly power.

The bottom line? Yes, Microsoft has a high degree of monopoly power, but it's not cut-and-dry about how much power they have. And it's certainly not cut-and-dry what to do about them either. Certainly it is important to limit the impact of their potential leverage (For example that Passport, Messenger, Hotmail, and MSN Photos are bundled with XP) from their existing markets, but don't think for a minute that it is simple. It's not.

Don't forget Office

[Darth RadaR]

One thing that would (IMHO) *highly* cut back on M$'s monopoly would be for the DOJ to make M$ open up their formats on the Office products. I can't count the times that I've told people to send me a document in text-only format because I'm not using MS Office and Star Office might or might not convert it properly.

If M$ is going to get any fair competition, they need to open their formats on Word and Excel so people are not forced to use MS Office if they have to work with those formats. That would be a big boost for the developers of Abiword, WordPerfect for *nix, Gnumeric, Star Office, etc. They wouldn't have to spend so much time on converters. They could spend their time making great office programs that work with anything someone sends you, and make the office application software battle a fair fight.

Re:I just want to know...

[lgraba]

Do any of these issues change the testimony in the anti-trust trial that:

- MS threatened Compaq with withheld licenses if they didn't remove Netscape from their computers going out the door.
- MS threatened Intel management over Intel's work on multimedia software.

These are but two examples of the way MS abused their monopoly power. The fact that there might be competition on the horizon (a speculative, not certain, assertion) does not change what has occured one bit. If I robbed a bank, should I be spared a penalty because I myself might be robbed sometime in the future? I don't think so!!!

Re:Justice for the Rich

[Alsee]

a couple of people who will be very strict with me and spank me most serverly if I do it again

Read the proposed settlement more closely. They aren't allowed to spank Mircosoft. All they can do is snitch on them. But they can't even really do that - they are under a GAG ORDER. They can only snitch to the DOJ. Considering that the DOJ came up with this settlement, somehow I'm not thrilled with a GAG ORDER saying if Microsoft breaks the lawn one else can know.

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Interesting difference: Dimitri vs MSFT

[RNG]

The contrast of how the US judicial system can work is interesting: Dimitri circumvents the protection on some minor piece of software and gets thrown into jail. MSFT leaves behind a trail of dead competitors and obvious monopolistic abuses, their executives basically deceive the court with false or doctored testimonies and they're looking at another slap on the wrist.

Isn't it great what (lots of) money can buy you??

Re:I just want to know...

[Alsee]

The economic concept of monopoly power holds that a "monopoly" is not an absolute, it is a point on a scale. Where they are on the scale is uncertain.

You missed. Monopolies are perfectly legal.

Yes, Microsoft has a high degree of monopoly power, but it's not cut-and-dry about how much power they have.

And it doesn't matter how much monopoly power they have.

The issue is actions. Certain actions to maintain a monopoly position are illegal. Certain actions using a monopoly to create a new monopoly are illegal. Legal fact: Microsoft's actions were illegal.

it's certainly not cut-and-dry what to do ... don't think for a minute that it is simple. It's not.

No agument there, lol.

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