Microsoft bashing: has the DoJ gone too far?

Judge Penfield Jackson has found the world's largest software company guilty of monopolistic practices and passed sentence. Unsurprisingly, Microsoft chairman Bill Gates and his cohorts don't agree with the outcome.

For one, they claim the verdict and decision to split the company sets an unhealthy precedent.

In an open letter to shareholders and customers, Gates said: "The dismantling of Microsoft would also send a signal that companies in America that are 'too' successful will be punished harshly - a signal that will be welcomed by foreign competitors seeking to overtake America's global leadership in technology."

But leaving aside the future of America Inc, as it might pain even the most ardent anti-Microsoft critic to admit, there is an argument that the DoJ has overstepped its original brief. What started as a case about browsers - with Netscape complaining of being nobbled by Microsoft - has at times turned into a 'get Microsoft' carnival.

Bill Neukom, vice president of law and corporate affairs at Microsoft, certainly thinks this is the case, pointing out: "This case has always been about browser software, not about spreadsheets and word processors."

Mike Thompson, director of research at Butler Group, agrees in part. He says: "Microsoft has to bite the bullet on some stuff but I don't think they should be forced to go further than other manufacturers. It is vindictive and unenforceable in law."

One piece of irony is that the ruling could increase the amount of money Microsoft makes, with combined revenues increasing as end-users pay more.

Clive Longbottom, analyst at Strategy Partners, explains: "This decision will push the price up for the consumer. With two separate companies, there is no possibility for cross-funding and when you see that most of Microsoft's profits come from its operating systems business, you can see that the other business will suffer as the company pushes up its prices to sustain itself."

On the ruling, he adds: "They haven't kept within the bounds of the case - otherwise Microsoft would have had a slap across the wrist and been told to sell off Internet Explorer. Now it has become a case of 'sod you, we're going to split you in two'."

Others say restrictions put on Microsoft are unworkable.

Glenn Manishin, partner and anti-trust lawyer at Patton Boggs, says the DoJ is "diving into an exercise of futility of enforcement" by laying down restrictions.

"You cannot impose hundreds of detailed restrictions for a market that is still evolving, particularly when you have a defendant which has a pattern of intentionally violating prior restrictions, and a market where technical terms are hard to figure out," he says.

Others have said the DoJ is intent on teaching the software giant a lesson, any way it can. However, the US government has justified the ruling in the name of consumer choice.

As assistant attorney general Joel Klein said of Judge Jackson's sentencing: "Under our proposal, neither ongoing government regulation nor the self-interest of an entrenched monopolist will decide what is best for consumers. Instead, consumers will be able to choose for themselves the products they want in a free and competitive marketplace."

And just as certain as the repercussions of this heavyweight bout is the DoJ's will to match Microsoft's objections.

Strategy Partners' Longbottom reckons a possible reason for the DoJ's terrier-like aggression is its refusal to lose face as Microsoft continues to put up a fight.

He adds: "The US government cannot climb down otherwise it will be seen as victory of capitalism over government. It really doesn't matter which company is at the receiving end. Microsoft has entrenched itself by its attitude in this case and this has only served to make the DoJ more strident."