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The Trials of Microsoft: the more things change, the more they stay the same
The judge may have put his thoughts down on paper - but that's hardly a binding document. Suzanna Kerridge looks at the small print and finds that nothing much has changed - at least not yet

By Suzanna Kerridge

Published: Monday 08 November 1999

Microsoft has acted in a monopolistic manner to gain its place in the market. It has abused its power, ignored customer demand and stifled its competitors.

This was the damning statement issued by Judge Penfield Jackson in his Findings of Fact document published online on Friday after close of trading.

Judge Jackson said Microsoft was not the champion of innovation it claims to be instead, he believes the company is guilty of suffocating it.

He said: "Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products."

He added: "Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest."

Microsoft responded by claiming it was only the first round of what continues to be a drawn out legal process.

Even though this is not the final ruling in the case which is now trundling into its sixth month, it provides a very clear picture of the likely outcome. With such a show of support from the Judge, the government now has the upper hand. The language of the document suggests Judge Jackson will not be content with just demanding the browser be unbundled from the Windows operating system.

So what does this mean for the corporate world? David Taylor, director of Certus, an association of IT directors, said: "I feel sorry for Microsoft, in that it has had an open playing field and it has built up the organisation on the basis of software that is of a quality that people want to purchase. They should be admired from an entrepreneurial point of view.

"But they have created a monopoly that isn't in the interest of IT directors worldwide. Microsoft has a stranglehold on the industry. Some IT directors feel, 'So what?' They use Microsoft and they're happy with it. But some feel that enough is enough and there should be more competition," he added.

Microsoft's future is in need of some stabilizers. As the song goes: "Everything free in America, for a small fee in America."

For Microsoft that "small fee" could be one of three courses of action - divestiture, fine or settlement.

Opinion on the probable outcome is mixed. Martin Butler, founder of the Butler Group, predicted an out of court settlement, but Rob Hailstone, analyst at Bloor Research, forecasted that a fine would be imposed to act as a deterrent to other would-be monopolies.

But the type of punishment could be irrelevant: the industry could evolve on its own to adopt alternative technologies, such as Linux and Java, thereby naturally diluting Microsoft's power.

Splitting the company into two or even three smaller companies would be disastrous, according to Eddie Bleasdale, director of NetProject. "It would be better if the industry had just one rather than two Microsofts to monitor."

Legal experts claim the ruling is designed to force the two sides to negotiate. Robert Hauberg, former Department of Justice lawyer and partner at US law firm Baker, Donelson, Bearman, Caldwell, said: "The least costly system would be resolution before this hits the appellate courts which could drag the process out for two or three years. Both the court and parties involved know that if that happened, whatever relief ordered could be out of date as the market moves so fast."

The worst possible outcome for Microsoft, he said, would be for the company to find itself in a situation similar to AT&T in 1984 when a judge ruled it to be anti-competitive, split it into seven 'Baby Bells' and made the court its regulator.

"To make the court a regulator would take serious thought as Microsoft would either have to have it as part of a settlement or be forced to accept it if it goes to the Supreme Court. This would be costly for the government to delegate resources for litigation and for Microsoft to continue its legal path."

But as the court drama unfolds what happens to the users? It will have no effect at all, said Butler, as the company's huge installed base will not be swayed by the court's decision and will still choose Windows. The momentum of the Microsoft machine will see it through.

Hauberg also claimed users had little reason to worry - not because of the prowess of the software giant's marketing machine, but rather because it could be years before the case fights its way out of the appeals court and the Judge's decision is upheld.

But he added: "It is likely that the Judge will find the company has acted illegally and hopefully will have enough evidence to support it."