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Microsoft on the Line

Kris Schnee

The case against Bill Gates and the Microsoft Corporation is surely the biggest “Trial of the Century” since O.J. Simpson’s. Microsoft is the world’s largest producer of computer operating systems, a household name alongside McDonald’s and Coca-Cola, and was until recently the most highly-valued corporation in the world. The antitrust suit being prosecuted by the Department of Justice and the governments of 19 states has dragged on long enough, and the recent ruling against Microsoft (whether right or wrong) is a welcome sign that the suit could end soon -- if only a deal could be worked out. Unfortunately, it seems likely that we will be hearing about Microsoft’s travails for years to come.

Most home personal computers are PCs, and most PCs run some version of Microsoft Windows. This has been the situation since Microsoft’s Windows 3.1 (which seems ancient today) conquered the market; Windows 95 and 98 took Windows 3’s position, and the upcoming, infuriatingly-named “Windows Millennium” will probably follow. And of course there are the business versions of the operating system, such as Windows NT, and Microsoft’s other software such as Word and Internet Explorer -- the program that has been the focus of the company’s troubles.

Microsoft is charged with monopolistic practices, but the company’s monopoly over the operating system market is a natural one. In some industries, one company will tend to rise to dominance even if it does nothing illegal, simply because the largest company is most efficient.

The existence of one dominant operating system is good for other software companies (the ones not making operating systems), since there is one common platform and a single version of a program will be compatible with a majority of computers. (The same argument explains why English is becoming the unofficial world language.)

What’s good for programmers in this case is good for the consumer too, because a broad user base for one system means a wide variety of software. Few operating systems and lots of other applications is the best possible combination for computer users.

Consumers are not being forced into buying Microsoft’s products. Certainly many people, especially on this campus, would tell you that Windows is not the best operating system available, but the simple fact is that it is good enough. Windows is easy to use, is tolerably stable, and is compatible with most new software. Computer dealers include Windows systems on their new PCs, because they know it is the system most people want. The system’s widespread success and the wide array of compatible software reinforce each other -- so again, Microsoft’s is a natural monopoly. Simply being the market leader is no crime.

But Microsoft really does appear to have strong-armed the industry in some ways. One of the accusations against the company is that Microsoft raised its licensing fees to PC sellers who were unwilling to include only Microsoft’s web browser, Internet Explorer, pre-installed on their systems. Bill Gates, in effect, dictated to computer companies that they should have no other browsers before him. There was no real justification for Microsoft’s attempt to shut out its competitor Netscape from the market but greed; it was a case not of free competition between similar products, but of a company using its dominance in one market to force competition out of another.

Microsoft tried to deal with anti-competition accusations early on, by expanding the role of Internet Explorer in Windows 98. Explorer became the default browser for viewing graphics files, among other things, and the file structure of the hard drive itself could be viewed in Web page form. This move was too little, too late; Explorer is still obviously a Web browser first, and not an integral part of the operating system as Microsoft has argued.

Then there is the Sun/Java debacle. Microsoft has apparently deliberately altered Sun Microsystems’ Java platform, which was designed to be a cross-platform operating system, in order to deliberately limit its compatibility with non-Microsoft users. This action would mean that Microsoft more or less tried to waste Sun’s money and ruin the entire purpose of the Java experiment, giving consumers fewer choices and less flexibility in choosing how they run their software. Microsoft’s action is especially offensive given Java’s nature as a Web-based system -- it suggests that Bill Gates would like the World Wide Web to be his Web, on which computer users around the world can only “freely” exchange information if they do so with Microsoft software.

What can be done about Microsoft’s probably-illegal activities? Four solutions have been proposed. One is to break Microsoft into product-based companies. That is, one pseudo-Microsoft would make operating systems, a second Web browsers and Internet content (like the e-magazine Slate), and a third other software. Another is the Bell method, shattering Microsoft into regional fragments, an absurd solution. Microsoft makes computer software, products made to be sold around the world, not “South” or “Atlantic” or “Pacific” only.

A third option is the open-source system -- allowing other companies to freely modify Microsoft’s software to suit their needs. One advantage of this settlement is that Windows would gain the power of the Web community as developers, giving Windows the self-supporting ability that rival operating system Linux has.

The fourth option, probably the best, is to force Microsoft to simply equalize its pricing, and forbid the company to shut out competing software with licensing-fee penalties. The price-equalization option would simply keep Microsoft within the bounds of free competition, without breaking up a company that makes a product people want.

Microsoft is going to appeal the decision against it, and will try to take its case to the Supreme Court, a solution which serves no one. A court appeal would keep one of the world’s most valuable companies (no longer the most, thanks to the antitrust suit) in turmoil for years, causing unnecessary chaos in the computer market and wasting millions of dollars in court proceedings. The best-case scenario for Microsoft is to waste time and money to ultimately win the privilege of extorting product loyalty from PC manufacturers. At worst, Microsoft’s struggles will prove a total waste.

Why can’t Microsoft work out a settlement, having lost this battle, instead of pressing on with its case? Agreeing to some relatively minor concessions now, like promising to let other companies compete with Microsoft on their own products’ merits, could save the software giant from being torn apart slowly and painfully.