Business World
What We Learned in the Microsoft Trial
By Holman W. Jenkins Jr.
06/30/1999
The Wall Street Journal
Page A27
(Copyright (c) 1999, Dow Jones & Company, Inc.)
The evidentiary phase of the Microsoft lawsuit wrapped up last week, and it's been an education. If Joel Klein were possessed of any public spirit at all, he would drop the case right now.
Yet there he was on Thursday, declaiming on the courthouse steps that Microsoft represents a "serious, serious problem" that only sweeping Justice Department remedies can fix. "If you think that Microsoft's operating system monopoly is going to go away in two or three years," he added, "then we shouldn't have brought this case. But I obviously don't believe that."
That last bit is lawyer-speak meaning "In the real world I don't believe what I'm saying, but in court I believe it." Mr. Klein doesn't want future clients to think he's a dim bulb.
He's got a problem. As a matter of law maybe, but certainly as a matter of doing what's right, the evidence and events outside the courtroom have clearly shown Microsoft's "monopoly" to be more semantic than real. This month Justice rolled out its latest ringer, an IBM manager who testified Microsoft threatened to withhold a Windows license unless IBM made all sorts of concessions not to promote products that compete with Microsoft's office applications, encyclopedia, etc.
Uh-huh. When all the palavering was done, IBM said "no" and got its Windows deal anyway, and a pretty good deal at that.
The same was true of the Apple, Intel and AOL witnesses earlier. That's why the government's case has been built entirely on the premise that Microsoft breaks the law merely by engaging in hard bargaining, never mind what bargains were reached or how events played out.
This might be a good time for Mr. Klein to remember that he works for us, not for Microsoft's competitors. They've been cheerleading for this lawsuit since day one, but they can't afford to mislead the markets the way Justice spins the public. The SEC frowns on CEOs who mislead investors.
Take Larry Ellison. He was on the Neil Cavuto show talking for the umpteenth time about Bill Gates the bullying monopolist. But he hastily drew a line: "I mean he's never bullied Oracle. But I certainly . . ."
When Mr. Cavuto pressed on, suggesting that Oracle must be dead meat now that the "bully" has targeted its flagship database software, Mr. Ellison became indignant:
"Well, let's look at the facts. Right now, the fastest growing segment of my industry is the Internet. Of the 10 largest consumer Web sites, all 10 of them use the Oracle database. In the 10 largest business-to-business Web sites, nine of the 10 use Oracle. None of them use Microsoft. Every single web portal, things like Lycos, Excite, Yahoo!, all use Oracle. None use Microsoft. Microsoft's been in the database business for a decade and they continue to lose. They've been losing share to us at a faster and faster rate over the last several years. In fact, we dominate. We almost have Gates-like share in the Internet and it's the Internet that's driving the business."
OK, Larry.
Moving along to Sun's Scott McNealy: His partnership with AOL and Netscape has figured prominently in court, with the government swearing a blue streak that their plans don't "threaten" Microsoft. That's not what Mr. McNealy told a trade publication, tele.com, in January. What follows is a lot of jargon, but it means Microsoft has a monopoly in nothing:
"We added in Netscape and AOL as distribution channels, getting Java 2 into the tens of millions of disks that AOL sends out, so that the world is going to be littered with Java 2, just on the desktop. Then you add in what's going on in Personal Java and Java Card and Java on the server, and all of a sudden we have a very, very interesting, stable volume platform that gives any developer for the telco or ISP community a virus-free, object-oriented, smart card-to-supercomputer scalable, down-the-experience-curve platform that allows you to interoperate with every kind of device you can imagine."
But nobody spins like AOL's Steve Case. In court, the story is that AOL was "bullied" into accepting a free browser from Microsoft (until then, AOL customers had to pay 40 bucks for a Netscape browser). It was "bullied" into accepting free placement on every Windows desktop.
These deals made AOL king of the Internet, dwarfing everybody including Microsoft. Now AOL has bought Netscape, but as Mr. Case will smirkingly tell you, it's up to him to decide when to dump Microsoft's browser and begin promoting Netscape's browser instead.
When will that happen? When he no longer cares whether Microsoft kicks him off the desktop (meaning when Microsoft can no longer hope to gain anything by kicking him off the desktop).
AOL has signed up to provide Internet access on the Palm, using a non-Microsoft operating system. Deals are in the works with various smart-phone makers, again bypassing Windows. Mr. Case has spun the court and gullible journalists by saying "of course" AOL has no intention of competing directly with Microsoft -- which works if your understanding of the industry is so skimpy that you believe the relevant threat is another PC operating system.
But, hark, AOL is going to compete on the desktop too. Last week we learned about talks with Microworkz to launch an AOL-branded computer, using BeOS and Linux (i.e., no Windows). Gateway is working on its own Internet computer using the Amiga operating system (yep, the same OS adopted by Commodore in the 1980s).
Faster than anyone predicted, the Windows universe is fragmenting. Microsoft built us a common platform by committing itself to a big, bulky, backwards-compatible Windows, and now it's stuck with a platform too big and bulky to be useful for a new generation of devices. These gadgets will run happily on any number of narrowly targeted, code-light operating systems, as long as they speak the common language of the Internet. Even Mr. McNealy predicts Windows will have less than 50% of the market by 2002 -- that is, in "two or three years."
This was in the cards before Justice ever filed its antitrust suit. We pointed out here three years ago that if "the future of computing is a toaster tied to the Internet," the "death struggle of the operating systems" is over. We're happy to report that Microworkz is calling its non-Windows machine the "iToaster."
Pursuing this case any further would be nothing but a gratuitous favor to companies that don't want Microsoft to be allowed even to compete. It's time to pull the plug |
