A summary of today's testimony:
zdnet.com
And some more spinning by me:
65. Given the natural barriers to entry described above, a competitive threat to Microsoft's operating system monopoly is less likely to come from other operating system products than from extensions to complements of Windows that also can serve as platforms to which ISVs write applications programs. Although a PC operating system cannot successfully compete against Microsoft's operating systems without first overcoming formidable barriers to entry, the situation is different for a product (e.g., browsers or Java technology) that is both initially a complement from an end user perspective and a potential substitute for the Windows 95/98 platform to which applications developers can write. Because applications written to such a complement are compatible with Windows, their developers can sell their applications to users of the Windows operating system. Eventually, a sufficient number of such applications may become available to support an alternative platform to Windows. This alternative platform can then be combined with other operating systems to offer a complete and viable substitute for Windows.
66. To be sure, if the technology is to realize its full potential as a substitute for Windows, it would eventually need to become an attractive platform for many applications. However, because such a technology can gain wide marketplace acceptance based on its value as a complement to Windows, the hurdle of attracting application developers is substantially reduced. The wide dissemination of the complement among PC end users means that application developers can reach a broader base of potential customers by writing to it than by writing to an operating system that competes directly with Windows 95/98 and starts with very low market penetration and installed base.
67. As more applications are written that work with the new platform, it will become more attractive to users and ISVs as a substitute for Windows. Ultimately, the choice between the Windows platform and the alternative platform may be made by users on the basis of the price and other characteristics of those platforms, rather than on the availability of compatible applications.
68. Internet browsers are complements that pose precisely this sort of threat to Microsoft's operating system monopoly. . . .
It seems to me that this is the guts of the government's case. However, there are some very interesting tensions inherent in this, and it perhaps proves too much.
There are a lot more "complements" to Windows than just the internet browsers and Java programming language identified in the government's complaint. Every single one of these "complements" presents a source of potential competition. The complements consist of:
1. Virtually every single program that runs on Windows: Fundamentally, for a "complement" to be a potential competitor to the Windows platform, all you need are two things: (1) a set of applications APIs written into the program that allow developers to write their own "plug-ins" or extensions to the program, and (2) the potential to "port" the program to other, competing operating systems (i.e., the program does something that would be useful to someone not running Windows, such as Word Processing).
A developer could use Windows to distribute his product containing the new APIs, build up a critical mass of users on Windows (including users of applications written by others for his platform) and then port his API-containing product to a new platform. Netscape is the only the most devleoped along these lines; other programs which obviously have this potential and are therefore potential competitors of the Windows platform include any widely distributed application such as Word Perfect, Quicken, Photo Shop and the like. But anyone who can achieve critical mass with any application program theoretically can create a set of APIs to compete with Windows.
2. The Internet: The Internet is also a "complement" to Windows, in the sense that users access it to enhance the value of the Windows OS. That menas that any program which could contain APIs running on any server on the internet is a potential competitor of the Windows platform. Furthermore, unlike Windows-based applications, which have to be ported, internet-based applications can initiate a positive feedback loop for any operating system capable of accessing over the internet either it or any program running on top of it that uses its Windows-competitive set of APIs.
This creates some interesting competitive problems for Microsoft and explains, I think, a lot of their behavior. On the one hand, they have to make Windows APIs available to the development community if they want to maintain the "applications barrier" which the government identifies as one of the principal barriers to entry which keep non-Windows PC operating systems from gaining share. On the other hand, they cannot allow any one application from gaining enough market share to present a competitive threat, or, if it does gain such share, to make the transition from a mere application to becoming a competitive platform.
So, we have Microsoft, the alleged concealer of hidden APIs. We have Microsoft the imitator, that clones any program that achieves commercial success, then drives that program out of the market. And, we have Microsoft the predator, which will do absolutely anything to keep control of its desktop, user experience and APIs.
But, although these business practices will deter some applications developers in isolated instances from crossing over into the platform business, the real deterrent, for the vast majority of developers must be price. Relying on predation to keep developers out of competition while maintaining a high price will simply energize competitors who are not yet victimized to work harder (think of the Drug War as an analogy -- every time the government does a big bust, the street price goes up, and more importers and dealers appear to fill the demand, requiring an even bigger crackdown by the government). Keeping the price down actually enhances the value of the Windows platform for developers who want to develop complementary software, thereby protecting Microsoft's "applications barrier" to entry, while deterring them from crossing over to become competitors of the Windows platform. If the price of Windows is kept too high, it will act as a magnet whose attractive force all of the predatory conduct in the world will not overcome.
So Boulton may or may not be right that the price of Windows is "significantly" above competitive levels, but the government's own case contains at least the beginnings of a demonstration of one way potential competition may keep Microsoft's market power in check.
How's that for a Devil's advocate's argument? |
