From the WSJ in regard to the Microsoft ruling... Seems like this should be a positive for Microsoft's 'customers', such as CPQ....
Regards,
John
PS - Nice day today. Odd to see CPQ right on top of my SI percentage gainers, and Dell right at the bottom <ggg>....
November 5, 1999
Federal Judge Finds Microsoft
Has Operating-System Monopoly
An INTERACTIVE JOURNAL News Roundup
A federal judge found late Friday that Microsoft Corp. has
monopoly power in the market for operating-system software that
runs personal computers, handing the U.S. Justice Department a
key victory in its long-running antitrust lawsuit against the software
giant.
U.S. District Judge Thomas Penfield
Jackson determined that Microsoft used
that power to stifle innovation in the
high-tech arena and hurt its competitors,
and that its actions were harmful to
consumers.
That strongly suggests that the judge will rule against the software
giant in the next phase of the antitrust dispute. It isn't illegal to
acquire a monopoly, but it is illegal to use that dominance to
maintain the monopoly or to gain monopoly power in new areas.
The ruling from Judge Jackson is a blow to Microsoft, which had
contended that it competed roughly but fairly in an ever-changing
market, and which had held that the market should be defined as
including a host of other computing systems and a growing class
of devices that can access the Internet.
A Three-Part Decision
Judge Jackson's findings of fact mark
the first step in what, barring a
settlement, will be a three-phase
decision. Friday's ruling addressed,
among other things, the precise
definition of the market at issue and
whether Microsoft holds monopoly power over it.
Both sides now have 30 days to issue
their proposed "findings of law" based
on the judge's findings of fact. Judge
Jackson will then issue his own findings
of law. If he determines in those findings
that Microsoft violated antitrust laws, the
court would spell out penalties and
remedies at a later date, most likely next
year. Either side could then appeal.
However, many legal observers have speculated that Judge
Jackson's structuring of the legal endgame is meant to spur a
settlement between the two parties by giving both sides a clearer
idea of where his final ruling is headed. That would relieve the
court of the difficult task of determining a remedy and prevent the
legal dispute from dragging on for years.
The government spent $7 million on the lawsuit and used tens of
thousands of pages of e-mail and other documents as evidence,
seeking to portray Microsoft as the industry's schoolyard bully.
Justice Department lawyers said the company illegally used its
heft to undermine competing technologies and to discourage
support for its rivals.
Microsoft Chairman Bill Gates never appeared as a trial witness,
but the government did play nearly eight hours of video excerpts
from a deposition. The results were a disaster for Microsoft: Mr.
Gates sounded evasive -- at one point he asked a government
lawyer to define the word "definition" -- and professed not to
remember key events and e-mails. The judge laughed and shook
his head while watching portions of the deposition.
Microsoft also suffered numerous setbacks in court, as executive
after executive was hammered by government attorney David
Boies and forced to retreat from their positions. In one
now-famous incident, Mr. Boies forced James Allchin, a senior
vice president and a top computer scientist for Microsoft, to admit
that key videotaped evidence Microsoft introduced in its defense
had misrepresented facts to the court. But the government
suffered its share of problems, too: Its top economics expert,
Franklin Fisher, told a surprised Mr. Boies that Microsoft hasn't
hurt consumers "up to this point."
Legal Fireworks
A three-phase decision "is neither unique nor standard" in
antitrust cases, said antitrust lawyer attorney Dan Schwartz, who
served in the Bureau of Competition at the Federal Trade
Commission. With substantial remedies at stake, "it's not unusual
to break a decision into different pieces."
That's especially true in a non-jury trial. Judge Jackson is hearing
the case without a jury.
The Justice Department and 19 states filed suit against Microsoft
in May 1998, alleging that the company had unlawfully attempted
to maintain its monopoly in the market for computer operating
systems by attempting to crush potential competition posed by
the Web browser made by the former Netscape Communications
Corp., now a unit of America Online Inc. The trial opened in
October 1998 and closing arguments were held two months ago.
Microsoft denied the government's charge, saying it was simply a
vigorous competitor in a highly volatile software market. It
attacked Netscape and arch-rival Sun Microsystems Inc. as
"wards of the government" who sought protection after proving
unable to compete with it.
Despite the legal fireworks, the success of Microsoft, with $19.7
billion in sales this year alone, rarely wavered. Its stock price has
more than doubled since the lawsuit was filed and its Windows
operating-system software now runs more than 90% of
computers. Its Web browser -- once considered second-rate -- is
now favored by nearly three-fourths of the roughly 200 million
people on the Internet.
But while Microsoft's numbers have remained impressive, the trial
has changed the way the software giant does business,
suggesting that two years of intensive federal scrutiny of Microsoft
have been a kind of remedy for the very concerns that prompted
the lawsuit.
The trial and its harsh publicity forestalled some of the software
company's most aggressive practices at the very moment the
foundation of Web-based commerce was being laid; as a result,
competition in the software industry has remained far more open
than many would have predicted when lawsuit was filed.
"The fact Microsoft was under scrutiny in that period made [it]
more cautious and reluctant to attempt to dominate the new
Internet marketplace," Berge Ayvazian, chief executive of Yankee
Group, a technology-research firm, said earlier this week. "If they
hadn't been under antitrust scrutiny, it would have turned out
differently."
Yet during the course of the trial, Microsoft also has secured
some potentially irreversible gains, most notably achieving
dominance over Netscape in the Web-browser market.
AOL has the ability to partially reverse that trend. But if Internet
Explorer becomes as universal as Windows, Microsoft could
develop proprietary links between the two that would give it even
more potential leverage as it enters the Web's next battleground:
the markets for Internet servers and services.
A New World?
Microsoft has pulled back from some of its most aggressive
practices since the charges were filed. Early in 1998, the head of
Microsoft's MSN site suggested in an internal memo that buyers
of Windows 98 could be automatically signed up for a Hotmail
e-mail account from Microsoft -- but not until after Mr. Gates
testified before the Senate Judiciary Committee. That proposal
was never implemented.
In March 1998, on the day before Mr. Gates's appearance before
the committee, the company dropped provisions of its contracts
with Internet service providers that discouraged them from
promoting Netscape's browser. Later, Microsoft dropped similar
provisions from contracts with Internet publishers and media
companies.
Microsoft's situation in some ways is reminiscent of that of
International Business Machines Corp. in the 1970s, when its
management, distracted by a government antitrust suit, let control
of the nascent PC industry fall into the hands of Microsoft and Intel
Corp. But so far, Microsoft has been far less hobbled than Big
Blue.
The company's finances are the envy of the business world. The
Internet has so far only fueled demand for Windows and Office,
not reduced it. And, while PC prices have been falling by 40% a
year, Microsoft has generally maintained the price of Windows,
underscoring the company's continuing market power. If anything,
it has been Microsoft's own missteps that have sometimes
hampered its ambitions to dominate online services with
Windows.
Meanwhile, some of the worries about Microsoft's power have
proved a little overblown. The company has had some success
with travel, auto-buying and personal-finance Web sites, but fears
that it would take over those industries now seem quaint. Instead,
Microsoft is busy spinning off or selling many of these Web sites
and redirecting efforts toward establishing a general-purpose
portal and supplying technology to other Web businesses.
Moreover, PC makers that rely on Microsoft for Windows are
showing far more independence. Even close allies, like Dell
Computer Corp., are now offering factory installation of the Linux
operating system on some computers.
Gateway Inc. has gone even farther, entering into a long-term
strategic partnership with America Online. AOL has invested
$800 million in the computer maker and is expected to
collaborate with Gateway in producing Windowsless devices for
browsing the Web.
Windows' influence has also been eroded by the popularity of
Apple Computer Inc.'s iMac line of Windows-less computers, the
success of 3Com Corp.'s handheld Palm computers and AOL's
continued subscriber growth and its $10 billion purchase of
Netscape.
"The world at large in information technology is less afraid of
Microsoft today than they were three years ago," Scott Winkler, a
Stamford, Conn., consultant, said earlier this week. "They've
suffered significant losses and had very few gains." |
