Does the Microsoft Trial Verdict Really Matter? nytimes.com
This is from the editorial page of the NYT, and it fits with the front page story from yesterday that I noted previously. Floyd Norris is an old-line business reporter, who I've previously quoted on Microsoft option obligations and accounting practices. Reggie derided him on that, but I'm sure he'd like this piece better. Norris, like you, finds the remedies issue puzzling. Me too, but I don't think about it that much, as any concrete effect is still relatively far off, considering appeals and all. It'll be interesting to see what the government asks for, and whether Microsoft actually attempts to negotiate. Given the pre-filing "negotiation" ruse, where Bill pulled the offer that got him to the table, before he actually got to the table, I imagine any negotiating will be difficult.
I can almost agree with this article. As a hearts and minds guy, I'd say the trial has accomplished something already, however it turns out. And from a technical perspective, the Linux groundswell seems to be the place to look for an alternative for Microsoft hegemony. It'll be interesting to see how the trial turns out on the remedies front, but it's certainly not the only hope anymore for those who would like to see software that sucks less. Article quoted in full below, editorials don't stay online at the Times site.
Cheers, Dan
Does the Microsoft Trial Verdict Really Matter?
By FLOYD NORRIS
There have been at least a dozen trials of the century in the past 100 years, many of them soon forgotten. But the Microsoft trial now nearing an end deserves that label for the light it sheds on where the real power lies as the 20th century ends.
Here is the world's most powerful government attacking the world's most valuable company. Yet there seems to be a consensus that the Government cannot win. Or, to be more precise, that it really cannot do anything to ultimately defeat Microsoft, whether or not it wins in court.
Microsoft's stock price is up 125 percent since the fall of 1997, when the Justice Department probe became public. The company is now valued at $379 billion, or 16 percent more than the much larger General Electric, which ranks No. 2 in valuation. Investors believe Microsoft will continue to prosper for many years.
Of all the great trials of this century, this one is unique in one important respect: with both sides having completed their cases -- although rebuttal witnesses are to be heard in April -- we still have no firm idea of what the Government wants to do about Microsoft. In the first great antitrust trial of the century, Theodore Roosevelt's attack on J. P. Morgan's Northern Securities Company, which controlled both major railroads in the Northwest, the remedy of making the railroads compete again was obvious.
And in criminal cases ranging from the Lindbergh kidnapping to O. J. Simpson, the Government's goal was, of course, clear.
But -- assuming for the moment that Microsoft is guilty of violating antitrust laws -- what is to be done? That has not yet been made clear, and none of the alternatives seem especially attractive. Breaking up the company into several companies that all produce operating systems would lead to compatibility problems. Breaking it up into functional companies, with one making such applications as word processing and another responsible for operating systems, would still leave a functional monopoly in operating systems. It would be a challenge to put teeth into a requirement that Microsoft be nicer to its competitors.
That is the calculus that has enabled Microsoft's stock price to keep rising even when the case has appeared to be going badly for it. Microsoft is deemed unstoppable.
There is one dissenter from that consensus. Bill Gates, Microsoft's chairman and chief executive, argues that one of these days his company is likely to get it wrong, ending its dominance.
Oh sure, you say.
Of course he says that. What would you expect from an antitrust defendant?
But Mr. Gates is probably right. Remember the decline of I.B.M., itself an antitrust defendant a quarter-century ago. Dominant companies react slowly to change and are reluctant to move away from the technology that made them rich. Companies with no stake in the old order are more likely to create the new one.
Moreover, there is evidence that Mr. Gates is being honest about his beliefs. It can be seen in the company's repurchases of its stock. Microsoft needs to buy back a lot of stock to offset shares that are issued as employees cash in stock options. But in recent years it has sometimes slowed or even halted its purchases because the stock price looked high. For now, with the stock rising ever higher, that caution seems foolish. But it was -- and is -- real. Microsoft's latest financial statement shows another pullback in purchases.
There have been dominant companies in important industries before, but exact parallels to Microsoft are hard to find.
It has made millionaires out of thousands of its employees through stock options, and in the process distorted the Seattle-area housing market. Workers at Boeing, the other major employer in the region, might not be as angry if they did not see how rich the other guys were getting.
Whatever the courts decide, Microsoft's dominance is likely to continue. Perhaps its competitive strategies will seem less piranha-like. Certainly executives will use more discretion when writing internal E-mail messages.
But someday Microsoft's stock price will stop soaring and even fall for a few years. There will be griping by newer employees who resent the wealth of old-timers and demand to be paid more in cash and less in options that no longer are sure things.
Microsoft will find itself outfoxed by some competitor. Its monopoly will end, but not because of what the courts decide. |
