To: RTev who wrote (22540 ) 5/12/1999 8:00:00 PM From: RTev Read Replies (2) | Respond to
I'm going to propose a [loong] scenario for settlement of the antitrust case that seems to solve most of the issues raised in it, but also gives MSFT shareholders a pleasant result. I offer it under the meaning of the futurist's notion of scenario , that is, not as a prediction of what will happen but as an analysis of what could happen.Split off only the consumer Windows division into a new company. Equity in the new company: Current non-insider holders of MSFT would get a fractional ownership in the new company based on its projected value. It might mean 1 share of common stock with voting rights in the new company for every 5, 8, or 10 shares of MSFT held at the time of the divestiture. Microsoft itself and its insider shareholder would get a different non-voting, but dividend-yielding class of stock. This would give the new company independence from Microsoft but would give the company an interest in its financial well-being. Microsoft (and, of course, its shareholders) would directly benefit via the dividends from the new company's profits."Property" divested to the new company: The new company would get the code base, patents, and technologies currently maintained by the Consumer Windows division. Exactly what that means would be open to considerable negotiation. Because it's been tied so tightly into the OS code, the new company would probably get IE code. Who would get things like ActiveX, DirectX, or other shared-code products? The two companies would have to negotiate -- probably under some court direction -- to figure that out, along with licensing agreements for other technologies.Business goals of the new company: With one significant exception, the new company (call it Windows, Inc.) would have long-term freedom to enter into any business they wished, but in the short term, it would be set up mainly as a licensing and certification business. Additional restrictions on Microsoft: I suspect the plaintiff lawyers would ask for one additional remedy: For a period of time based on its total OS market share for desktop computers and servers Microsoft would be required to make its OEM and direct-sales contracts for both NT and Windows public. (This is similar to a restriction placed on AT&T after its divestiture of the monopoly local businesses. Even though AT&T was in a competitive market in long-distance, they were required to file tariffs that announced their pricing plans. The requirement was dropped only after their market share dropped below either 60 or 65%.)Advantage to Microsoft: Microsoft could still sell consumer Windows and would probably retain considerable brand loyalty in that business. Through its non-controlling ownership of Windows, Inc., it would gain additional returns even on sales by other licensees. Microsoft could still develop consumer Windows. They would offer changes to the system through the development license process.Advantage to MSFT shareholders: Since current holders of MSFT would become owners of Windows, Inc. as well, they'd benefit from the profits of both companies.Advantage to competition: Even though they would still be a single "Windows" standard, it would be sold in different configurations by different companies. An OEM would be able to choose among those competing suppliers. Development would also favor increased competition. Caldera -- which owns DR-DOS -- might buy development rights and suggest changes that would make Windows fully compatible with their underlying system. AOL/Netscape might be interested in making changes that would pull IE out of the OS code so that Navigator could more easily be offered as part of a bundle that did not include IE.
