With Microsoft Suit, ‘What Ifs’ Get Louder
As the federal government attempts to curb what it sees as Microsoft Corp.’s threat to competition, the consensus among executives and analysts is that few companies inside or outside the computer industry will escape the ripples of this legal splash.
From bank boardrooms to car dealerships to the garages of software entrepreneurs, executives--whether prescient or paranoid--are increasingly grappling with the question of what they would do if the Redmond, Wash.-based software giant entered their markets.
On Monday, executives and analysts began to sort out just how much protection--if any--other companies would get from this landmark suit if it succeeds.
“This suit affects almost every company in the business,” said David Vellante, senior vice president at International Data Corp. in Framingham, Mass. “But the irony is that the companies already effectively competing with Microsoft--including Sun Microsystems, Intuit Corp. and America Online--may benefit from this the most.”
For Netscape Communications Corp., the company the suit is most specifically designed to assist, it may be too little too late, said Vellante and others. The Mountain View, Calif., company has seen its share of the Internet browser market shrink from more than 90% to less than 60% under Microsoft’s assault with its own browser, Internet Explorer.
The Navigator browser is still an important part of Netscape’s brand identity and helps drive traffic to the company’s Web site. For those reasons, the company has a significant stake in the outcome of the suit, which seeks to force Microsoft to end exclusive deals with computer makers that push Netscape out of the market.
Even if the suit succeeds, it may have little financial impact on Netscape, which has spent the last two years moving away from the browser market and now gives the product away for free to match Microsoft’s giveaway policy.
Depending on its outcome, the suit may be more meaningful for “future Netscapes”--that is, companies with promising technologies that have not yet caught Microsoft’s full attention.
“We’re following this very closely,” said Mark Lorimer, president of Auto-by-Tel Corp., the leading online car sales service. “Depending on what Microsoft is allowed to tie to Windows, it could have an adverse impact on us as well as a lot of other Internet companies.”
Auto-by-Tel competes with a rival Microsoft service called CarPoint. So far, Auto-by-Tel has been holding its own.
“But if Microsoft tied their own e-commerce companies, including CarPoint, directly into the operating system, that would be a very powerful and unfair tool,” Lorimer said.
Diminishing that possibility is one of the primary goals of the federal suit, which seeks to curb Microsoft’s ability to control what computer buyers see when they first turn on their machines.
Microsoft had been preparing to give some of its own services--and those of its partners--prominent placement on the “first screen” that users see when they start its upcoming Windows 98 operating system. But the government believes those decisions should be left to computer makers.
In the meantime, the uncertainty surrounding the suit is disruption enough for computer manufacturers and other companies that have been counting on a smooth release of Windows 98. That product, scheduled to appear in stores June 25, could be delayed by government demands that Microsoft modify the program.
“I saw Windows 98 being a great growth prospect for Symantec Corp.,” said Gordon Eubanks, chief executive of the Cupertino, Calif., company that makes popular anti-virus and utilities software. “But there is a real risk now that people about to buy a new machine may wait to see what happens.”
The companies that may derive the greatest advantage from the suit, analysts said, are those that are already having some success fighting off Microsoft and that may find their positions strengthened if the suit forces Microsoft to become more cautious.
Some of these thriving rivals include Intuit, which continues to dominate the market for personal finance software; America Online, the world’s largest online service; and Sun, creator of the Java programming language.
“Microsoft used to have this attitude that they would step on whoever got in their way,” Vellante said. “Now, with the government watching their every move, Microsoft will have to be a lot more careful about where they step.”
* LAWSUITS FILED: The U.S. and 20 states filed two antitrust suits against Microsoft. A1
