A Major Bug for Microsoft
U.S. District Judge Thomas Penfield Jackson decisively dropped the first shoe last Friday, concluding that the U.S. Justice Department and 19 states were right: Software giant Microsoft has a monopoly in personal computer operating systems and has preserved its domination by “using its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft’s core products.”
Jackson’s toughly worded ruling does not end the historic proceedings, for he still has to rule on “remedies.” But he made it clear that he sees the problem as grave, one that allows Microsoft to stifle “innovations that would truly benefit consumers . . . for the sole reason that they do not coincide with Microsoft’s self-interest.” On Sunday, Microsoft’s chief operating officer wisely indicated a new openness to an out-of-court settlement, something the Justice Department has long invited.
Jackson went beyond the narrow proposition the Justice Department put before him--did Microsoft illegally try to bundle its Web browser, Internet Explorer, into Windows?--to the broader question of whether Microsoft is curbing innovation by preventing computer manufacturers and software programmers from customizing Microsoft products to meet the unique needs of their customers.
During the trial, Justice Department witnesses presented plenty of evidence about Microsoft’s stifling power. Jean-Louis Gassee, head of a Silicon Valley company, BE Inc., whose PC operating system won glowing reviews from programmers but has only a tiny market share, summed it up: “Computer companies no longer control their own computers. Microsoft treats the companies like vassal states,” by offering Windows at discount prices only to companies that “behave.”
Jackson could impose remedies up to and including breaking up Microsoft. But the better approach is for Microsoft to license its software--leasing its now-secret “source codes” to programmers, who could then customize and improve on it. Innovation thrives when the underlying instructions on which the software is based are available to outside tinkering.
Despite all of its technical jargon, the Microsoft trial is about a simple principle: protecting consumer choice and ensuring a free marketplace in which consumers have genuine options.
