Few Were Surprised by Decision
The Justice Department’s decision Thursday to drop any effort to break up Microsoft Corp. came as no surprise to many of the software giant’s rivals.
“Those of us who have been critics of Microsoft have to separate our emotional attraction of the breakup to the reality of the legal system,” said Mitchell Kertzman, chief executive of San Carlos, Calif.-based Liberate Technologies, which competes with Microsoft in the market for interactive television software.
“As attractive as the breakup may seem, it’s not going to happen,” he said.
Much of the industry views Microsoft’s dominance as a fact of life and may prefer a speedy resolution to the landmark antitrust case.
“Microsoft is going to be dominant, no matter what,” said Andrew Neff, a technology analyst with investment banking firm Bear Stearns. “What’s bad is uncertainty.”
Analysts said the Justice Department is bowing to the inevitable in an effort to press quickly for behavioral remedies that could rein in Microsoft’s monopoly.
“All this means is that the Department of Justice has decided to fast track the trial,” said Rob Enderle, an analyst with Giga Information Group.
Microsoft’s critics believe that a protracted legal battle only benefits Microsoft.
“There is some urgency because Microsoft is so aggressive,” Kertzman said. “They want to get Dot.net, Hailstorm and all the other things that the industry is worried about into the marketplace” before any legal restrictions are imposed, he said. Kertzman was referring to Internet-based software initiatives that rivals see as new bids by Microsoft to dominate the online world.
Microsoft antagonists view features of the forthcoming Windows XP operating system as the latest evidence of the company’s anti-competitive behavior. But analysts said computer makers suffering through the worst market downturn in years will welcome XP, hoping it will spur new PC sales.
Most software makers also would prefer a stable coexistence with Microsoft, said Jeffrey Tarter, editor of industry publication Soft-Letter.
“The vast majority of companies developing products that just run on Windows [don’t] feel threatened by Microsoft,” he said. “For the average [software] developer, [the antitrust trial] . . . hasn’t had any real impact on their business.”
Additionally, some executives expressed disappointment that the Justice Department on Thursday also dropped plans to pursue allegations that Microsoft illegally “tied” its Internet Explorer Web browser to their Windows operating system.
Microsoft has crushed many smaller companies by integrating features similar to those firms’ software products into Windows--which comes pre-installed on the vast majority of PCs.
For example, the software company Real Networks sells a product that allows PCs to play movies and music, and competes with a similar Microsoft offering, Windows Media Player, included as part of Windows.
“[Competitors] see technologies that they’ve developed as stand-alone products turned into Windows features, and that’s scary,” Tarter said.
David Yoffie, a professor of business administration at Harvard University, said that the Justice Department might seek a “must-carry provision.” That would require the software giant to distribute competing products, such as Real Networks’ software, as an option along with its own media player.
But that demand might prolong the legal struggle. “Those are the kinds of things that Microsoft will fiercely reject and could lead to a very long case,” Yoffie said.
Microsoft’s most tenacious rivals, Sun Microsystems, AOL Time Warner and Oracle, may press for such stringent behavioral remedies, no matter how long the company draws out the legal battle.
“They are still locked in a death struggle with Microsoft,” Tarter said.
