Microsoft In The Land Of Opportunity

from ZDNet Friday November 19

I think it's the beginning of the end for Bill Gates and Microsoft, and it has nothing to do with whether the company wins or loses its antitrust trial. To me, it's the trial itself - and not the eventual outcome - that is a turning point in computer industry history, the moment that historians will look back on in 20 to 30 years and point to as the linchpin that led to Microsoft's eventual fall from market power.

Why? Because the trial did something that few things have managed to do: demystify technology and show, in case there were any doubts, that Microsoft is a profit-driven business, run by profit-motivated executives and influenced by profit-seeking investors, and not an altruistic organization working for the greater good of the consumer.

For years, Microsoft and other computer technology mavericks such as IBM derived a measure of their power in the marketplace by capitalizing on the fact that few people knew anything about that technology. Computers are nerdy stuff, and the machinations of computer companies were incomprehensible to the Regular Joes and Janes out there. If Bill Gates bought company X or incorporated technology Y into Microsoft's operating system because of some grand vision for the digital future - and if those moves made PCs more powerful yet easier to use - who were we mere mortals to question Gates' vision?

But technology is not a mystery anymore. Ten-year-olds build Web sites, and 62-year-old federal judges can now jabber with industry insiders about the inner workings of OSes, application programming interfaces and browser software.

So now, when Gates and Steve Ballmer and all those other Microsoft executives get up and say that they are simply working to make technology better for consumers and that the government is trying to take away their right to innovate, I like to think people know that's just the company spin. Because you don't have to read the depositions, e-mails and news reports, or some of the many documents in this case to know what the trial is really about: business.

And in this case, it's about the business of being a technology company, which, despite the rhetoric and the mumbo jumbo about technology changing at the speed of light, is really no different than the business of a being a railroad company or phone company or utility company.

In business, there are certain things that make you a success. Innovative products is one of them, and I don't dispute the fact that Microsoft is a pioneering technology company that managed to build a low-cost, functional OS and get it widely adopted by the market through creative marketing and smart distribution deals. It succeeded in part because the technology worked and made PCs more useful; it will be remembered as a company that helped popularize desktop computers and - with apologies to Xerox PARC and Apple Computer - also helped popularize graphical user interfaces.

But what the trial has shown is that the company also succeeded in part because it unfairly used its formidable market position to prevent upstart innovators - in recent years, Netscape Communications - from potentially undermining that market position. It's not the fact that Microsoft incorporated its Internet Explorer browser into their Windows operating that got the government in a huff, you may recall. It's the fact that Microsoft tied distribution of its then stand-alone browser to its OS - despite a government consent decree it signed that expressly forbid it from such tying tactics. It's the fact that the company was not shy about using its OS dominance to bend Windows licensees to its will in ways that effectively locked out would-be competitors from the PC distribution channel.

This being a capitalist society and all, I can see how many people might not fault Microsoft for pressing its market advantage. It's business, after all, and the name of the game in business is to beat out your competitors and win all the profits for yourself. If your market dominance puts you in a position to squash your competitors before they have a chance to gain a marketfoothold, why not exploit that position? That makes Microsoft aggressive, many say ruthless.

But is that cause for an antitrust case?

It is here in the land of opportunity, where anyone with a bright idea has the potential to succeed. There are certain rules we expect our businesses to adhere to in order for this free-market economy to work and, for better or worse, those rules are different when you get in a position of market power like Microsoft - a monopoly position, according to Judge Thomas Penfield Jackson.

How we remedy that is what the court case has yet to decide, and I'm not laying any bets right now on what remedies might be pursued because I don't think it matters. Gates and Microsoft have already been knocked off the technology pedestal on which they've been sitting for the past decade. They may have crossed a few too many lines in their quest to protect and preserve their Windows franchise, and it may not have been fair to the people they claim to be serving: consumers.

It's not the mythical consumer I'm talking about here: It's you and me. You might think Windows is the next best thing since chocolate milk, but how do you know that if you've never been allowed to try malted milk or milk shakes or root beer? Do you really think it's in your best interests long term to leave the choice of how your computer or your Internet appliance works to any one individual or company, whether it's Microsoft or not?

That's why I think Gates and Microsoft have reached their pinnacle of power and that the company's influence on the industry will slowly begin to wane. I don't think Microsoft's fall is going to happen quickly. I have no doubts that Microsoft will continue to dominate the PC industry for many years to come, that its profits will keep growing exponentially and that the majority of U.S. consumers will continue to tune into the Internet on Windows-based PCs - for now.

But it's inevitable things will change. For every Windows devotee out there who thinks Microsoft is being unjustly targeted by the government for simply being a business success, there's another person - thanks to the trial - who now questions why, if Microsoft is so insistent it only wants to compete on the merits of its technology, it went to such lengths to make sure its would-be competitors didn't get the opportunity to take them on in the market.

And the question they're asking is: If competition is the American way, then what's the Microsoft way?

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