The Great Tech Showdown I’m rooting for Bill Gates

Hal Plotkin, Special to SF Gate
Thursday, September 30, 1999

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/technology/archive/1999/09/30/gates.dtl

I hope Microsoft founder Bill Gates wins his fight with the Justice Department.

Before you fire up your flame-throwers, let me explain.

I don’t want to see Gates get off entirely scot-free. But I do take his side on the big issues, such as whether Microsoft should be forced to sell its browser and operating systems separately, or whether the company should be busted up into different firms, one that sells operating systems, and the other, applications.

Many of those pushing the current antitrust action are hoping the feds force Microsoft to de-couple its Internet Explorer browser from Windows.

But, in the future, do we really want the government determining where one piece of software, such as a browser, ends and another, such as an operating system, begins?

To understand how this may play out it helps to look at the past.

Many of the software programs we use today are useful combinations of what were once separate products. For example, back in the days before browsers, several different programs had to be mastered before you could send and receive e-mail. In addition to an operating system, you needed something called a TCP/IP stack to connect to the Internet, a UNIX-based program such as PINE to compose, send and receive letters, and often several other programs to read different file types.

Anyone who remembers PINE knows how much better e-mail software programs, like Eudora or Outlook Express, perform.

But advances like that might occur less frequently, take more time, and be more expensive for consumers if the Justice Department successfully forces Microsoft to disconnect its browser from its Windows operating system.

If any of that happens, it’s only a matter of time before software companies serving other markets, particularly online, try to use that legal precedent against their own competitors. Rather than duke it out in the marketplace, even more skirmishes between software firms will be fought out in the courts. Our court system, wholly unprepared for the task, would be forced to decide which companies can sell what kinds of software.

If there is one thing the software industry doesn’t need, it’s more legal disputes and more lawyers. In the end, only the biggest companies would benefit from a more highly regulated industry.

In fact, the only thing that’s clearly worse than Bill Gates trying to dictate what’s on our desktops is to give that authority to a federal judge, backed by the power of the state. At least Gates doesn’t have an army.

Likewise, breaking Microsoft up into separate companies also doesn’t make sense. That strategy worked, for the most part, with Ma Bell. But there is a very big difference between telephone services and software.

The complicated process of unbundling local and long distance services is an absolute breeze compared to the considerably more complex task of determining where one section of software code should legally end and another begin.

If the feds begin making those types of decisions, the only predictable result will be less coordination between programmers who make operating systems and programmers who make applications. And that means higher prices for less-reliable products produced by companies that are required by law to organize themselves inefficiently. There’s something very wrong with that picture.

There are, however, some very important steps the feds can take that stop well short of the more draconian solutions under consideration.

For starters, Microsoft should be required to pay very stiff penalties, much higher than those now allowed, whenever the company is caught charging different prices to different manufacturers, with the exception of equally-applied volume discounts.

Charging computer makers different prices for an operating system to put pressure on them, for any reason, should be treated like the crime it is: extortion. The corner grocer can’t charge one customer one price, and another a higher price, merely because the customer sometimes shops someplace else.

Fines for improperly muscling manufacturers should really sting: not treble damages, which is chump change for a company the size of Microsoft, but ten-times damages at a minimum, twenty or more if it happens more than once over a short time frame. Forcing Microsoft to play fair, not changing the rules of the game, is the best way to make sure competing software companies can gain the attention of computer makers.

Similarly, Congress should authorize even more substantial penalties if a company of Microsoft’s size ever refuses to sell its product to another company in hopes of stopping that company from doing business with other firms.

Ironically, that was exactly the situation that helped touch off the current federal case against Microsoft. Computer manufacturers complained that Microsoft was forcing them to dump Netscape’s browser in favor of Microsoft’s product.

Since then, however, the guys in the white hats at Netscape, such as company cofounder Mark Andreessen and former CEO Jim Barksdale, who were among those who called in the feds, have ridden off into the sunset, their saddlebags stuffed with freshly minted IPO cash. Both are now venture capitalists.

Before they left, though, they did something that greatly undermined the fed’s case against Microsoft; they sold Netscape to Microsoft wannabe America Online.

Back when Netscape was an independent company it was possible to make a plausible argument that Microsoft was competing against it unfairly. But the new AOL/Netscape will have a much tougher time making that charge stick. The company is now an online portal, a browser company and an Internet service provider.

Like Microsoft, it’s trying to use its strength in one market to dominate others. Microsoft wants to dominate the desktop through its ubiquitous operating system. AOL/Netscape is trying to do the same through online means. The average consumer no longer has a dog in that fight. Except, perhaps, to hope both companies fail as they try to eliminate all their competitors.

Even more worrisome, though, is what might happen to Linux if Judge Thomas Penfield Jackson rules against Microsoft.

Linux, as you probably know, is the open-source operating system that is gaining ground on Windows. Although it is currently used on less than 2 percent of desktops, Linux and the open source software movement are picking up steam.

It will take some time, but Linux is inexorably moving toward more consumer desktops. Many say its inherent reliability and stability could one day make it a dominant operating system. The growing legion of programmers contributing to its development are making breathtaking progress, particularly with innovative multimedia applications.

An anti-Microsoft ruling could be a time bomb that damages Linux as well. Should Linux continue to catch on, Microsoft, or another party, might eventually convince some other judge that Linux vendors should be forced to abide by the same rules that apply to Microsoft. That would mean no applications bundled with an operating system, which would be a disaster for the growing open source software industry.

Even worse, constant litigation over such matters would turn the software industry into even more of a contest over which firm has the best lawyers, rather than the best software.

To be sure, the feds have done some good in trying to nail Microsoft. The notoriously inward-looking company has begun to clean up its image, leading to a dramatic recent increase in philanthropic activities. In recent weeks, for instance, Gates has pledged a billion dollars for minority scholarships, and millions more for health-related assistance in the developing world. It’s an example many others, including some of those leading the Gates lynch mob, would do well to imitate.

Bill Gates is an easy target thanks to his quirky personal style and often brutal business tactics. But the software execs hoping to hand him his head on a federal platter should stop and think for a moment about what might happen if they get their wish.

After all, Janet Reno has their addresses, too.

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