DOJ vs. Microsoft

The Department of Justice (DOJ) versus Microsoft court case has drug on since 1997 and shows no signs of ending anytime soon. Handing down a verdict that was no surprise to anyone who has followed the case, US District Judge Thomas Penfield Jackson found Microsoft guilty of using its monopoly power over OS software for PCs to compete unfairly in other markets.

According to the ruling, Microsoft forced Windows 98 buyers to also purchase Microsoft Internet Explorer (IE). Judge Jackson found this conduct to be an attempt by Microsoft to hurt sales of the Netscape Navigator browser. Judge Jackson ruled that Microsoft abused its OS monopoly in other technical market segments by pressuring other companies to develop applications that integrated directly with Windows rather than integrating with IE. Judge Jackson found that Microsoft used the same strategy to hinder developers' and software vendors' adoption of Java. Finally, the ruling stated that Microsoft illegally used exclusive contracts to force computer manufacturers and ISPs to distribute IE.

Judge Jackson's disregard of Microsoft's defense arguments wasn't surprising given Microsoft's video episode blunder, which bordered on the surreal. Microsoft claimed that the company unintentionally altered the video that (hopelessly) demonstrated the inseparable integration of IE and Windows. This incident seriously damaged Microsoft's credibility. The DOJ recommended splitting Microsoft into two companies, and in theory, this split will foster competition in the OS arena and encourage Microsoft to port its applications to other platforms. In addition, the DOJ believes that turning this huge company into two slightly smaller huge companies will create opportunities for independent software vendors (ISVs). However, in this case, theory is far from reality.

First, the Microsoft application company won't have incentive to write applications for other platforms because Windows systems dominate the market, and the company already makes the software that those systems run. The competing OSs don't have enough market share to make substantial development efforts economically viable.

Second, as a member of a small ISV, I realize this split creates no new market opportunities, in part because the software market is mature. Will a small company produce a serious competitor to Windows 2000, Office, or SQL Server? I don't think so. Microsoft will continue to dominate the corporate desktop because it provides the best desktop OS. The Microsoft application company will continue enhancing Windows applications and will make competing more difficult for ISVs. In the long run, the effect of a Microsoft split will be exactly the opposite of what the DOJ intended, and a split won't serve either Microsoft or consumers any better.