Microsoft Ruling Surprises Few In Industry

 
 
By Scott Berinato  |  Posted 1999-11-05 Email Print this article Print
 
 
 
 
 
 
 

"The judge has ruled uniformly against Microsoft. The judge has found both an existence and an abuse of monopoly power."

"The judge has ruled uniformly against Microsoft. The judge has found both an existence and an abuse of monopoly power."

Hillard Sterling, an antitrust lawyer at Gordon and Glickson LLC in Chicago, was emphatic in his assessment of the findings of fact issued Friday by U.S. District Court Judge Thomas Penfield Jackson in the Department of Justice vs. Microsoft Corp. antitrust trial.

Technical assessment aside, though, Sterling and many other industry observers who are still digesting the landmark 207-page document that largely favors the DOJs case withheld one emotion -- surprise.

"The decision is unsurprising in its strength and its tone," Sterling said. "Equally unsurprising will be the judges conclusions on the law. Judge Jackson obviously made his mind up long ago."

While Sterlings sentiments are not universally held, Microsoft partners, competitors, supporters and users across the board echoed Sterlings lack of surprise.

Confirms what we know

"The ruling confirms what we all know, so in a sense it should not be a surprise," said Novell CEO Eric Schmidt. "Most people would say theyre a monopoly on the desktop. To me the business question is, the position that Microsoft has should not allow it to do something in other markets."

Schmidts former number two wasnt surprised either.

Chris Stone, formerly senior vice president at Novell, tried on several different hats in assessing the findings of fact.

"As an ex-competitor, Im not surprised. But I am surprised at the level of detail and the hand forcing," said Stone. "To me it reads as Come on, guys, settle.

"I do think its a pretty big victory for open source," Stone added.

Mitchell Kertzman, CEO of Liberate Technologies and former chairman of Sybase Corp., was blunt.

"I feel a sense of relief that we werent just crazy, just disgruntled competitors," he said. "What they were doing turned out to be as illegal as we thought it was. Its not like those things were all history or that we shouldnt do anything because the world has changed. Thats like saying the murderer ran out of bullets so lets not give him anymore."

Linux set: "Halleluiah!"

Indeed, open-source advocates were hailing the findings of fact as validation of their business model.

Asked for a comment, Linux vendor Caldera Systems Inc. CEO Ransom Love began singing "Halleluiah!"

Still he said he was "not surprised a bit at the strength" of the findings of fact.

Love, whose company is currently involved in a lawsuit with Microsoft, said the findings of fact were "vindication" that could provide the industry with the level playing field he says is missing.

"No one wants to see Microsoft go under," Love said. "We just want to see them play fair. Hey, they have done great things for the industry, but they have hampered it quite a bit, too. We want to play with them, its just that no one wants to play with a bully."

Red Hat Inc. CEO Bob Young agreed with Love that the goal should not be to take Microsoft out of the picture but rather to "police them so they play by the rules."

"Maybe outside the technology industry there was some question," Young said, "But everyone inside the industry knew this was coming."

In fact, Young said Jacksons finding that Microsoft is a monopoly is downright obvious.

"Prices in the PC industry have fallen like rocks, with the exception of Microsofts OS and the applications that run on it," Young said. "We are sure appreciative Justice has recognized the obvious."

What should be done?

With the findings of fact published, some are ready to push the legal process forward -- foisting their own suggestions on what this should mean when Jackson moves on to the findings of law and the remedies portion of the legal process, which come next.

For example, Sun Microsystems Inc., a fierce Microsoft competitor, issued a statement with bulleted suggestions for what steps both Microsoft and the DOJ should take. Among Suns suggestions:

"Microsoft should be prohibited from buying the distribution channels of the future (e.g., cable and wireless) and from buying rather than inventing technologies. Microsofts unfettered use of a cash hoard created out of monopoly profits is a competition killer." And "the government needs to foster competition in the software industry by assuring that the technical interfaces of Microsofts monopoly products are open."

Meanwhile, Joseph Alsop, president of Progress Software Corp., hardly addressed the actual findings of fact and instead launched right into what ought to be a remedy.

"Traditionally, Microsoft has won very poor marks for quality of products and customer support," Alsop said. "If the Justice Department drives Microsoft to comply with ... two key points -- open-source development and competitive pricing -- consumers should see more choice and better prices anyway as the market for Microsoft Office-like products becomes more competitive."

Presumption is precisely the problem

But Hillard Sterling argued that such unsurprised presumptions of guilt will be a large part of a Microsoft defense that has some life left in it.

"Microsoft will use this as support that this case was always a diatribe against Microsofts successes," Sterling said. "The strength and tone of the document will give them the position that they could never win this case."

Firmer still in the opinion that Microsoft is being railroaded was Jonathan Zuck, president of ACT (the Association for Competitive Technology), an interest group that believes the government should not intervene in the software industry.

"This is the result of a lot of years of lobbying from a few of Microsofts competitors," Zuck said. "Theyve been dancing a rain dance and theyre getting a few drops of rain now. But when it starts pouring, even they will see the shortsighted nature of this."

Zuck said the U.S. economy will not benefit from a decision against Microsoft. He said one-quarter of the Gross Domestic Product results from the technology industry and "intervention into that market would be misplaced."

At least one IT user agreed.

"I think, ultimately, end users are going to lose and pay more for what they get," said Nelson Ramos, vice president of management systems at Memorial Hospitals Association in Modesto, Calif. "Its one of those paradoxes. I think Microsoft is approaching near monopoly size, but at this point were past the point where if you were going to do something it should have been done already."

A lot of court time left

ACT and Zuck also are bullish on a pro-Microsoft outcome to the case, arguing, like Microsoft itself did in a press conference Friday night, that this is one step in a long process that could ultimately take years and reach the U.S. Supreme Court.

"Certainly it seems like an early Christmas present for Microsofts competitors," Zuck said. "But I would really urge them to hold on to their receipts."

On that point, antitrust specialist Sterling agreed.

"Theres more time before the DOJ can claim a final victory," he said. "Microsofts real audience is the D.C. Court of Appeals, and they always knew that. They just didnt know theyd be going in with the DOJ spotted this kind of lead."

 
 
 
 
 
 
 
 
 
 
 

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