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Did Justice go far enough?

The Microsoft monopoly settlement may not be perfect, but it is timely. 11/05 ReleVents hed: Did Justice go far enough? dek: The Microsoft monopoly settlement may not be perfect, but it is timely. by James Mathewson

In case you haven’t heard, the Department of Justice (DOJ) and Microsoft settled their three-year-old antitrust case on Friday, as reported on our site on Monday. I know I promised not to talk about the Microsoft case anymore, but I can’t avoid talking about the story that will have a greater impact on tech life in 2002 than any other story from 2001, a year of huge stories.

Regular readers know that I have urged strong restrictions on Microsoft’s business practices as part of any settlement. I have also urged quick action because of the ongoing damage Microsoft’s monopoly does to software innovation. You can’t have both. Microsoft was perfectly willing to delay the case as long as it could in order to avert some of the tougher restrictions. Ultimately, Attorney General John Ashcroft and company balanced the two goods to try to get relatively strong restrictions in a relatively short amount of time.

Critics of the settlement claim it does not go far enough to ensure competition. In particular, it places no limits on bundling and other strategies Microsoft uses to leverage its monopoly into other markets, especially the Internet. That may be true, but getting those provisions into a settlement would have only delayed it far into the future. And every day Microsoft is allowed to use the tactics banned by the settlement puts existing competition in a tougher competitive position. At some point, stricter restrictions will be meaningless because competition will be gone. So a swift, weak settlement can actually do more good than a slow, strong one. Though this settlement may be weaker than I would like, I applaud it because at least it does something to rein in Microsoft, and it does it now, before all possible competitive threats are history.

What does the settlement do? For starters, it allows small-utility makers to get out of the shareware shadows and start producing commercial software to enhance the Windows experience. The unwritten rule in software since the late ’90s was, if you make a useful utility and successfully market it commercially, Microsoft will find a way to bundle a clone of it into its next version of Windows and put you out of business. This forced lots of software development into other platforms or into shareware, which is below Microsoft’s radar. As a result of this settlement, I look for a lot of new commercial products based on existing shareware products. The result will be improved Windows experiences for everyone.

Second, the settlement should reawaken the software industry outside of the utility business. It has been well documented that Microsoft has secret application programming interfaces (APIs) that favor its own productivity software over the competition’s. Microsoft also released its public APIs to competitors well after its own developers had them in hand, giving Microsoft a time advantage. The settlement should level the playing field for the WordPerfects of the world, and this competition should force Office prices back in line with industry standards.

Third, this settlement is a huge boost to smaller OEMs and clone makers. In the old days, clone shops could design special enhancements into their machines and thereby develop value-added systems that were, in some cases, head and shoulders above what the big OEMs could produce. When Microsoft placed lots of restrictions on what software PC makers could include in their systems, it turned the PC market into a commodity business that was destined to be dominated by the vendor that figured out how to mass-produce machines the cheapest–i.e., Dell. Now, boutique clone makers can build lots of middleware enhancements into their Windows machines and once again compete with the Dells of the world. And consumers will have more legitimate PC choices.

While I wish the settlement had gone further to inhibit Microsoft (especially from leveraging its desktop monopoly to gain market share on the Internet), I also feel a tremendous sense of relief that the process is finally over. Microsoft will indeed be forced to comply with competitive restrictions, and some of the tech world will greatly benefit from this settlement.

James Mathewson is editor of ComputerUser magazine and

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