by John M. Curtis
(310) 204-8700

Copyright November 10, 2002
All Rights Reserved.

oming to her senses, U.S. District Judge Colleen Kollar-Kotelly begrudgingly approved a watered down settlement with Microsoft, finally ending the Justice Department's misguided 1998 antitrust suit against the world's biggest software maker. Much to the dismay of its competitors—especially IBM, Sun Microsystems, Oracle and AOL—Microsoft will make some concessions but won't be broken up as recommended by U.S. District Court Judge Thomas Penfield Jackson in April 2000. Microsoft was no Standard Oil, just a pioneering company, lucky enough to ride the tsunami called the "computer revolution." Under pressure from AOL—who had just bought Netscape Communications—Clinton Atty. Gen. Janet Reno filed an antitrust suit, accusing Microsoft of monopoly, stifling innovation and thwarting competition. In a nutshell, Microsoft was accused of blocking software companies from linking products to its immensely popular Windows operating system—the platform used by over 90% of the computer market.

     Kollar-Kotelly's ruling—agreeing with the Appeals Court—forces Microsoft to expose its copyrighted "source codes," enabling software makers to bundle software, Internet browsers, media players, etc., with the Windows architecture. Disappointed with the ruling, several states attorney generals sought tougher penalties. "This suit, however remarkable, is not the vehicle through which plaintiffs can resolve all existing allegations of anti-competitive conduct," wrote Kollar-Kotelly, leaving the burden on states and private companies to prove damages. In effect, Kollar-Kotelly's ruling keeps Microsoft intact, raising the bar for plaintiffs claiming damages via Microsoft's anti-competitive practices. "It represents a fair resolution of this case," said Microsoft chairman Bill Gates. "I am personally committed to full compliance," barely containing his glee that his company is largely off the hook. Sure, he now has to give away some proprietary secrets, but Microsoft still has a virtual lock on the software market.

     If nothing else, the settlement establishes an independent Microsoft board, creating a technical compliance committee to answer to the Justice Department. Unlike Janet Reno, Bush's Atty. Gen. John Ashcroft agrees with the appeals court that breaking up Microsoft went too far. Ashcroft praised Kollar-Kotelly's ruling, claiming it would help improve "technologies with full confidence that their efforts will not be impeded by anti-competitive practices." Disgusted with the ruling, Microsoft's competitors had little to cheer about, seeing the ruling as window dressing. "Microsoft lost every battle and they won the war. The lesson everyone learned here is just stay out of Microsoft's way," said Northwestern business professor Shane Greenstein, believing that Kollar-Kotelly's ruling was a slap on the wrist. In truth, Microsoft believes that any ruling infringes on existing copyrights and patents on its Windows operating system.

     Coca-Cola wasn't forced by a federal court to release its secret formula, because competitors couldn't gain enough market share. General Motors wasn't compelled by court order to share its proprietary technologies with Ford. Neither did a court force Krispy Kreme to give away their recipe of making the perfect doughnut. Yet Microsoft, who broke IBM's stranglehold on the early PC market, created the world's best operating system, enabling companies like Dell, Gateways, Hewlett-Packard, Compaq and Sony to thrive. Building a better "mousetrap" is always the goal free enterprise. Patent and copyright laws protect entrepreneurs willing to stick their necks out to reap the rewards of the marketplace. Microsoft didn't stifle competition creating a winning product. They gave all competitors the incentives to outdo them. Unfortunately, Apple Computer retained its own niche; IBM abandoned its OS/2 operating system; Sun's Java technology never took off; and Linux failed to offer a better alternative.

     Proving that no good deed goes unpunished, envious competitors still aren't satisfied with Kotelly-Kollar's ruling, forcing Microsoft to give away its trade secrets. "The weak steps Microsoft has taken to comply with the requirements already show that the settlement will be ineffective in curbing Microsoft's monopolistic and anti-competitive practices and how difficult it will be to enforce," said Mike Morris, a spokesperson for Sun Microsystems, whose Java technology missed the boat. Not only do Microsoft's competitors expect proprietary "source codes" and interfaces, they want access to Microsoft's Office Suite, its best selling business software. Giving software companies open access to Windows to offer inferior programs won't increase computer sales. For other software companies to compete, they must create better programs, not just lackluster alternatives. Kotelly-Kollar's ruling forces Microsoft to open Windows to less desirable programs, giving software companies, if nothing else, the chance to compete.

     Inventing Windows and creating the computer revolution, Bill Gates never won a Nobel Prize or Congressional medal. Instead, Clinton's Justice Department slapped him with an antitrust suit, claiming he stifled innovation and hurt competition. Patent and copyright laws are designed to protect inventions and original ideas from unscrupulous competition. Political forces—not a true application of the 100-year-old Sherman Antitrust Act—exacted a pound of flesh, forcing Microsoft, unlike other proprietary companies, to give away its trade secrets. Getting easier access to Windows won't create better alternatives to existing Microsoft programs, though it gives competitors an opportunity to get in the game. Microsoft doesn't have to get back at computer companies choosing alternative products. Offering inferior programs won't increase sales. Consumers—not the courts—decide the fate of software companies hoping to take a bite out of Microsoft's business. With Windows now open, whom are they going to blame the next?

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's a consultant and expert in strategic communication. He's author of Dodging The Bullet and Operation Charisma.

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