Macrosoft Big Bang

So there’s talk afoot of the Justice Department breaking up Microsoft. What are the upside and downside?

Will we see a flood of innovation that MS can no longer suppress?

Will I be able to buy a BMW with a Pontiac (or is that Chevy) engine?

Will Netscape take over (that’s illegal, isn’t it?)?

I don’t know. We thought the same thing about the breakup of MA Bell. Now my phone bill is a hell of a lot higher than it used to be and getting a new phone line put in takes forever. They tell you it’s there, you tell them its not. :rolleyes:

Bitch by Birth

The entire DOJ investigation was a witchhunt. The conclusion was obvious from the moment these accusations started flying.

I don’t believe that Bill and his crew have operated above board all the time. Nor that they have not used some strong arm tactics to muscle their competition out of the way. But I also don’t imagine for a minute that their biggest detractors would not have (and did not on a lesser scale) acted in the very same manner under the circumstance. Netscape a Sun Micro were simply beaten by a better competitor at the very same game they were playing. They lost to a guy who was able to beat IBM at the PC O/S game years ago. They were simply beaten by their better and they’ve had a bad case of sour grapes since then.

As for the 19 (or is it 13 senators) that went after Microsoft, to me it’s just a case of not enough cash crossing their palms. Bill’s biggest mistake was not buying enough senators and congressman in his rise to the top. He thought that he could stay clear of politics by not getting involved with it at all. He was wrong. He scorned them by ignoring them and by gosh, they were going to teach him a lesson. Welcome to the world of politics Mr. Gates.

Will they recommend the breakup of the company? Only if they are criminally stupid!

Will Bill pre-empt them and do it because he figures it’s good business? Maybe, but it will be on his own terms.

Will that weaken MS? Nope. It will only introduce new MSFT stocks on the market.

To be sure, Microsoft will not rule the nest forever. As long as Bill Gates continues to chart the course of the company, I believe they are going to continue to be industry leaders. More than that Window trademark, Bill is the most recognizeable trademark the company has. Only when he leaves will the future of MSFT become uncertain.

I have to disagree with you, QuickSilver. Certainly, the arguments presented in your post are weak or fallacious.

The implication of the second sentence is that Judge Jackson is not impartial. The fact that the DOJ filed charges, and Judge Jackson has indeed upheld many of those charges, pretty much demolishes your characterization of “witchhunt” (i.e. is to damn by investigation).

Well you’re supposed to operate above board all the time. If you don’t, you’re committing a crime. It is a crime to use strong-arm tactics to muscle the competition out of the way.

This is an example of the fallacy of argument ad hominem tu quoque. It’s not relevant to Microsoft’s conduct or our judgement of it what other people might have done. Had they broken the law in the same circumstance, they would correctly be in court in Microsoft’s place.

The number of Senators for or against Microsoft is irrelevant in federal court, unless you have pretty good proof that Judge Jackson is being swayed by political considerations.

Now that the settlement talks between DOJ (and the states) and Microsoft have failed, it will be up to Judge Jackson to impose a penalty and the Appellate Court (and perhaps the Supreme Court) to uphold or overrule it.

I sucked up to Wally and all I got was this lousy sig line!

I was not trying to deny that Microsoft had broken anti-trust laws.

I know that “the other guys did it too!” is not a viable defense.

As to Judge Jackson’s impartiality, he too is a political animal and not immune from his own human desires. He did not rise to his position without playing politics. His motivation may not be money but as with most politicians, it’s very likely power. To preside over such a big case is certainly heady stuff. Enough to get one into history books. (Forgive my cynical nature)
But far more important than any of this is the fact that my MSFT stock has been suffering ever since this DOJ business began and the last 48 hours have been a disaster :frowning:

Damn it, if it’s not Greenspan it’s the DOJ!

MS stock is plummeting lately. So is some of Bill Gates money. For consumers, I agree with the OP that it probably won’t be an improvement. Phone service has not improved since AT&T was broken up. What about IBM, why didn’t they ever get broken up?

IBM is as old and stodgy as some of the senators and congressmen. They have been in the old boys club for too many years.

It’s those upstart, smartass kids like Bill Gates that need a lesson or two in how to kiss the ass of the hand that keeps the DOJ off your back.

That imagery is truly beautiful.

Did your MSFT stock plummet? Well, good. Owning stock in a company is stating your approval of their actions, and if you’d approve of their actions, you deserve to lose your stock investment.

Why didn’t IBM get broken up? Because the trial dragged on too long and by the time it was done, the breakup wasn’t relevant.

Didn’t service improve since AT&T was broken up? The bill may be higher, even if you adjust for inflation, but the service is a thousand times better and there are classes of service that were never dreamed of before. AT&T was holding the market back, why should they change the way they do things dramatically if they don’t make any more money? Yet, if they didn’t squash the companies that might, they’d eventually be forced out. Their breakup didn’t magically make everything better, but it allowed for us to do things like buying a digital cellular phone for $25 and paying $25/month for 200 minutes and free evenings and weekends, including in some plans, flat-rate long distance in off-peak hours. That to me is far superior service to the clunky, low-quality service and those annoying rotary phones. I don’t believe we’d be here now if it wasn’t for the breakup.

I don’t think a breakup is really the punishment that fits the crime, that would be to take all the money that MS took via its illegal actions and distribute it to the customers who now pay near monopoly prices for their OS, and to the companies forced out of business by MS’s actions. This is clearly impossible, to broad to implement even if you could determine exactly how much they gained from each shady deal.

So, what do you do? Fine them? Who gets the money? How do you work out an appropriate fine? The company is much bigger now, a $1b fine based on their take in past years could be handled from their current cash reserves.

Breaking then up is a way to bring them down in size to where other companies can exert the same ammount of muscle, and theoretically keep each other honest. It might not work, won’t IMHO, unless they do more than just move some developers around. The seperation between divisions is critical, and they need to be monitored.

I’d support a harsh punishment, not just a breakup, if I could think of anything relevant. They did break a few laws, and came very close many other times, and deserve to suffer for it.

Originally posted by QuickSilver:

You do realize that Bill Gates has announced that he’s stepping down as CEO, don’tcha?

He already has. He’s still Chairman of the Board, but Ballmer is CEO.

I’ll note that I have yet to hear from anyone in the business community that expects this transition will make a whole lot of difference in Microsoft’s actions / attitude.

Speaking as a (minor) Microsoft stockholder, I’ve always held their stock because I thought it was a good investment, not because of any approval of their actions. Never confuse finance with philosophy.

Lest anyone (including me) think I’m a financial wizard - I sold 80% of my Microsoft stock two years ago because I thought Microsoft was going to get nailed by the justice department suit any day now. Even with the recent price decline their stock price is still 50% above what it was when I sold it. Ah, well…)

The obvious thing they should do with a fine is give the money to me.

I heard that the appellate court venue will be in Washington, but is that Washington state or D.C.? The venue may have a significant impact.

I wonder how many judges hold MS stock? :wink:

This is getting hard. Somebody relieve me. (A Wallian exclamation)

I am baffled by those who support MSFT in this battle. I wonder if the same people who think a company does not need to make a profit are also those who think that that a monopoly is okay? Some kind of new investment/economics paradigm?

Reality Check. A company is worth its discounted dividend stream (see Modigliani or Fama) and a monopoly is an unvarnished evil threat to a competitive free market system. Enforced bundling of IE with Windows is only the most flagrant abuse. Think how many good software ideas have not been successfully (ie profitably) implemented by software entrepreneurs because all MSFT has had to say is that they are preparing their own version. You need to kiss MSFT butt and comply with all of their requests/demands in order to get the coveted “Windows Compatible” sticker on your product. (Failure to do so means your product gets stuck over on the shelf with the Amiga and Commodore applications.)

MSFT has so far run a benevolent (at least to the non-pro’s) dictatorship. But there is no new paradigm. If you like competitive markets, you must break up monopolies, whether they are railroads, oil company trusts, or MSFT. Read Adam Smith.

Break them up. At least seperate the applications group from the OS group from the programming languages. (However, I would love to see several competing Windows products, maybe get ONE THAT WAS NOT SO BLOATED AND WOULD NOT CRASH APPLICATIONS BECAUSE IT COULD NOT ALLOCATE MEMORY CORRECTLY.)

“Let a hundred flowers bloom, let a hundred schools of thought contend.” Odd the Mao could see the value in competition and that fat feudalist Rush Limbaugh defends MSFT’s central-planned economic dictatorship.

I’m not. If you give somebody money to do something, and that something is a crime, are you not guilty of it?

An example. You give me $20, I buy a club and mug someone, taking $40, of which I give you $30. You hand me back that $30 asking me to give you the same return on the investment and see me walk towards an alley…

The first time you could plead ignorance, saying you were unaware of my actions. How would you claim innocence the second time?

If MS breaks the law, and you buy stock, supporting the company, aren’t you giving your approval of the methods they use to get money?

And I’m not talking about moral approval. That’s irrelevant. Many people hire servants to do that which they find morally repugnant. They don’t say it’s morally okay to do something, they say it’s morally okay to hire someone to do something morally wrong.

The law takes a dim view of this in many cases, the example of the mugging being one. Why is it not seen as a bad thing when shares of stock and a corporation are involved?

Would it be different if I incorporated, went public, and then started mugging people? What about if the corporation could pay off any legal fees, and/or get their agents off on technicalities, yet it was openly known that they were performing illegal actions to make money?
You can justify it any way you want, but anyone who bought stock in MS is saying they’re fine with a little law breaking as long as it lines their pockets. The only exception would be someone who bought the stock without knowing anything about the company. But I don’t think you can claim ignorance. (Nor is ignorance a defense in most crimes.)

Legally, a monopoly is okay. It’s abuse of monopoly power that isn’t. It’s the latter that the judge found Microsoft guilty of.

Of course, before you can find an entity guilty of abuse of monopoly power you have to establish that it has that power, and a fair amount of the trial’s time was spent on that issue as well. (And that’s why Microsoft spent so much effort claiming that it wasn’t a monopoly - if you don’t have that power, you can’t be found guilty of abusing it.)

Actually, it’s worth whatever people are willing to pay for it at the time (see your favorite stock market quotes page). Note that 3COM’s stock was selling for 18% less at 1:20PM yesterday than it was at 4PM the day before. I don’t think its discounted dividend stream changed any during that interval :slight_smile:

I will change “worth” to “value” and stand by the statement. Read Modigliani and Miller or Eugene Fama. This stuff is basically arithmetic with stochastic process/random noise (sometimes lasting 8 years) thrown in.
Richard Ney stated long ago that a price of a stock was anything its specialist wanted it to be. (The abuse inherent in the specialist system is another topic altogether.) My point was that there is an organized body of investment/economic knowledge that analyzes the value of a stock and demonstrates the evil of a monopoly but that this body of knowledge is erroneously being described as obsolete.

To get back to the original topic, read Adam Smith (the real one.) He had as many bad things to say about collusions and monopoly than he did about govt intervention.

Oh, yes. Helping the stock market should be the primary occupation of the judicial branch. Much more important, and also more quantifiable, than that irritating justice business.

There are laws in this world. There is however very little justice.

Perhaps Microsoft is being clobbered by laws, perhaps they are seeing some justice. Either way, we are all loosing sight of what really important here… my stock portfolio! :wink: