Netscape has been ahead in the browser market for a really long time.
Microsoft is a lot more than just software.
Net Force, a video, is a clever spoof of Microsoft & Gates, says it all pretty much.
Sorry for missing these in my earlier reply:
No (and try to get past the Microsoft case here), a monopoly is the logical conclusion of one producer’s having the better product in a competitive free market system. It’s every business’ and capitalist’s goal. In fact, the federal government will guarantee you a monopoly for 17 years if you have a new idea - all you have to do is patent it. Again, it’s only when monopoly power is misused that it’s considered to be a problem.
(Of course, if the company with a better product is a foreign one, a goverment will help its local inefficient businesses by slapping a tariff on those awful foreign competitors. But that’s not because it’s protecting a competitive free market, it’s because foreign workers don’t vote and local ones do.) 
[QUOTE]
Reality Check. A company is worth its discounted dividend stream (see Modigliani or Fama) [/QOUTE]
I’m confident that you have misquoted/misunderstood your sources there. You have Modigliani and Fama valuing Cisco, the company with the largest market capitalization in the US, as having zero market value - something that neither of those two worthy gentlemen would ever do. Cisco has never paid dividends, and won’t pay any in the future as a matter of company policy. Many of the high techs, including Microsoft, have the same policy, prefering to reinvest all of their profits directly back into their company.
Change “worth” to “value” in my reply, and I’ll stand by my reply. Exactly what are you referring by “value” rather than Market valuation? I rather doubt that Modigliana and Fama were referring to religious values at the time.
(struggling to be polite here) Reading them is nice, but it also helps if you understand them.
So enough already with the squabbling about whether Judge Jackson’s findings of law were right or wrong; that’s for the appeals court to decide (checks and balances, and all that).
IF (and it’s a big if) MS loses the appeals process, what do you think would be a fair penalty? What would the effects of your proposed penalty be?
BREAKUP of the company:
Could very well make each of the Baby Bills stronger, rather than weaker. It would definitely make each segment of the whole rethink its basic philosophies. If, for instance, an Office applications company were split out from the rest of the company, would they port to other OSes? Office for Linux, anybody? Stronger Baby Bills is not necessarily a Bad Thing. As long as there are opportunites for other companies (Corel, etc.) to prosper or fail fairly, justice will have been served.
OPEN SOURCE-ing the code for the OS, the apps, and/or the browser:
Could be very beneficial to the other companies whose OSes and other products have gone by the wayside in the last ten years (IBM, Caldera [owners of DR-DOS and its derivatives], Apple, and so on). Caldera, in particular, recently won a lawsuit against MS which pretty clearly pointed out that Windows 3.x-era MS made strong efforts and plans to deliberately hurt the business of (at the time) Digital Research. Who knows where OS/2 could be if MS had not abused its monopoly power? Or Apple, which seems to be rising from the flames as we type (would there even have been flames?)?
HUGE MONETARY DAMAGES:
These would have to be on the order of ten billion dollars or more to really have any effect, I think. Who should these penalties be payable to? Probably all the same companies mentioned in the open-source section above. After all, they’re the ones who have been hurt most. This would benefit stockholders and technology users indirectly. Or the penalties could be paid to everyone who’s ever had to use or support an MS-based system. Essentially, this is everyone in the world who uses computers. Woo-hoo, we each get ten bucks. This seems pretty pointless to me.
PROHIBIT MS FROM DEVELOPMENT for some period of time:
It would have to be a period of time long enough for other companies to build some momentum; perhaps five years? Maybe more? This is a long time in the lifecycle of a technology business. In five years, computing will have changed immensely, and MS will then have a huge amount ofinertia to overcome, while the momentum of the other companies would give them a running start. It’s be pretty hard to enforce, but it avoids the question of who get the money, since little would change hands.
Any thoughts?
A committee is a lifeform with six or more legs and no brain.
Breaking up the company into several Nanosofts may seem reasonable but I think Microsoft has a strong case in saying it’s products are highly integrated and forcing them to pull them apart would destroy the company (regardless of whether or not that would actually be the case).
Another challenge in breaking up Microsoft is administering the separation. You may force them into separate building but how do you keep them from continuing to work together and sharing information? And would you want to? And would it take an act of Congress to enact these kinds of laws? And as in the case of IBM, once it was done, would it still be relevant?
Forcing a company to stop business/development would be unconstitutional at the very least. Only an idiot would consider that a viable solution.
Forcing Microsoft to open it’s source code to anyone but it’s business partners is just wrong in so many ways. Aren’t there intellectual property rights to prevent that sort of thing?
Which leaves us with a fine. Yes, the fine will be severe. Not 10 billion mind you. Perhaps several 10’s of million, paid over some time. To whom. I don’t know… Judge Jackson? Maybe in the form of $10 dollar discounts on Microsoft software to all consumers?
In my opinion, the judgement will be a fine. Anything more will be deemed as unwarranted interference by big brother in the affairs of an essencially free enterprise. That would set a poor precedent and would not be accepted well by the american free enterprise system as a whole.
That’s just MHO.
If a company never plans to pay a dividend and never plans to spin off or liquidate assets, it has no more value (worth) than a Beanie Baby collection, that is, what the Bigger Fool will pay for it. What do you think a zero coupon IO is worth (valued)? Growth companies eventually mature and pay dividends. That is the Modigliani and Fama thesis. That is how you put a value on something like Cisco.
It is always the bigger fool who does not believe in the Bigger Fool Theory. No need to struggle to be polite, golfer, but do read the sources cited. By the way, I always watch to see if people spell (or pronounce) Modigliani correctly to get an indication if they know what they are talking about. You flunked once already.
I hate to say this as a stockholder, but if Microsoft loses the appeals process I think this is the only option that makes sense. Break it up into OS, Desktop Applications, and Networked (IE, Internet) Applications. The catch here is to somehow ensure that all ties between the three are realy removed.
Note that Scott McNealy of Sun Microsystems wants Microsoft broken up into so many pieces that even finding the crumbs would be difficult to do. He wants the OS group, for example, to be broken up into three separate companies alone. Somehow, I suspect this suggestion was a little self-serving.
As an application developer, this one really bothers me. It basically says, “Hey you, give away all of the stuff you’ve ever written”, and I just can’t agree with that. Microsoft’s not being found guilty of writing applications, they’re being found guilty of abuse of monopolistic power. Let’s match the corrective action with the crime, here.
Uhh, no they didn’t. That suit was settled out of court. It’s not all that clear they’d have won in court.
BTW, this particular suit is really galling to me. Caldera bought the rights to DR-DOS for a song, then turned right around and sued Microsoft for actions that Caldera claimed occured before Caldera purchased DR-DOS and because DR-DOS was now worth only a song. (In fact, when Caldera purchased DR-DOS, Noorda basically announced that he were purchasing it precisely so that they could sue Microsoft.) Uhh, exactly how was Caldera the wounded party here? I mean, if Microsoft hadn’t crushed DR-DOS with its earlier actions, Caldera would have had to pay a lot more money for it. I could see Digital Research suing about the low transfer price, but not Caldera.
(I’ve heard the legal arguments about the suit already having been opened by DR at the time of the purchase, making the right to continue the suit transferable along with the product, but still…)
Ahh, but who gets them? I’m having enough problems with this lawsuit being regarded as the “Sun Microsystem and Netscape Relief Act” as it is. As a practical matter, the already-rich companies (and their stockholders - in some cases, me again) would get even richer, and those little companies that supposedly were prevented from ever taking a foothold in the first place wouldn’t get a dime (because they don’t even exist anymore). Neither would consumers - can you imagine the sheer mechanics of figuring out who actually purchased each of the 100 million or so computers that were supposedly affected during the affected interval? “Let’s see, you bought a 486/33 with Windows 3.1 installed and then upgraded to Windows 95 on your own, so you get $12.47…”
If anything, the government should just keep the money. What the heck, use it to pay down the National Debt. (Republican response: No, wait, use it to reduce taxes! Democratic Response: No, wait, use it to improve social programs!)
But who would benefit from this? Certainly not the consumers. Mostly Sun Microsystems. Maybe Oracle. I’m afraid I can’t see this one.
Hey, Manhattan—
Is this a good time to buy up some depleted Microsoft stock? Or some other Internet stocks?
C’mon, what’s a little insider trading amongst friends?
Oops, I see where I did just that. My bad.
I’m the one with the typo, but in terms of understanding Modigliani’s work I’m afraid that you’re the one that’s in trouble.
Seriously, I just spent a few minutes performing web searches, and the results I came up with totally disagreed with your basic assertations of what Modigliani’s conclusions were.
(Let’s hope I can get this UBB code right… )
After the Revolution is an article from CFO magazine on the effects of the Modigliani-Miller papers on the world of Corporate Finance.
M&M Killed the Dividend Star is a section (toward the end) of a Motley Fool article that also describes the effect of Modigliani and Miller’s work on the world of corporate finance.
Both articles claim that Modigliani-Miller’s basic assertation is that dividends don’t matter (specifically that “the value of a firm is also independent of its dividend policy.” ). That’s exactly the opposite of your claim that “A company is worth its discounted dividend stream” and the above Beanie Baby comment.
In fact, the Motley Fool article suggests that the current wave of non-dividend-paying companies may be a direct result of Modigliani disciples having finished business school long enough ago to be attaining high positions in our major corporations. (Then again, maybe they just like Beanie Babies)
(I should have mentioned for the lurkers that both articles claimed that it was the Modigliani-Miller papers, along with Modigliani’s Life Cycle hypotheses work that basically got Franco Modigliani his Nobel prize in 1985.)
WillGolfForFood, I see you’re suddenly silent on the topic of buying stock in a company you know is acting illegally. Why? Because you know it’s true.
As for the results of the trial.
There are two that I think could work, and I’ll explain why.
Microsoft uses its monopoly power in the OS division to control products in other sections, like the browser wars, or making competitors office suites perform more slowly, or such.
Breaking up the company, not even into a bunch of little parts, just the OS division and everything else would at least make those other divisions play fair. They wouldn’t have access to undocumented OS features, or anything else, so the playing field would be levelled. The OS department also couldn’t count on being the only OS that everyone’s favorite OS ran on, so they’d actually have to innovate.
OR… Open source the OS. Microsoft has controlled access of the source code to the OS, giving full access to their other divisions, and giving broken API information to other companies, or making them wait a few months, to give their internal department a head start. To open source the OS, or at least all the APIs, and everything directly connected to them (anything a program would need to access) everyone would be using the same information. This would work best in conjunction with breaking MS up, but could justify breaking it into fewer pieces.
There’s no reason to assume that this would kill MS, almost all other OSes are partially or completely open source. BeOS has completely open APIs, MacOS X internals are open source completely, Linux is 100% open, BSD is 100% open, most ‘big’ unixes are mostly open, and license their source code for semi-reasonable ammounts of money. MS is one of the only companies with a 100% closed OS, and the only way they’ve gone anywhere with it is they leveraged their early monopoly power.
So, open sourcing Windows (completely or partially) and breaking them up, to remove the OS division from all others, if not further, would be my suggestion. It would still leave MS a huge presence in the field, but it’d take away the power they’ve wielded against competitors.
A fine would be nice, I worked at a company that had tons of copies of NT and I’ve got a hundred or so boxes (flattened, without manuals, etc) that I was given. If they go the rebate path, I’m in the money. But, I don’t think they should. Their pricing was excessive, but what’s done is done. If they get fined it should go to tech scholarships or something like that. You couldn’t pay off to damaged companies, many aren’t here anymore, or are only here by proxy (Caldera & DR DOS). Paying to the consumers means people need to find receipts, etc. And the fine needs to be huge to phase MS at all. $15 billion or so, or more over a few years, would seem about right.
And who cares if it ‘unfairly’ hurts stock prices? IMHO if you don’t watch what a company you invest in does, you deserve to lose big for condoning their actions.
As Matt_mcl says, the judicial branch should concern themselves with justice, making things right and punishing offenders, instead of making sure that some investors make more money.
WillGolfForFood, I see you’re suddenly silent on the topic of buying stock in a company you know is acting illegally. Why? Because you know it’s true.
As for the results of the trial.
There are two that I think could work, and I’ll explain why.
Microsoft uses its monopoly power in the OS division to control products in other sections, like the browser wars, or making competitors office suites perform more slowly, or such.
Breaking up the company, not even into a bunch of little parts, just the OS division and everything else would at least make those other divisions play fair. They wouldn’t have access to undocumented OS features, or anything else, so the playing field would be levelled. The OS department also couldn’t count on being the only OS that everyone’s favorite OS ran on, so they’d actually have to innovate.
OR… Open source the OS. Microsoft has controlled access of the source code to the OS, giving full access to their other divisions, and giving broken API information to other companies, or making them wait a few months, to give their internal department a head start. To open source the OS, or at least all the APIs, and everything directly connected to them (anything a program would need to access) everyone would be using the same information. This would work best in conjunction with breaking MS up, but could justify breaking it into fewer pieces.
There’s no reason to assume that this would kill MS, almost all other OSes are partially or completely open source. BeOS has completely open APIs, MacOS X internals are open source completely, Linux is 100% open, BSD is 100% open, most ‘big’ unixes are mostly open, and license their source code for semi-reasonable ammounts of money. MS is one of the only companies with a 100% closed OS, and the only way they’ve gone anywhere with it is they leveraged their early monopoly power.
So, open sourcing Windows (completely or partially) and breaking them up, to remove the OS division from all others, if not further, would be my suggestion. It would still leave MS a huge presence in the field, but it’d take away the power they’ve wielded against competitors.
A fine would be nice, I worked at a company that had tons of copies of NT and I’ve got a hundred or so boxes (flattened, without manuals, etc) that I was given. If they go the rebate path, I’m in the money. But, I don’t think they should. Their pricing was excessive, but what’s done is done. If they get fined it should go to tech scholarships or something like that. You couldn’t pay off to damaged companies, many aren’t here anymore, or are only here by proxy (Caldera & DR DOS). Paying to the consumers means people need to find receipts, etc. And the fine needs to be huge to phase MS at all. $15 billion or so, or more over a few years, would seem about right.
And who cares if it ‘unfairly’ hurts stock prices? IMHO if you don’t watch what a company you invest in does, you deserve to lose big for condoning their actions.
As Matt_mcl says, the judicial branch should concern themselves with justice, making things right and punishing offenders, instead of making sure that some investors make more money.
Let’s see Bill Gates starts a computer company while in college. He, Paul Allen, and Steve Ballmer build their computer and try to make some money at it. Bill gets wind of IBM needing an OS. He sells them on the concept of his OS which is really owned by someone else. Then he goes and acquires the OS from the real owner. Nothing illegal so far.
Now, Bill and Co. continue to build their OS, they continue to work with IBM, but IBM gets too big for its britches and Bill and IBM part company. IBM works on OS/2 and Bill develops Windows. Still no illegalities.
Bill builds the most successful OS yet. IBM can’t take them down (now IBM was much bigger than MSFT, so why did Bill win, he is much better at Marketing than IBM is) Companies purchase MSFT to put on the computers they sell.
Now maybe Bill made threats to the companies that they be exclusively Windows or else. But realistically they can do whatever they want if OS/2 or another OS is better then they will sell the better OS. They chose to use the OS that the majority of people are using at work and that the majority of software companies are producing software for.
Years ago, WordStar was the top word processing program. They got cocky and did not inovate. Wordperfect passed them. Then they got cocky and Word beat them out. Same for Lotus 1-2-3. Or Dbase.
Sure MSFT bought FoxPro and other inovative companies. Where is the harm in that? Bill has done what all companies are expected to to become Number 1 and fight off any company that tries to de-throne you.
If MSFT is not being inovative, the another company will beat them out. If IBM had won, then we would not be as far along as we are today. Really LINUX is not a real contender, but if they ever become one, then they could de-throne MSFT.
Did they do anything illegal? Maybe, though that is not clear in my mind. I believe Bill did what he should have done and was expected to do and that is grow his company and make money for the stockholders.
I can see people getting all up in arms about investing in cigarette companies and others that kill people. All Bill has done is make money by making a software product.
I do not believe it is wrong to invest in MSFT. If you believe it is wrong then don’t. But don’t buy any SP500 mutual funds or much of any other kind of mutual fund, because they probably own some MSFT. Stick to puchasing specific wholesome stocks like Phillip Morris or RJR.
Jeffery
Amen, braddah!
I still maintain that the lawsuit was initiated by a bunch of also rans who just can’t stand loosing at their own game.
Microsoft has done more in it’s short life to bring the home computer to the masses than any other company in the IT business. While IBM and Sun sat around in their ivory towers trying to make things as complex as possible, MS produced products that a majority of people could easily learn to use and actually WANTED to use. It wasn’t always perfect and it wasn’t always on the bleeding edge of innovation, but it was accessable and relatively in-expensive and portable.
As for investing in a company based on it’s moral track record… grow the fuck up! Ever invest in GM or FORD? How’s their WWII record? Ever invest in aeronautics and electronic companies? You know, they do quite a bit of work for the defense industry. Hey, how about those power or oil companies? They’ve all had an environmental disaster on their hands due to negligence. Perhaps we should only invest in food growers… no wait… they distroy forests and spray pestisides… How about textiles… but don’t they use child labourers … I know, DOT COM companies… yeah… all they produce is vapour wear… good idea!.. wit-less…
As far as I can tell, what MSFT did that was found to be illegal was to give IE away for free with Win95. Netscape was then forced to do the same. The part that I find interesting is that at the time, pretty much everyone I knew used Netscape because it was far superior. Since then, most of those people have switched over and become die-hard IE users. The way it looks to me was that when MSFT tried to force IE on people at first, it didn’t work because IE sucked. Later, when they improved it to the point that it was better than the competition, more people started using it.
Actually, it was because I thought it was too silly to argue about. However, I’m an open-minded sort that’s always willing to change…
Let’s take your original assertion:
I could argue that nobody was claiming that Microsoft was acting illegally in 1991 when I bought the stock (or, if anyone was making that claim at the time, nobody was paying much attention to them). However, I’m willing to let you modify your argument to that of someone continuing to hold the stock of a company that at some point in time began acting illegally.
I could mention that I wasn’t clever enough to participate in Microsoft’s IPO, so I never gave Microsoft any money. I (or, specifically, my broker) gave my money to whomever owned those shares before I did. If/when I sell them, Microsoft won’t be paying me back, either - whomever buys those shares from me will be doing that. Microsoft never used my money for anything - after their IPO, they’ve always been well-heeled enough to fund their operations out of their (positive) cash flow. Also, note that as a matter of policy Microsoft has never paid dividends and never plans to do so.
I could argue that, until earlier this week, whether Microsoft was committing a crime was still in dispute. In fact, this particular issue will still legally be in dispute until the inevitable appeals process finishes. (I might also point out that the $20 or so each Microsoft share has dropped since that event certainly feels like punishment to us stockholders. But I digress…)
I could also point out that by passing Microsoft’s alleged guilt to its stockholders, you’re including virtually every mutual fund in existance (and certainly every index fund). Say, does anyone here participate in a retirement fund or 401K plan? You people are guilty of abusement of monopoly power!!!
So, let’s see - I didn’t give Microsoft $20, they didn’t buy a club with my money, they didn’t give me back $30, and whether they’ve mugged anybody is still technically in dispute. Other than that, your analogy works fine.
Microsoft is only going to lose the money spent on legal fees. They can keep this case tied up in appeals for maybe 5-10 years. At that point, the entire industry will have changed, and the case will be irrelevant.
Okay, Let’s say that Microsoft’s “Crime” was giving IE away with Windows (I think it might have been because it was integrated with it but either way).
Now, this is the only area that I have seen where people will complain about getting something for free.
If Sprint gives a free phone to everyone who becomes a Sprint PCS customer, is that illegal? Does anyone complain? AirTouch may complain and say that they now have to give away phones, but so what?
People in general will not use crap software even if it is free. If the free software is crap and the good software is reasonably priced, then they will actually purchase the good software. Besides didn’t Netscape do the same thing to Mosaic and all the ealier browser people? But I guess it was not illegal for them to do it.
Maybe you want to complain that Microsoft used its size to produce a product that would be reasonable to sell and gave it away. No one ever complained that MS gives MS Works away with their OS, maybe because it is crap. People pay hundreds of dollars for Office or some other WP, Spreadsheet, etc. package because the free stuff is crap.
But on the subsidizing issue, what about the USPS? They use the money from their First Class mail monopoly (yes the USPS has a monopoly on First Class mail, FedEx and UPS and others cannot deliver a non-urgent letter because of a very old law). The gov’t repeatedly tells us that the USPS is not really a gov’t agency and is fully self supported. So how can they have this monopoly? They then use this monopoly to subsidize their other services like International shipping. No one complains about this (well no one except FedEx, UPS, and other such carriers). What about the fact that these other carriers are required to charge at least 2 times what the USPS charges for services. That is why when they do the priority mail ad the cheapest price given after theirs is double their price. They also do not have to pay taxes like the other carriers do.
So why is this monopoly okay, but the supposed Microsoft monopoly not okay? Because the gov’t protects the USPS and not MS.
Jeffery
‘Microsoft is only going to lose the money spent on legal fees. They can keep this case
tied up in appeals for maybe 5-10 years. At that point, the entire industry will have
changed, and the case will be irrelevant.’
Oh, no, they can’t. The judge has set it so they can only appeal to the Supreme Court, by passing lower appeal courts. This should speed this up by about 1-2 years.
I see ads on tv all the time now for cheaper MS stuff…Even Jay Leno showed on his program the 99 cents store, with a sign on the window that said ‘Microsoft Stock 99 cents/share’