Should MicroSoft be broken up?

Great Debates
41

PeterB writes:

So Microsoft doesn’t compete in the worldwide market of Intel compatible PC operating systems? I’m afraid you’ll have to support your assertion if you intend it to be anything other than laughable. Also, I’ve already posted several examples of Microsoft’s wrongdoing. Please explain how each of these were not, in fact, antitrust violations.

The breakup will remove the incentive for Microsoft to use it’s Windows monopoly as a club against competitors who compete against Microsoft applications. See the IBM PC Company example I posted earlier for an instance of behavior that would be prevented under the judgement. The additional requirement of uniform licensing for the top 20 OEMs will also help here.

Your snide comment is actually quite illustrative. It shows first that you do not understand the basis of the case. The government is not suing Microsoft because Microsoft has a monopoly, be it natural or otherwise. The government is suing because Microsoft abused their monopoly position by shutting out competitors and attempting to propagate its operating system monopoly into other areas.

Second, Microsoft’s operating systems monopoly is a natural monopoly, but that makes it more, not less, important that antitrust laws be upheld in this case. (For those following along at home, I claim that Microsoft has a natural monopoly because network effects, like compatibility, cause users to tend to use the same products as other people they interact with. On a large scale, this has the practical effect of causing the product with the largest market share to eventually dominate and become a monopoly.) By definition, a natural monopoly is easier to maintain and harder to dislodge than a regular monopoly. As a result, the potential for abuse of a natural monopoly is higher, as is the potential harm that can be done. Thus, it is even more important for the government to step in to counteract abuses by natural monopolies before serious harm is done to competition.

Mr. Feely

42

Part of that was the infancy of the marketplace. The technology coming together is more a part of natural evolution than any innovation on the part of MS. The portable magnetic media of the era was cassette tapes and 8 inch floppies. I don’t recall MS saving us by manufacturing 5 1/2 and ultimately 3 1/4 inch floppies.

Again, I don’t recall MS in the manufacturing business. I do recall the MS official position that 640K “should be enough memory for anyone”. Today PCs have as much RAM as a typical disk drive of 10 years ago. MS has had to keep up with physical media and they’ve done it by selling us “new” operating systems, not just patches to the existing one(s).

This is an election year – everyone running for office should send this guy their literature.

You still can’t buy a single program that works on all computers. You can’t even buy a single program that works on all MS operating systems. Ever notice that software is labelled “for DOS”, for “Win 3.x”, for “Win 9x”, for “Windows NT”, or for “Windows 2000”? Even those in the windows domain aren’t necessarily portable to other Windows operating systems.

Go back to the JAVA discussion. Somebody actually went to the time, trouble, and expense to write something that would make the PC operating system transparent, and MS sabotaged the work.

Several fallacies here.

Number 1: Everything didn’t have to be IBM compatible. IBM just happened to be the standard by which most of the industry was focusing. The IBM/MS partnership actually hurt IBM in that it gave MS a huge jump in credibility.

Number 2: Despite the attempts by JAVA, there is still no universal standard. IBM’s OS/2 was to have filled a huge gap between the mainframe and the micro worlds. Windows has actually extended the gap.

Number 3: IBM has been broken up due to antitrust violations. Back in the days when there was real competition in the mainframe world, IBM was found guilty of antitrust violations. Their punishment was that an entire division was “given” to Control Data who ran the enterprise under the name of “Service Bureau Corporation”.

Splitting MS will not cause a decline in PCs, a rise in prices, or anything else that the uninformed public seems to fear. It will put competition back into the marketplace and allow others to compete, which in turn will give ME more choice.
SouthernStyle

43

I love their commercials where they say the best is yet to come. As time would show, they are going to have to become 2 companies which means that is the best? lol

44

Mr. Feely - Thank you for your articulate and correct analyses.

As stated before, MS was not brought to court because they are a monopoly. They were charged because they abused their monopolistic powers. They have continually acted in a manner that impedes competition instead of encouraging it. This, by definition, harms the consumer. That’s why the U.S. has antitrust laws.

Some examples:

1.They willfully corrupted the JAVA “write once, run anywhere” protocol, after they swore they wouldn’t. We now have the crappy and truly security-dangerous Active-X technology.

  1. They bullied their OEMs by not allowing them to change the splash screen or remove Internet Explorer icon from the desktop. They expressly forbade some OEMs from preloading Netscape, even if the end-user requested it. They continually threatened to withhold product and coding from partners who would not toe the line.

I could go on and on. Some other things that bug me, personally, are that their software, in general, is not self-contained and messes with * way too much* on my hard drives; Office encoded secret identification numbers on all output; and, Windows has not come down in price since it came out!!!

MS may have created a standard originally, but they sure have spent a lot of time and resources making sure their OS and software is as incompatible with the competition as possible.

The DOJ is right on this one.

45

Wow…so much to respond to.

Java is not the same as JavaScript. Java is a compiled language that generally runs server-side, and as a compiled language, the executables are hardware-dependent. JavaScript is a client-side scripting language that is supported by the browser. Java was a concept of Sun; JavaScript was put forth by NetScape.

The breakup of AT&T was done cooperatively between the government and AT&T. AT&T recognized that the divetiture would enable them to enter more markets that they currently could not enter (computer hardware, networking, cable TV, and much more). AT&T recognized that they could make a lot more money by not restricting itself to telecom services.

Before Microsoft was a whole bunch of people. Ashton-Tate, Borland, Lotus, WordPerfect, Apple, Bell Labs, Novell, as well as IBM (all right, I confess: I actually bought TopView. On 5 1/4" diskettes. Actually paid money for it. I am so ashamed).

The internet existed before Microsoft. TCP/IP was not a Microsoft invention. Neither was multitasking, multithreading, or windowing. Microsoft didn’t invent the word processor, the spreadsheet, the browser, e-mail, Basic, C++, Java, Javascript, HTML, presentation software, project management, or, actually, very much of what they do sell.

On the other side, buying applications for a Unix-based system will set you back a significantly higher chunk of change than a Windows App.

I doubt that the BabySoft that builds applications will suffer much. They would do well for years by porting their applications to other platforms (Building VB or Word for Motif or X-11, for example, or for i-phones and Palm VIIs).
The BabySoft that gets the OS has their work cut out for them, though. They might have to come up with an elegant, robust operating system that runs well in something under 128M.

What the communications industry is finally learning,and what Microsoft has yet to learn, but will probably be beat over the head with, is that things are different now. You can make a lot more money by building a superior product that works in multiple environments than by building a product that can only work in your own proprietary environment. Information can best be leveraged by interfacing and communicating with other systems, not by killing them.

That’s just my opinion, though.

46

Small correction.

Java as a compiled language is platform independent; the java virtual machine is written specifically for each platform, to provide a platform independent API. There’s some work being done on binary compilers for Java (making it platform specific), but the idea behind Java is bytecode compilation for the JVM. That’s the reason behind the “write once, run anywhere” slogan.

The way Microsoft tried to corrupt Java was offering Windows specific APIs in the JVM that they produced, allowing java coders to write java code that would work only on Windows, defeating “write once, run anywhere”. The lawsuit Sun launched against Microsoft was that this action violated the licencing agreement permitting Microsoft to advertise their JVM and java code as “java”. Sun won the first round, getting an injunction against Microsoft that prevents MS from using the java trademark; I’m unsure where the case stands now.

47

Thank you,hansel. I couldn’t have said it better.

My point was that MS purposefully and arrogantly violated their license agreement(with Sun).

48

Well…

Let’s say you had a product that could, oh “Navigate” around the Internet. In your product you put a new idea that would help this Internet “Navigator” extend HTML and run modest applications within your product. It could do so with a reasonable degree of security.

Then, let’s say, someone else built another application that could “Explore” the Internet. This Internet “Explorer” tried to be as good as your Internet “Navigator”, and allowed others to have a choice of what product they wanted to buy.

That’s competition.

Then, let’s say that this other party took your idea, changed it around enough to make your product not work anymore, and gave it away to everybody that used to buy your product, so as to drive you out of business.

That’s predatory and monopolistic.

Then, this other party takes your idea to the extreme, allowing their product, oh, let’s call it “X”, to "Active"ly take over your machine and do just about anything the author wanted to, including erasing your HD or selectively gather personal information about you, defeating any security you may have in place.

That just becomes a bad idea.

Not to take away any thunder from Sun Microsystems, I’m sure they’re upset with Microsoft, too. However, Sun Microsystems is doing just fine, selling hardware and their own flavor of Unix to run on Internet servers and Firewalls all over the place. We got several of 'em. The ‘dot’ is alive and well, thank you. So what if Microsoft has to name their Java components something else. They just call it JavaBuddies instead of JavaBeanies and all is well in Redmond.

I would think that Netscape has the bigger beef with Microsoft, though. JavaScript was a big addition to make the Internet a friendlier place, both for the end user and for the application builder. Having their own idea used to kill their company by a predatory giant tends to leave you somewhat disgruntled. That’s the way Microsoft has become a monopoly, not by competing, but by doing away with it’s competition; not by innovation, but by assimilation and extermination. Resistance is Futile.

There’s a big difference.

49

Don’t downplay the MS dealings with Sun.

Microsoft built their Active-X product by licensing Java from Sun (including source code), illegally adding their own extensions that made the product distinctly not Java compatible, and selling it as their own.

By violating this license, they “stole” the source code saving themselves many millions of dollars. This got them into the marketplace many months sooner than the could have with “their own” product and saved many, many man-years in development time.
SouthernStyle

50

More salient points against Microsoft were raised in a recent NY Times column by Thomas Friedman (published on 6/11/2000 in the Akron Beacon Journal), excerpted as follows:
"(I)f you read carefully Judge Jackson’s ruling to split up Microsoft you will see that this case is also about attitude. …

(I)t’s an idictment…of the particular attitude and arrogance of Microsoft. …

No one epitomizes this attitude more than Bill Gates. As far as I’m concerned, the goverment had grounds to break up Microsoft simply for what Gates did last year, which was to hire an army of Washington lobbyists to try to get Congress to cut the budget of the antitrust division of the Justice Department while Microsoft had its case before that department. Think about the arrogance behind that strategy. How would you feel if the biggest company in your town tried to use its influence to slash the funding of your police department, at a time when the police were bringing charges against that company? That’s what Microsoft did.

And that to me is the real point of (Judge) Jackson’s ruling. Microsoft isn’t a threat just because it’s big. GE is big. Intel is big. Cisco is big. Microsoft is a threat because it is big and deaf to some o fthe bedrock values of the American system. …"

51

Yes, and preferably retroactive to the day they put out a free Internet Explorer to gouge Netscape’s profits.

52

Nope.

Read the definitions provided in the FoF. MS don’t make “PC” OSes, they make “Server” OSes, according to the FoF.

Perhaps they have a monopoly in some market, but not the one that the FoF defines.

Because they don’t have a monopoly in the PC OS market.

This would be the same IBM PC Company who produced an OS that directly competed with Windows, but needed Win32 compatibility, and who also wanted the Windows 95 source code?

In what respect? MS cannot be forced to grant licenses to anyone.

Yeeees. And? I would argue that such action is in the benefit of the consumer, because of the natural monopoly. It is more damaging to have multiple OS standards than it is to have little competition.

Natural monopolies can hardly abuse their position in order to maintain their monopoly status; they can’t but help be a monopoly.

53

Here’s the definition from the findings of fact (emphasis mine):

Your claim, then, is that Microsoft does not compete in the market for operating systems on Intel-compatible desktop and laptop computers? I’m afraid you still haven’t transcended laughable.

At issue was the licensing of Windows for IBM’s OEM machines. That is a separate issue from Win32 compatibility or Windows 95 source availability, neither of which IBM demanded in conjunction with the OEM contract. If Microsoft refused licensing based on IBM’s desire for either of those, in addition to its support of SmartSuite and OS/2, that is further evidence of anticompetitive behavior.

No, but if they decided to spontaneously stop granting licenses to the top 20 OEMs, I’m sure they’d be sued to hell and back for abrogating their fiduciary responsibility to their shareholders, not to mention frustrating the implementation of the final judgement.

I must apologize; I did not verify that the accepted definition of the term “natural monopoly” is the same as the definition I was familiar with. It is not. The accepted definition is “a monopoly where competition is prevented by the very nature of technology or the market.” I argue that Microsoft’s position in the operating system market is not a natural monopoly under this definition, but instead is “a monopoly where competition is hindered by the very nature of technology or the market.” For the lack of a better term, I’ll call this a semi-natural monopoly. For the operating systems market to be a natural monopoly, the barrier to entry would have to be so large as to be infeasible to surpass it. I don’t think this is the case; for example the Wine project claims to be 90% compatible with the Win32 platform specifications, and with some effort could be made to compete with Microsoft’s implementation.

Now, regardless of Microsoft’s status as a natural or semi-natural monopoly, clearly some action needs to be taken. If Microsoft is a natural monopoly, then we obviously should be regulating it as a public utility to avoid monopolistic abuse. After all, this is the way our other natural monopolies (e.g. electric, gas, (possibly) water) are handled. If it’s only a semi-natural monopoly, then my previous arguments still hold; it is especially important to uphold antitrust laws because the market itself makes it easier for the Microsoft to abuse its position and do significant damage.

Mr. Feely

54

PCs can be “distinguished” from servers, because PCs don’t provide data, services, and functionality through networks to multiple users.

A PC running Windows 9x can do all of these things. Indeed, much of the functionality is provided out of the box.

If those features permit one to distinguish between the two classes of computer, then necessarily, they are unique to servers. (If they’re not unique to servers, then they can hardly be used as a means to differentiate between the two classes of computer.)

Given, then, that those features are unique to servers (and not available on mere “PCs”), and given also that Windows 9x (and NT, and 2K) all provide those features, then it is clear that Windows 9x, NT, and 2K are not PC OSes, but rather server OSes – OSes for server systems.

Yep, that’s my claim, for the simple reason that the FoF gets it wrong. MS may well have a monopoly, but not in the PC OS market.

What the Judge fails to realize is that nowadays we have “NOSes”, and that all OSes are NOSes (perhaps with minor exceptions for (say) embedded computers etc.).

55

No. PCs can be distinguished from servers because PCs are not designed to provide data, services, and functionality through networks to multiple users, but rather are designed for use by one person at a time. It’s not a matter of whether the operating system in and of itself is capable of functioning in the role of a server, but whether the computer as a whole has been designed for that purpose. I think it’s quite clear that desktop and laptop computers are designed for use by one person at a time, even if they are also capable of providing server functionality. Since Microsoft sells operating systems for desktops and laptops, it thus competes in the market for operating systems on PCs.

I agree that from a technical perspective this distinction is somewhat arbitrary, but from a market perspective it effectively distinguishes between two radically different markets. Try calling up Dell and requesting a computer designed to provide data, services, and functionality through networks to multiple users. I can guarantee you that they won’t try to sell you a destop or laptop running Windows 98.

Mr. Feely

56

As in sad?

Don’t feel broken up little MicroSoft. Once you’re two companies, you can form an illegal cartel, like the phone companies, and continue as a Virtual monopoly. The term even suits you.

57

Crap.

You think Windows 9x isn’t designed for multiuser operation? Then why have they given it file sharing, print sharing (since the original release), web serving (since Windows 95 OSR), NAT (since 98SE)?

Windows 95 is thoroughly designed for multiuser operation.

I think it’s quite clear that Windows 9x is a NOS and is designed to do server jobs.

People might use it in a standalone configuration, but lots of people use its network capabilities, too.

No, because its products are server OSes, according to the functionality that servers are designed to provide.

Somewhat arbitrary? It’s entirely arbitrary (along with such claims as you can’t use a server OS for regular work, which is surprising, because I’ve been using Win2K Server, and before that NT4 Server, for just that purpose), and dishonest. And furthermore, it’s flawed, because it arbitrarily defines a market that no-one, least of all MS, competes in.

I don’t believe marketing came into it. What was discussed was the design of the product. The product is marketted for consumer users, but is very much designed for a networked environment.

58

Hmm the techno babble in the last few posts i mostly understood, but what does any of that have to do with microsoft breaking up?

The question is not should microsoft be broken up but why wasent it done sooner?

59

Let me say this again, more clearly: the criteria that distinguish between PCs and servers apply to the computer as a whole, not to the individual components such as the operating system. Having relevant components that are able (or even designed) to support multiuser operation is only a necessary, not sufficient, condition for a computer to be considered designed to support multiuser operation.

To make an analogy: if I sell a Ford Escort with a trailer hitch, that doesn’t mean that the car was designed to tow things, even if it is capable of doing so.

As you say, Windows 9x was designed with some features that allow for multiuser operation. However, that doesn’t mean that every computer sold with Windows 9x installed is also designed for multiuser operation. For example, suppose I built a computer for my father so that he could use his Excel 2000 spreadsheets at home. After assembling the hardware, I would install Microsoft Office and Windows 98 SE on the computer. In no way could it be said that the computer was designed for multiuser operation, however, since I as the designer ignored those features. Likewise, many OEM desktops and laptops are shipped with a modem, but no network card. Surely if they were designed for multiuser operation, they would have the hardware to support that operation to the greatest extent possible.

In my experience most people who buy laptops and desktops do so for use by single user at a time, with any multiuser use incidental to the single user use. I have no reason to doubt that is the general case, based on the marketing of these systems. Thus it would be illogical for computer manufacturers to design laptops and desktops for multiuser use rather than single user use. Given that, the only reasonable conclusion is that rational computer manufacturers design their laptops and desktops for single user use and thus they are PCs as defined in the findings of fact.

Also, I don’t believe the findings of fact makes the claim you attribute to it, namely “you can’t use a server OS for regular work.” At best, it makes the claim that server computers are not designed for use by one person at a time.

60

I believe it does, actually.

From Paragraph 19: