InformationWeek

November 22, 1999

Secret CIO:
What Now, Mr. Gates?
Bill Gates has to change his attitude or he could lose a lot

Secret CIO o one in the IT business to whom I have spoken was surprised by Judge Thomas Penfield Jackson's ruling against Microsoft in the government's antitrust case. In fact, most of them greeted with satisfaction the findings of fact issued by the judge.

Since the trial began, there's been a shift in sentiment against Bill Gates and the Redmond crew. Though in the past, many of us in the industry were less than thrilled with the prices we had to pay for Microsoft software--and even more unhappy about the quality we received for the sweat-equity-earned budget dollars we were expending on said products--we tended to admire the Billster for his business acumen and sheer luck in having such bumbling competition. Gates reminds you of the guy you knew in college who was incredibly focused on doing his own thing--overly competitive, but a nice enough hombre if you made it onto his radar screen. In person, he seems nonthreatening and able to blend into a group (if allowed to do so).

The revelations of the trial, however, have changed people's perception of Gates and his company. Now when you hear Ronald Reagan's phrase "the evil empire," it isn't the late Soviet Union that comes to mind.

There's a long way to go before the final chapter of this antitrust case is written. Whatever the outcome, it will rank alongside the Standard Oil and AT&T lawsuits for impact on our society. In the next phase, unless there is an out-of-court settlement, Judge Jackson will rule on whether Microsoft violated the law. If it is determined that Microsoft did, what should the remedies be? More important, what should they not be?

I am against forcing Microsoft to sell copies of the Windows source code to other companies or put it into the public domain. What the industry and the consumer do not need is the potential fragmentation of a standard, albeit an exasperatingly sloppy one. I've also changed my mind about breaking Microsoft into an operating-system company and an applications company. Enforcement of the boundary between the two would be numbingly difficult, and while I don't like Microsoft's business practices, I am not very fond of the idea of having government lawyers make these decisions. So I've come down to three remedies that I think would benefit users of Microsoft products.

First, require Microsoft to publish its application program interfaces and file format definitions prior to beta release. Compatibility is the reason CIOs stick with Windows and spend so much extra money on Office. If we know that workable alternatives exist, competition will flourish, and it will be in the best interest of Microsoft to significantly improve its operating-system stability and to price its products competitively.

Second, insist that Microsoft sell its software at the same price to all PC manufacturers--and prohibit Microsoft from telling them what the user will see on startup. Innovation, of which Microsoft is so proud, should not be limited to Microsoft alone, and common pricing will remove the vendors' fear of retaliation from Redmond.

Third, prohibit Microsoft from cross-subsidizing product development, and require that Internet Explorer be removed from Windows and sold separately. Consumers would have been better off if the millions of dollars spent to destroy Netscape by giving away Internet Explorer had been used to reduce the price of Windows or improve its stability. Since neither was done, give a cash rebate to every purchaser of Windows 95 and 98 that adds up to this cost.

Bill Gates and his company are at a crossroads. He acts as if no-compromise, no-holds-barred, and power-is-everything are the rules. Microsoft lobbyists in Washington have even asked Congress to cut the budget of the Department of Justice agency that launched the antitrust suit. Gates can maintain his cutthroat business approach, or he can realize it's time to change. The question he has to ask himself is: What will it cost to continue this win-at-any-price mentality? And can even the world's richest man afford it?

Herbert W. Lovelace shares his experiences (changing most names, including his own, to protect the guilty) as CIO of a multibillion-dollar international company. Send him E-mail at lovelace@home.com, and read his online column at www.informationweek.com, where he will provide real--and sometimes whimsical--answers to your questions.

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