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November 17, 1999
What Would You Do If You Were Bill Gates?| Threads |
| Microsoft CEO Bill Gates has some choices to make in the wake of the court's findings in the antitrust case. The possibilities range from publishing Microsoft APIs to splitting the company apart. Are there other remedies you'd seek? Would you simply stonewall, refusing to give an inch, and hope to win on appeal? Please share your thoughts, and discuss the results from our instant poll. Join in! |
| Recent Columns |
| For Microsoft, D-Day--As In "DOJ"--Is Coming |
| Bio |
| Fred Langa is a senior consulting editor and columnist for Windows Magazine. Fred's free weekly newsletter is available via subscribe@langa.com. You can contact him at fred@langa.com or via his website at http://www.langa.com. |
The language in the Judge Jackson's "Findings of Fact" in the Microsoft- Department of Justice trial was so harsh it left little doubt that if the court imposes its own remedies to correct Microsoft's excesses, they will be dire. (A copy of the full text is available at: http://www.browsertune.com/dojvms.htm) In fact, in the press conference immediately following the release of the findings, prosecutors said that they would rule out nothing in terms of remedies. To me, this sounded as though they were hinting at the threat of a forced breakup of Microsoft.
Since then, Bill Gates has said he'll be flexible in seeking a settlement, but he also has said he won't yield to anything that affects Microsoft's "ability to innovate." I'm not sure what that means, exactly; it could mean almost anything.
Gates is probably temporizing: He has to say something to reassure stockholders and customers, but he can't say too much until his lawyers meet with the DOJ lawyers and see what, if any, middle ground there is.
There may not be a lot: Clearly, the DOJ has the upper hand. If Microsoft is intransigent, it may well be facing a court-imposed settlement that could include breaking up Microsoft into Baby Bills--regionalized "mini-Microsofts" that would compete against each other and the rest of the industry; or the forced splitting of Microsoft into three separate Operating System, Applications, and Internet Services companies. (See http://www.techweb.com/wire/finance/story/ contrarian/INV19991112S0001)
So what can Microsoft do? What should it do?
I can think of half a dozen approaches that might squarely address the court's findings, meaningfully remedy the wrongs of which Microsoft is accused, and yet still allow Microsoft to remain in control of its own destiny. The following might be palatable to Gates and Microsoft shareholders:
1) Pay a huge fine. This wouldn't be enough to resolve the legal proceedings, but as show of good faith and a meaningful act of contrition, Microsoft might opt to pay a huge fine (a billion dollars?). The fine could be paid either directly to the U.S. Treasury; split between the Treasury and the States that joined the Federal suit; or some combination of both, along with a huge gift to charity--say 250,000 fully-equipped PCs to schools across the United States (roughly a $200 million proposition). If nothing else, it would be a huge PR success, and could help Microsoft to rehabilitate its public image by actually performing an obvious public good.
2) Unbundle the browser. The Judge's reactions to the courtroom demonstrations this past summer suggest to me that he might accept the functional elimination of Internet Explorer from the Windows package as a step toward resolving the suit. Microsoft could build a simple yes/no question into the Windows setup scripts that would either install or not install the Microsoft browser, at the users' choice. (Microsoft's semantic arguments aside, this isn't that difficult to do. For example, Microsoft could leave the underlying TCP/IP plumbing intact and simply eliminate the visible, obvious browser.) People could still choose IE if they wanted it, but the key thing is that user choice would be restored.
3) End all secret deals. End all preferential pricing for original equipment manufacturer partners, except for normal volume discounts. Microsoft should have a single, public price sheet that applies to everyone, whether or not they're friends of Microsoft.
I think Microsoft could implement items 1 to 3 in short order. They'd address the worst of the excesses the company is charged with, do some real good for the industry, for the community--and for Microsoft. But they still might not be enough. So here are three more options:
4) Publish all application programming interfaces; forswear use of any undocumented calls. Many of the fears of Microsoft competitors could be eliminated at a stroke if Microsoft were more open about the way their operating systems and applications work. By documenting and publishing all APIs, without exception, and not making use of any API until it has been published, Microsoft still could innovate and alter its operating systems and applications. But it would do so in an open and fair way that would allow competitors to create products that work well with Microsoft's and that could not be sabotaged by hidden code.
5) Self-limit the tying of applications to the operating system. Years ago, Bill Gates once told me, "By the time 80% of users are using an add-on product, it's time for that add-on to become part of the OS." It's not a horrible idea on the face of it: If 80% of users need some add-on product that the OS itself isn't providing, you can argue that it's being responsive to customers to build that add-on into the operating system. But whether doing so is a monopolistic abuse depends on how you define an "add on." For example, when many of Microsoft's customers started using DOS and Windows on networks, Microsoft added networking to the base operating system. Few would argue that this was a bad thing. But 80% of Microsoft customers use browsers, and the court seems to be saying that adding that to the operating system was definitely not OK. Pushing the argument further, almost all of Microsoft customers use word processing applications. So, should WordPad be replaced with "Word Express?" (I think not.) Clearly, there is some line that distinguishes true operating system-level functions from applications. If Microsoft could clearly articulate that distinction in a way the court could approve, and pledged not to build application-level services into the operating system, Microsoft could self-limit its power. Competitors would know that they could safely develop products in certain areas without the threat of Microsoft simply absorbing their market into future versions of the operating system.
6) Voluntarily split Microsoft into applications, operating systems, and services divisions. If none of the above works, perhaps Microsoft should bite the bullet and reorganize itself before the court does it for them. I personally think the Baby Bills idea is silly and unworkable, but splitting the current company into three independent companies could be a good thing. If the applications division is worth its salt, it shouldn't need any under-the-table, insiders' help from the operating system people, and vice versa. Although this is the most radical and dangerous option of the six I list here, it could be made to work if it were done carefully and without the "beat Microsoft into the ground" tenor that seeps out from the language of the findings of fact.
Are there other remedies you'd seek? Would you simply stonewall, refusing to give an inch, and hope to win on appeal? Or would you go even further than the steps I've outlined? Please tell us your thoughts, and discuss the poll results above: Join in the discussion!
What would you do if you were Bill Gates? Which of the six alternatives above, alone or in combination, would you opt for?
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