Down To Business: When In Trouble, Sue Microsoft

You almost have to feel sorry for Microsoft. Sure, it's still one of the world's most profitable and valuable companies, and it still sits on a mountain of cash and a monopoly or two, and ... what was the point again? Oh, yeah, we were starting to feel sorry for Microsoft.

Because of its continued dominance, Microsoft is under mounting legal and regulatory pressure. Having settled with the U.S. trustbusters over its Windows monopoly, Microsoft is still slogging it out with the European authorities, which, like the Americans, have declared the company guilty of anti-competitive business practices for including too many features in Windows. Not to be left out, the Korea Fair Trade Commission ruled in December that the integration of media player and instant messaging capabilities into Windows is beastly. If Microsoft loses its appeals, it will have to develop stripped-down versions of the operating system for those countries.

So much for antitrust policy protecting consumer interests. It's hard to imagine how forcing Microsoft to distribute inferior products serves the greater good. Is the company supposed to ease up on innovation so that smaller rivals have a fighting chance?

More recently, Adobe, Symantec, and myriad other partners-turned-competitors have threatened legal action if Microsoft doesn't remove iterations of their technology from forthcoming products. Adobe this month complained that the next version of Office takes too many liberties with its PDF format, so Microsoft pulled the popular "save as PDF" feature from the software, making users download that functionality. Adobe still may sue if Microsoft doesn't charge for the patch. Symantec, which sees Vista cutting into its desktop security business, is threatening to sue Microsoft if it doesn't remove certain data management technologies that Symantec owns from the operating system. (Microsoft maintains that it bought the rights to those technologies from Veritas, which Symantec later acquired, in 2004.)

Siege warfare is a grind, but Microsoft's litigious rivals are honing it to an art form. Sun Microsystems showed the industry the way two years ago, when, after many years of legal sniping, it made peace with Microsoft for the tidy sum of $1.6 billion--receiving $700 million to resolve pending antitrust claims and $900 million to resolve patent claims. Ever since, it's been open season. In the Sun case, Microsoft chose to settle and move on. In Europe and elsewhere, Microsoft has dug in. Either way, it's spending billions that might otherwise go to product improvement and development.

Perhaps Sun and the others all brought strong cases against an infamous anti-competitor. I'm not about to defend Microsoft's every business practice as legitimate, nor am I capable of assessing the merits of every case brought against the company. But Microsoft can't make a move these days without some competitor, former competitor, or would-be competitor issuing legal papers. Can't someone kick the snot out of Microsoft in the marketplace without a court-ordered escort?

This litigiousness is one reason Google's introduction last week of a Web-based spreadsheet application is so exciting. Google doesn't try to control its every market entry. It just plows in. Google Spreadsheet is no Excel killer, especially as a tool for business users, but it's certainly a cause for concern in Redmond, as Google also is coming after Microsoft with easy-to-use E-mail, scheduling, word processing, and other apps. Meantime, a recent partnership with Dell gives the Google search appliance better inroads into enterprise accounts against Microsoft and others.

Lest we start feeling too sorry for Microsoft, it hasn't been above using niggling legal tactics to slow Google's advances, as it did last year when it sued Google for luring a Microsoft exec away to run its Chinese operations. Microsoft argues that it was just protecting its commercial interests against an overzealous competitor. Its rivals argue the same thing all the time.

Rob Preston,
VP/Editor In Chief
[email protected]

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