MS breakup proposal gets mixed reaction

The proposal to split Microsoft into two separate companies has some industry observers expressing outrage at the mere suggestion of dividing up the company and others saying action might actually benefit the software giant.

          The US Department of Justice's proposal to split Microsoft into two separate companies has touched home in the IT industry, with some observers expressing outrage at the mere suggestion of dividing up the company and others viewing the action as one that might actually benefit the software giant.

          Many IT workers saw the proposal for a Microsoft breakup coming, based on US District Judge Thomas Penfield Jackson's November 1999 findings of fact that showed that the government believed Microsoft was an illegal monopoly.

          "After last November, you kind of saw it looming on the horizon," said an IT administrator who wished to remain anonymous. "We would joke about it, about 'Baby Bills' running around, and I think, to a certain extent, that Microsoft got what it deserves. The problem is, we don't know what all this will do to the rest of the tech world."

          Jonathon Zuck, president of Association for Competitive Technology, a Washington-based trade association representing more than 9,000 companies in the IT industry, said he was "blown away by the ludicrousness of the [Justice Department's] proposal."

          "The potential for collateral damage here is enormous," Zuck said. "It's more than Microsoft; it's going to be small businesses that are trying to go out and get funding or IPOs that are going to be denied that funding. It's small businesses that are affected the most when the government begins to intervene and regulate an industry. I kept expecting to see horns appear on [U.S. Assistant Attorney General] Joel Klein's head as he tried to spin some yarn about how new and innovative products would be created by this, in a market that anybody who's objective would realize doesn't need any help from anyone."

          Others felt that the Justice Department is getting in over its head by trying to make decisions and rulings regarding the fast-paced technology world, especially because so many aspects of the IT market have changed since the legal skirmish began in 1997.

          "I don't think the people who are making these recommendations understand we could be shooting ourselves in the foot big-time," said Greg Scott, an IT manager at the College of Business at Oregon State University, in Corvallis, Oregon. "The court system moves so slowly that a lot of the problems they're trying to rectify are, to some degree, moot because of changes in the market, changes in the relationship between companies and technology. I think Microsoft does not own the Internet. I think they are in catch-up mode, so this whole issue about browsers, that's long past being on the bottom of my birdcage."

          However, others said that a breakup of Microsoft would not hurt the company as much as some are predicting, noting that Microsoft does have a tendency to push through obstacles put in its path and continually end up on the top of the heap.

          "I don't believe much will change," said Kevin Oerton, a group product manager for the semiconductor division at ATI Technologies, in Unionville, Ontario, Canada. "Microsoft is a very large organization, and we already deal with key managers within the company, and I feel our channels of communication would remain strong without getting anymore complicated."

          Ken Claggett, president of Syzygy International, a software development company in Fort Lauderdale, Florida, agreed.

          "If I were Microsoft, I would just say, 'Hey, I've learned my lesson and let's get on with business,'" said Claggett, adding that owning stock in two Microsoft-based companies might not be all that bad.

          Although Microsoft has said it will oppose proposals to break up the company, most in the IT industry are looking beyond the effects on Microsoft alone and wondering what the Justice Department's proposal will mean for the industry as a whole.

          "Gates, Ballmer, and company will probably come out of all this smelling like a rose, or two roses as the case may be," said the IT administrator. "The problem is, this might scare a lot of people out of the market -- a market that's already pretty touchy about technology issues -- and that could mean bad news for the startups that are trying to get off the ground."

          According to Zuck, whenever the government begins to regulate an industry, "it's small businesses that are affected the most," especially in the IT industry where small, companies are the ones pushing the innovation envelope.

          "This is the most successful segment of our economy," Zuck said. "The pace of innovation is like trying to drink out of a fire hose, and yet some guy that's never built a business in his life is telling us all about how he's going to fix it. I don't get it. I've been in the software business for 15 years, and I know that the way MS will be defeated is through superior products, and as long as their products are the best, they'll continue to be the most popular."

          Because Microsoft intends to oppose the proposed breakup, it is likely this case will linger in the appellate courts for a good amount of time, Zuck added.

          "My hope is that this is a tempest in a very small teapot," Scott said. "I'm hoping that as this thing plays out in the legal arena -- aside from all the media stuff that's happening in the foreground -- that cooler heads are going to prevail and whether there's legal justification for some adjustment I don't know; I'm not an attorney. But I think that the idea of a breakup scares the hell out of me."

          Regardless of their opinions on the breakup proposal, most users did agree on one point: The coming days will certainly be full of pundits, radio shows, and television programs slinging their own opinions.

          "Either Microsoft or somebody else is going to have to eat some crow to fix this up in the end," said the IT administrator. "I swear, between Elian Gonzalez and this trial, I can't leave the house without seeing a news story I wish would just go away completely."

          Stephanie Sanborn is an InfoWorld reporter. Dan Neel and Bob Trott also contributed to this article.

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