Which way, Windows?

Now that I've had time to read the US Court of Appeals' 150-page ruling on Microsoft, some lessons become clear: No breakup. Microsoft executives focused media attention on the fact that the breakup penalty was remanded to a different judge.

Now that I’ve had time to read the US Court of Appeals’ 150-page ruling on Microsoft, some lessons become clear:

No breakup

Microsoft executives focused media attention on the fact that the breakup penalty was remanded to a different judge. But few people seriously thought this breakup would ever be carried out. And, as I wrote in November 1999, it wasn’t even a good idea because it would simply replace one monopoly with two: Windows and Office.

No let up

Before the ruling, many expected that the business-friendly court would let up on Microsoft by dismissing most of the case. Instead, the judges unanimously agreed that Microsoft had abused monopoly power. More importantly, they said it had barred PC makers and users from removing bundled programs solely “to protect its monopoly, unredeemed by any legitimate justification”. This ruling legally impairs the software giant and aids the 100-plus private lawsuits that are under way against it. These plaintiffs qualify for triple damages if any one of them succeeds.

Here’s what I believe Windows users can now expect from Microsoft:

No remorse

Flying in the face of the judges’ ruling, Microsoft will release Windows XP with even more bundling: an MSN.com-specific browser, instant messaging, Passport, proprietary media players and so on. This will make Windows bulkier, slower and more prone to security holes. For example, when Media Player 7 was transplanted into Windows Me, mere data files suddenly became virus carriers (for a fix, see http:/iwsun4.infoworld.com/articles/op/xml/00/12/11/001211oplivingston.xml).

No recourse

It won’t be easy for users to undo these growths obscuring their Windows. But I believe Microsoft will pay a price down the road for its bundling. A new judge will determine a new penalty, and Microsoft by that time may look more like a repeat offender than a first-time delinquent.

Some claim that the whole antitrust trial is irrelevant because any penalty will come too late to bring back all the competing products that kilobit the dust. I disagree. This case is pivotal because the computer industry suffers from what economists call the “network effect”. Consumers adopt whatever software the greatest number of other people use. The company with the largest market share tends to become a monopoly.

If we want innovation, we need clear rules to counteract this effect. There is hope. Stung by criticism, Microsoft’s retreat on its new browser “smart tags” shows that some limits on absolute power are a good thing.

To restore competition, the new judge should forget about breakups and require Microsoft to license its source code for a set fee. And with numerous companies selling compatible versions, we might finally see a leaner and more stable Windows.

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