The Justice Department’s antitrust suit and Judge Jackson’s finding of fact have focused on how Microsoft used its operating system dominance to wrest control of the Web browser market from Netscape. Perhaps even more significant is the untold story of Microsoft’s attempts to corner the Web server market. As someone whose company competes directly with Microsoft, (we sell a Web server called WebSite that runs on Windows NT, and we are active in promoting Perl, Linux and other open-source technologies), I’ve been privy to some of the not-so-small details that have guided the course of this recent history. And, it seems to me that if it weren’t for the work of a small group of independent open-source software developers, the Justice Department intervention might have come too late not just for Netscape but the Web as a whole.
Judge Jackson’s analysis completely avoided the server side of the equation — and it is the server which has turned out to be the real next-generation platform. When Judge Jackson talks about applications and APIs, he’s clearly still thinking about Office-style desktop applications residing on the PC, albeit running in the browser rather than directly on the native operating system. Yet the most interesting new applications of the past few years don’t reside on the PC at all, but on remote Web servers. I’m talking about Amazon.com, eBay, E-Trade, Yahoo Maps and so on.
The server side of the Web is the new platform that Microsoft was rightly afraid of.
The government’s case didn’t focus on the server side because Microsoft doesn’t hold a monopoly position there. Browser-access statistics prove fairly conclusively that even in Netscape’s heyday, the majority of clients were running on the Windows platform. But on the server side, the dominant market share belonged — and still belongs — to UNIX-based servers, particularly the open-source Apache Web server and its derivatives.
Microsoft might argue that the importance of Apache and server-side technologies like Perl, PHP and Java servlets demonstrate that competition abounds, and that as a result, Microsoft doesn’t have an effective monopoly. But the situation is more complex than that. The company clearly has a monopoly on client-side operating systems and has consistently tried to use that monopoly to extend its leverage to any new platform it can.
In fact, the rise of Microsoft’s Internet Information Server (IIS) as the dominant Web server on NT shows much the same pattern as the rise of IE as the dominant browser: Microsoft got pole position by exercising its unique leverage as an operating system vendor.
Originally IIS, Web server software that runs only on the NT operating system, was bundled “free” with a version of NT called NT Server. Web server vendors such as Netscape and O’Reilly responded by pointing out in our advertising and PR that if customers ran our third-party Web server software on NT Workstation (a less expensive version of NT, which came without the IIS Web server software), they would end up with a more powerful server than Microsoft’s IIS running on NT Server — and it would cost less too.
Much as it had done by bundling the browser with Windows 98, Microsoft was bundling an application — the IIS Web server — as part of an operating system, (NT Server). But in this case, the company offered another version of the same operating system without the bundle, (NT Workstation). It seemed natural to competitors to offer our products on top of the version of the operating system that came without IIS.
It did not, however, please Microsoft that we did so. In June 1996 Microsoft responded by changing the license to NT Workstation to prohibit its use as a server platform. (At first, the company went further, and actually crippled the version of TCP/IP provided in NT Workstation, but the outcry from users forced it to backtrack.)
Microsoft argued, quite rightly, that it had the right to create two different versions of NT, with different price points, and different functionality. But the company went a step further, and used its operating system license (and more specifically the license to the parts of the operating system that implemented TCP/IP, an industry standard protocol) to prohibit the use of third-party applications that duplicated the functionality of Microsoft’s more expensive platform.
Microsoft’s public rationale for the policy — that it was protecting its customers because NT Workstation was not suitable for use as a server operating system — was proven false by my colleague, former O’Reilly editor Andrew Schulman (working with Mark Russinovich). Shulman and Russinovich demonstrated that it was possible to convert NT Workstation to NT Server by changing only a few registry entries. NT Workstation contained all of the same program code as NT Server; the code was simply disabled, and some additional applications bundled.
It’s unfortunate that Judge Jackson wasn’t aware of this 1996 use of the registry to suppress NT Server functionality in NT Workstation. He might have enjoyed the irony of Microsoft’s complaint about a Justice Department attempt to disable Internet Explorer in Windows 98:
“Microsoft contends that [the Justice Department consultant, Princeton University Professor Edward] Felten’s prototype removal program does not remove Internet Explorer’s Web browsing functionalities, but rather ‘hides’ those functionalities from the perspective of the user,” reads paragraph 183 of Judge Jackson’s findings. “In support of that contention, Microsoft points out that Felten’s program removes only a small fraction of the code in Windows 98, so that the hard drive still contains almost all of the code that had been executed in the course of providing Internet Explorer’s Web browsing functionalities.”
This is just what Microsoft itself did on NT three years earlier. If editing the registry to hide functionality, and offering two versions of an operating system — one with, and one without a bundled application — was an acceptable business strategy then, why was it not possible to do the same thing to produce a version of Windows 98 without an integrated browser?
The main point is that in each case, Microsoft used its power over the operating system to tilt the playing field in its favor, doing its utmost to crush the competition in a hotly contested Internet application area. In the browser arena, Microsoft bundled a browser into the operating system that runs most of the world’s PCs and then created obstacles for Netscape to package its browser on new PCs. In the server arena, Microsoft used a very similar tactic; it bundled the IIS Web server software with the NT operating system and then created roadblocks and financial disincentives for NT users to use alternate server applications. As a result, Microsoft was able to reserve the greatest slice of Web server space on NT for itself.
But Microsoft’s operating system is not nearly as entrenched in the server world as it is in that of the PC. So, once the company effectively blocked third-party Web server vendors on NT, Microsoft next set its sights not just on servers that ran NT, but on all Web servers. It was widely reported that during the summer of 1996 (that same summer that Microsoft revised its NT Workstation license to disallow its use as a server platform), Bill Gates told securities analysts that he considered Apache, rather than Netscape, to be his company’s chief competitor in the Web server space. And of course, by then, he was right.
Microsoft’s IIS is today the number two Web server — with 25 percent market share to Apache’s 54 percent, according to an October survey conducted by Netcraft. But for the Justice Department scrutiny, might not Microsoft have mounted an all-out attack next on the open source technologies and open protocols of the Web?
The infamous “Halloween Documents,” internal Microsoft documents analyzing a possible response to Linux describe a strategy of “extending” the “commodity protocols” on which open source projects depend, as a way of denying open source an entry into the market.
Whether or not the same tricks Microsoft used against Netscape in both the browser and server markets would have worked against Apache, we’ll never know. However, it is clear that if not for Apache’s continued dominance on the server side, the protocols and APIs on which the Web depends would have belonged almost entirely to Redmond. (The Apache Group’s firm embrace of open standards is one of the great unsung stories of the Web, and a key part of the magic that has kept its innovation alive.)
I don’t think people realize just how close we came to a Microsoft-dominated Web. If Microsoft, having trounced Netscape, hadn’t been surprised by the unexpected strength of Apache, Perl, FreeBSD and Linux, I can easily imagine a squeeze play on Web protocols and standards, which would have allowed Microsoft to dictate terms to the Web developers who are currently inventing the next generation of computer applications.
It reminds me a bit of World War II. France (Netscape) has fallen, and the Battle of Britain is being fought for the Web, with the stalwart resistance of the Apache Group holding up the juggernaut till the rest of the free world can get its act together. Whether Linux and the rest of the open source movement, or the Justice Department and the courts, play the role of America, I leave to history to determine.