The clock is ticking down, the lawyers are huddling, and any day now, we will be hearing what -- if anything -- the Justice Department plans to do about Microsoft. Windows 98 is set for a June 25 release, requiring that it be shipped to computer manufacturers mid-May. For federal and state antitrust lawyers contemplating a move to rein in Microsoft's operating-system-based power, it's now or never.
That explains the extraordinary PR barrage that began last week. On Thursday, Microsoft took out ads in the New York Times, the Wall Street Journal and other publications defending its position in the long-running dispute with the government. In the grand tradition of Mobil Oil's op-ed page punditry, Microsoft's ad took the form of a lofty unsigned editorial explaining why regulating the company would not be so much bad for Microsoft as bad for America.
The reason? Innovation. Innovation has become Microsoft's watchword in its struggle to win the public's loyalty -- always a difficult task for a gigantic corporation that owns 90 percent of its market. If people would just understand that the practices the Justice Department considers anti-competitive are instead innovations, maybe Microsoft would stop looking like such a bully. "At Microsoft," the ad concludes, "the freedom to innovate for our customers is more than a goal, it is a principle worth standing up for."
But what is innovation, anyway? To most of us, innovation in business is a matter of introducing new products or new, better ways of doing things. Somebody else may come along and figure out how to get those new products and practices into wide use. But this second person isn't so much an "innovator" as a consolidator -- or a marketer.
Microsoft's ad puts its own spin on the definition of innovation: It's "the ability to integrate a vast array of seemingly unrelated capabilities." That word "integrate" doesn't appear by chance. At the heart of Microsoft's quarrel with the government lies its determination to roll more and more new functions -- like Web browsing -- into the Windows operating system.
Maybe such an approach serves public convenience, as Microsoft maintains; maybe it inhibits the competitive marketplace, as the antitrust lawyers argue. But who in his right mind would call this "integration" an innovation? Inventing a Web browser is innovative; shoving its code into an operating system -- even elegantly weaving its code into an operating system -- is hardly a creative act of the same order.
Innovation," Microsoft's ad declares, "results from a spirited
competitive environment in which one company's good ideas spark more great
ideas in other companies." But what about when one company's good ideas
instead just spark Microsoft to buy it? Last week Microsoft went on with
its merry business of buying up other innovators. Its latest acquisition,
Firefly, is a once-high-flying Internet startup that specializes in intelligent agent
technology. Microsoft, however, apparently bought it for its work in the
area of online privacy "protection."
When the New York Times Magazine profiled the company last year, one of
its founders, Max Metral, described how small, innovative software
companies think about Microsoft: "All we can do is meet with them and try
to see what they're going to do to us when they feel like doing it."
Do we still have a "spirited competitive environment" when the market
trembles at Microsoft's every pinky-quiver -- or when the competition is
not for customers' minds and pocketbooks but rather for the interest of
Microsoft's acquisitions department? And after Microsoft is done with its
acquisitions and establishes new de facto standards by picking new
technologies, how much consumer choice remains?
These are the sorts of questions any good, heated debate of Microsoft's
place in the software industry demands. Don't look for them in the
articles and letters to the editor envisioned in the other prong of
Microsoft's PR offensive last week, though. In addition to the paid
advertorials, the Los Angeles Times reported on Friday that Microsoft was planning a
"stealth blitz" to generate favorable coverage of the company -- including
material "commissioned by Microsoft's top media handlers but presented by
local firms as spontaneous testimonials."
Is this an innovation in the creative purchasing of good publicity, or
just an old idea from the corporate PR arsenal? The concept of
"Astroturf" lobbying -- political pressure campaigns that appear to be
organized at the grass-roots level but are really paid for out of industry
coffers -- is nothing new. In any case, the plan (which targets those
states where state-level antitrust actions are moving forward) is just a
proposal rather than a settled course of action, according to Microsoft
spokespeople. Maybe so; but even by floating such an idea, Microsoft has
screwed up: From now on, even the spontaneous positive coverage it receives
may look a little suspect.
Why would a smart company do such a dumb thing? Usually Microsoft's
gaffes are attributed to its legendary arrogance, but in this case there
may be something else at work. In other Microsoft
news last week, the company announced it would voluntarily alter a
variety of content-distribution contracts that had become points of
contention with the antitrust investigations. Meanwhile, the cover of the
latest Business Week
asks, "What to Do About Microsoft: Leave It Alone, Regulate It, or Break it
One of Microsoft's current ad campaigns for its business software is
built around the phrase "Digital Nervous System." More and
more, Microsoft is looking like one nervous digital system