Money talks, Microsoft walks

Bill Gates lets out a big "Whew!" as the court decides that what's good for Microsoft is good for America.

By Scott Rosenberg
Published November 3, 2002 3:40AM (UTC)
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This is the way the Microsoft antitrust suit ends: Not with a bang but a whimper.

With their proposed settlement last autumn, the hollow men of the Bush Justice Department had already gutted whatever remnant of serious penalty or constraint against Microsoft that had been won during the five-year legal process. Now, with that settlement largely rubber-stamped by Federal District Judge Colleen Kollar-Kotelly, the endless process is, if not over, close to a finale.


Certainly it's conceivable there will be further appeals. But this round was the last credible chance for the nine states that decided not to settle for the Department of Justice (DoJ) terms to wrest some further results from the courts. From here on in, Microsoft chairman Bill Gates and his team can breathe a lot more easily. The rest of us personal computer users are in a somewhat less comfortable position.

Microsoft need spend not a cent of its $40 billion monopoly profits, beyond settling what are no doubt hefty legal bills. The company, which both district and appeals courts agreed had substantially violated the antitrust laws in its pursuit of browser-market dominance, is free to use most of the same tactics the next time it casts its eyes hungrily on new technology turf. Indeed, as Farhad Manjoo's two-part Salon series on a patent battle over Windows Media chronicled earlier this week, Microsoft has already begun to do so.

Certainly, the settlement rules out some of the crudest and most obvious below-the-belt behavior that Microsoft engaged in during the years it fought to replace Netscape's browser with Internet Explorer on the desktops of millions of Web surfers. Microsoft will be prohibited from discriminating against computer manufacturers ("OEMs") who choose to preinstall software that competes with Microsoft "middleware" (software, like the Web browser, that sits on top of the operating system and has the capability to become a software platform in its own right). OEMs are free to add icons and such to the Windows desktop, to bundle Internet service deals and to rig their new computers to automatically launch non-Microsoft applications. OEMs and users are supposed to be able to "turn off" access to "various types of Windows functionality" if they can find a replacement they like better.


However, when it comes to the heart of the problem -- the way Microsoft chose to weave Internet Explorer code into the guts of Windows in a manner that served no conceivable user benefit but that helped Microsoft elbow Netscape out of the market -- the settlement as tweaked by Kollar-Kotelly simply wimps out. "The evidence does not indicate that the removal of software code is beneficial from an economic perspective. The Court also finds that the forced removal of software code from the Windows operating system will disrupt the industry, harming both ISVs [Independent Software Vendors] and consumers."

The argument here seems to be: Let's not tamper with the innards of Windows, because who knows what might happen then? It's not an unreasonable question -- except that, by refusing to dig into the code, Kollar-Kotelly ensures that the remedies provided by the settlement will be cosmetic. And as long as Microsoft remains the untrammeled master of the Windows code, it can still find ways to trip up potential competitors without ever having to resort to anything so crude as threats to "cut off their air supply" or demands that desktop icons be removed.

Kollar-Kotelly's decision is persuasive at the level of detail; it is in sum that it fails to support its conclusion that the proposed settlement is indeed "in the public interest" -- a certification that's required by an obscure law known as the Tunney Act.


Kollar-Kotelly defines her mission, under orders of the appeals court that sent the case back down to her, in the narrowest of terms: How do we stop Microsoft from impeding competition in this particular market ever again? The trouble here is that this market is as dead as the unfortunate parrot in the Monty Python skit, and has been for most of the five years this legal process has taken.

Restoring competition in the browser -- or even the "middleware" -- market is a pointless exercise today. The unknown innovation, potential productivity and profits that a more freely competitive marketplace in this area might have provided are gone now, irretrievable. The technology industry has moved on to other realms. The only useful public interest in a legal process as monumental as the Microsoft case is to see to it that, next time around, in the next equivalent of the browser war -- whether it takes place in the arena of Internet-based video or mobile telecom or (most likely) some new product class that you and I haven't even heard of yet -- Microsoft does not repeat its historical pattern of "embrace and extend" and crush.


By that standard, today's news is not, as Attorney General John Ashcroft has it, "a major victory for consumers and businesses." It is a sad retreat from the notion that the government has the ability to restrain the anti-competitive behavior of the nation's most arrogant and unrepentant repeat violator of the antitrust laws.

My hunch is that the prevailing view of this case today, both in the Bush administration and among the judiciary, is: "Don't you know there's a war on?" With the economy in the tank, the government and the courts are unwilling to keep on challenging one of the pillars of the Dow Jones Industrial Average. The California-based companies largely seen as Microsoft's chief opponents have the bad fortune to live in a state that Bush's political party has had to write off anyway. And the widespread fraud that has come to light at firms like Enron and WorldCom represents corporate evildoing of much less ambiguity and complexity than Microsoft's, leaving Gates and company happily out of the spotlight and the hot seat.

Back in 1998, when the Justice Department first filed the suit that is now limping to its final resting place, I wrote, "Given the supersonic pace of the technology industry, browsers will probably be a dead issue by the time this lawsuit is resolved." I was right, only too optimistic in my time frame. Browsers became a dead issue before the suit even came to trial.


But if this were only about browsers, everyone would have gone home long ago. Ultimately, it's about whether one company should or will have the power to dominate, control and suffocate any technology market it enters. Yesterday and today, Microsoft has had that power. The court's decision means the company will have it tomorrow, too. If that's in the public interest, then I guess Microsoft 'R' Us.

Scott Rosenberg

Salon co-founder Scott Rosenberg is director of He is the author of "Say Everything" and Dreaming in Code and blogs at

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