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CRACKING
DOWN
ON
MICROSOFT
The Justice
Department has
a long history of
mistaking
innovators for
monopolists
BY LAWRENCE J. SISKIND
THE DEPARTMENT OF JUSTICE has
painted its assault on Microsoft Corp. as a campaign against
tying. Microsoft, the government says, should not be
allowed to force manufacturers who load Windows95 onto
their computers to include the Internet Explorer Web
browser.
Close inspection, however, reveals that the DOJ is not
guarding against tying -- it is guarding against change. And
while the Justice Department has won the first round
against the software giant, the question of whether that
change is good or ill should be left to the market to decide,
not the government.
When the DOJ charged Microsoft with violating their 1995
consent decree, it cited Sec. IV(E)(I), which bars Microsoft
from conditioning the licensing of any one product on the
licensing of another. Microsoft's Windows95 operating
system includes the Internet Explorer -- IE -- Web browser.
Microsoft openly forbids PC manufacturers licensed to load
Windows95 from removing the browser. To Joel Klein, head
of the DOJ's Antitrust Division, this is unlawful tying, plain
and simple. "We think the evidence will show unmistakably
that these are two separate products," he said. "Everybody
knows you have an operating system and you have a
browser."
Everybody also knows that whenever a lawyer begins a
statement with the phrase "everybody knows," the
consequent proposition will be questionable at best. Mr.
Klein's statement was not flat-out wrong. But it was flat-out
nearsighted. The only thing "everybody knows" about
operating systems is that they are constantly changing.
Mr. Klein's statement was not
flat-out wrong. But it was flat-out
nearsighted. The only thing
'everybody knows' about operating
systems is that they are constantly
changing.
An operating system program controls the operation of the
computer, determining which programs run and when. It
also coordinates the interaction between the computer's
memory and its attached devices. When the world's first PC,
the Altair 8800, appeared in 1975, its operating system
didn't have much to operate. The product was a
do-it-yourself kit, without display screen or printer.
Operating systems became more complex as personal
computers became more versatile.
FAR-FLUNG PERIPHERALS
Contemporary operating systems are as far removed from
the early operating systems as Cape Kennedy is from Kitty
Hawk. They have evolved to manage a growing array of
peripherals: keyboard, monitor, disk drives, printer, fax,
modem and more. They have also embraced new features
and capabilities: data compression, disk defragmentation,
multimedia extensions and data transmission technology.
All of these features, by the way, once existed as separate
programs. Yet no one views their inclusion in modern
operating systems as any kind of tying.
Which brings us to the Windows95 operating system. When
Microsoft began to develop Windows95, then code-named
"Chicago," it decided to build Internet technology into it.
The early elements of this technology included a Web
browser and were code-named "O'Hare." The very first
commercially available versions of Windows95 included
Internet Explorer as a component. Since then, IE has been
repeatedly upgraded, with each successive version more
tightly intertwined with the rest of the operating system.
The most recent version, IE 4.0, is ubiquitous, and allows
the user to explore World Wide Web sites from anywhere on
the computer. One can connect to the Web without even
opening the browser, and one can view Web sites (called
"channels") without connecting to the Internet.
What is true about Windows95 also holds true for rival
products. Brit Hume recently observed in the Weekly
Standard: "The distinction between browsers and
operating systems has blurred to the point where it's not
clear where one ends and the other begins." Every major
contemporary operating system now contains Internet
technology.
Designing an operating system to
access the Internet represents a
quantitative, rather than a
qualitative, change.
The intermeshing of operating systems with Internet
capabilities is eminently logical. These systems have always
been designed to access information. In the early days, that
meant accessing hard drives and floppy-disk drives. With
the advent of the CD-ROM, they were designed to access
data from that source. As businesses brought PCs into the
office, computers became linked together into networks;
operating systems were designed to access information from
local area networks.
The Internet, for all its unimaginably vast dimensions, is
just another repository of information to a computer.
Designing an operating system to access the Internet
represents a quantitative, rather than a qualitative, change.
MICROSOFT SLACKING
Ironically, this is not a change sponsored or spearheaded
by Microsoft. If anything, Bill Gates has been a laggard in
this area. His rivals are far ahead and he is playing
catch-up.
The great proponents of Internet-driven computers have
emerged from Silicon Valley, not from Redmond, Wash.
Larry Ellison, CEO of Oracle Corp., has long championed
the idea of the "network computer." Consider computers as
underwater divers. Equipping each diver with his own tanks
is wasteful and inefficient. It imposes severe limits on how
long and how far the diver can explore. Instead, let every
diver be connected to a surface mothership. The connection
frees the diver from the limitations and burdens of carrying
his own tanks. Similarly, loading millions of PCs with their
own copies of software programs is a waste of resources.
Instead, let every computer be networked and draw its
software needs from the vast store of the Internet. The
result, Ellison says, would be high-quality personal
computers retailing at about $500.
In line with this thinking, Sun Microsystems has developed
Java, a language that allows programmers to create
Internet-based applications capable of running on any
computer, regardless of operating system. Sun's CEO, Scott
McNealy, notes that 400,000 programmers (including 2,500
at IBM) are currently writing programs in Java language.
The libertarian journalist and futurist George Gilder
believes Java will revolutionize personal computing and
render proprietary systems like Windows obsolete.
If the future of personal computing is indeed linked to the
Internet, then weaving Internet technology into Windows95
(and even more intimately and pervasively into Windows98)
is not a grab for power. It is a clutch for survival.
Which brings us back to the DOJ's decision to prosecute
Microsoft for tying. Some have suspected a political bias,
noting that in 1992 and 1996 Silicon Valley entrepreneurs
were among Clinton's best friends in the business
community. Microsoft, on the other hand, has always
remained aloof from politics.
'INSTITUTIONAL MYOPIA'
But I believe the attack on Microsoft stems from
institutional myopia rather than political bias. The DOJ's
Antitrust Division may understand the law and may be
sincerely dedicated to enforcing it fairly. But it has no way
of knowing where the economy is headed or how fast it is
heading in that direction. Instead, the division views the
economy as static. An operating system will always be an
operating system. A browser will always be a browser. Just
like timber, coal or oil: Products do not change.
Because of this institutional myopia, the DOJ has a history
of marching down wrong roads. In 1969, it prosecuted IBM.
Fifteen years passed before the department finally
understood what every high school techno-geek already
knew: The computer industry was dynamic, and Big Blue
was not dominant.
If the Internet is the future of
personal computing, then weaving
Internet technology into Windows
is not a grab for power. It is a
clutch for survival.
The hapless campaign against IBM probably did no harm.
Other Antitrust Division missteps have. In the 1960s and
'70s, long after most Americans had abandoned the
neighborhood Mom-and-Pop store for the national chain,
the DOJ was prosecuting Topco Associates, a cooperative
association of small grocery chains. The DOJ wanted to
protect the association's small regional members. It failed to
notice the dynamic changes already apparent to the
average shopper. The days of the Mom-and-Pop grocer were
over. And while the DOJ was successfully squashing Topco,
its much more powerful rivals -- The Great Atlantic & Pacific
Tea Co. Inc. (A&P), Safeway Inc., the Kroger Co. -- were
assuming dominance over the grocery business.
The same myopia underlies the decision to prosecute
Microsoft. Enslaved by its institutional myopia, the DOJ
simply cannot understand that operating systems change.
Thus, it sees tying when in fact there is transmutation.
Internet-oriented operating systems may be the wave of the
future. Or they may be a detour to nowhere. Not everyone
likes or needs the endless waits, the superfluous graphics
and the flood of irrelevant and unwanted information that
always seem to accompany excursions onto the Internet.
Nothing is certain in high tech; business empires rise and
fall with stunning rapidity. Confronting this sometimes
creative, sometimes destructive turmoil, a wise government
would recognize its limitations and restrict its role. Whether
Windows95 should include Internet Explorer is a question
best left to the millions of jurors who make up the
marketplace.
AUTHOR
LAWRENCE J. SISKIND is a San Francisco attorney who specializes in
intellectual property law. Mr. Siskind owns stock in Microsoft Corp. He hopes
that his pro-Microsoft opinions, once published, will influence the price of his
stock favorably. The expectation of financial gain has colored, if not
dictated, the opinions expressed in his article.