Monopoly Busters

Who is right? Bill Gates, commenting on the recent DOJ ruling asks "can a successful American Company continue to improve its products for the benefit of consumers?" or is the Department of Justice (DOJ) who found that Microsoft has a monopoly and abused that power. DOJ found Microsoft's, "corporate practise was to pressure other firms to halt software development that even showed the potential to weaken the applications (new software) barrier to entry or that competes with Microsoft's cherished products"

Microsoft's muted reaction said the ruling was only a first step in a long series of legal steps. The DOJ's report 169 pages

(http://www.zdnet.com/zdnn/special/9911msdoj/findfact.html) is not so temperate in its findings. DOJ found through Microsoft's market position ,95% of all PC operating systems (OS) are Windows based, that consumers had no choice but to continue with Windows compliant software. Microsoft has no incentive to keep prices low as any consumer who chooses another OS will incur great expense. This problem is further excoriated as new original equipment manufacturers (OEMs) have to install Windows OS to ensure the widest possible customer base for their product.

Microsoft has deliberately followed a corporate policy to tightly integrate their browser, Internet Explorer, with every new and/or updated windows release. The code is so tightly integrated in the windows registry that it causes other non Microsoft browsers to operate with great difficulty in a Windows environment. The code necessary to ensure smooth operation of third party software was denied to Independent Software Vendors (ISV) who produced software rivalling or replacing Microsoft products. Those ISVs who chose to ally themselves with Microsoft had to sign licensing agreements disallowing them to carry or resell any rival or alternative software solutions. IBM was involved in a long provocative struggle with Microsoft because they chose to sell Lotus Office Suite and Lotus notes to their customers rather then Microsoft Office. This instigation cost IBM 31 million in additional payment to Microsoft. IBM was also required to pay a much higher premium that other OEMs for the right to use Windows Operating systems on IBM's new computers.

The large existing customer base of windows forces ISV to write applications first and foremost to the Windows environment. Each time Microsoft introduces "new and improved" operating systems Microsoft must convince ISVs to write new programs. As it is easy, but at a cost, for existing Windows users to upgrade ISVs must develop new software to run over the upgraded systems. Microsoft supplements developers incentives by extending various "seals of approval" to their software or hardware.

Microsoft licenses prohibits the transfer of an operating system licensee to another machine. It requires each new machine to have its own license. Microsoft forces OEMs to install the newer programs by increasing the price of the older OS versions, although the OS never "wears out". Microsoft licensing agreement with OEMs will increase user charges to the OEM unless the OEM drastically limits the number of PCs it sells without a pre installed Windows OS. Use restrictions are placed on any OEM "software bundles" that Microsoft believes could weaken Microsoft's own position as a software vendor.

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