Microsoft: Guilty! And Acquitted!

For those hoping for a return to a competitive marketplace in the computer software industry, November 1st was a dark day. U.S. District Judge Colleen Kollar-Kotelly, responsible for deciding if the controversial settlement between Microsoft and the Bush Administration’s Justice Department, gave the nod.

Despite being found to have illegally used its monopoly to force its way into new markets, and destroy potential competitors to its Windows product, the approved settlement basically allows Microsoft to continue business as usual. The settlement dictates various behavioral changes, but the language has so many loop holes that Microsoft will be able to do just about anything it wants.

While disappointing and frustrating, it was not unexpected. The day George Bush stole the US election, most observers knew this would be the outcome. And technically, the legal battles are far from over — nine dissenting states plan to continue fighting, and the European Union is expected to move shortly to address concerns of Microsoft’s practices in that part of the world. But overall, it appears Microsoft have won.

This is not to say that the Antitrust trial was a waste of time and tax payers’ money — Microsoft’s true behavior was reveled to the public and the business community for the first time. Further, being under close scrutiny, Microsoft stopped threating computer manufacturers for offering alternative solutions, like Linux and Word Perfect. This allowed products to gain (or regain) a foot hold in the public’s mind which they wouldn’t otherwise have been able to do.

Thus, while the final decision didn’t return competition to the marketplace, the trial itself did, somewhat. Now that, for example, Linux has proven itself as a reliable and cost effective way to provide server and networking services, Information Technology (IT) professionals are deploying it in a wide range of locations.

Microsoft itself has caused a major re-examination of Total Cost of Ownership (TCO) issues with the introduction of new “Licensing 6″ scheme which shifts to an annual subscription model. This has resulted in some businesses paying up to three times as much for the same software they’ve been using for years. For others, this has been a impetus to examine alternatives.

This is becoming particularly prevalent in non-US countries, where both security and costs are examined, and Microsoft’s solutions come up lacking. News comes out weekly now of a South American, European, Asian or African city, county or entire country migrating away from Microsoft products.

As an example of how far this is going, Bill Gates was recently in India. While there he donated $100 million to battle AIDs, and a plan to invest $400 million promoting Microsoft products to compete against the growing popularity of Linux. More than a few cynical journalists pointed out that this suggests that Mr. Gates considers Linux to be four times as important as AIDS.

Meanwhile, the non-Microsoft software industry, realizing they were going to have to fight an unbalanced war without government intervention, have begun working together to define interoperability standards. As an example, Sun Microsystems, Corel and Boeing, amoungst others, have formed a group within the Organization for the Advancement of Structured Information Standards (OASIS) to define an open standard for office documents.

The plan is to develop a fully defined file structure to allow documents, spreadsheets and databases to be exchanged between different applications, for example, Corel’s WordPerfect and Sun’s Star Office / Open Office. This means that organizations never need to worry about their costly produced documents never become locked into an undocumented file format. Microsoft was asked to join the group, but declined.

Sun have donated Star Office’s documented file format as a starting point, with the group working towards an XML file standard. In parallel to this, Sun have just released a developer’s toolkit to promote Independent Software Developers (ISD) to produce their own products which leverage on Star and Open Office. The plan is to create an ISD ecosystem to offer products and services to consumers.

And so, while the US Justice Department missed an opportunity to punish a monopoly convicted of unfair businesses practices and prevent continued abuses, the market has learnt and adapted. US commercial colonialism continues as usual, but at least international IT players have had adequate warning to at least know how the game is played.

It will be fascinating to look back in ten years time, and see where things end up. Much like IBM before it, who also escaped from a lengthly antitrust trial, Microsoft greatest liability may simply be that no-one trusts them. It couldn’t have happened to a more deserving company.

Published in the Victoria Business Examiner.