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Daily Wrap and Flow

Reading the Daily Wrap and Flow is a quick and easy way to follow the ebb and flow of the trial. This link will always contain the latest commentary making it easy to bookmark. This column is updated throughout the day with the latest commentary placed at the top. If you prefer external links to use a full screen see help.

tii

July 29, 1999 - Breaking up is easy to do.

But, first you must decide just what you expect to accomplish by that remedy.

Do you only want to prevent applications from being bundled with the OS so that all consumers must buy both or do you want to establish competition in the marketplace for the consumer OS itself?

If you break the company along product lines, you may or may not open up more competition for applications. If office products were separated out they may start to show up on OS/2, BeOS and even Linux. That would certainly help those systems meet the expectations of some consumers.

But, that would leave intact a monopoly in the consumer OS market. Perhaps if that company only had that one product (NT should be in its own company) it would or could be prevented from bundling applications. That would certainly benefit consumers. But, does it make it easier for OS/2, BeOS or Linux to gain market share? Perhaps. But, that company would also have to be precluded from forcing those per-processor licenses upon OEMs.

The best solution would simply be to take the code for Windows (98 and NT) and sell it openly by auction to 6 or 8 players in the industry. Microsoft shareholders would get the non-monopoly value of the assets. Then and only then would true competition exist in the consumer OS marketplace. 6 or 8 companies could each market the product. My guess is that HP, IBM, Compaq, Caldera, Novell, Symantec and even Oracle might be interested in submitting a bid. Even Inprise might give it a try. One or two venture capitalists might even put together a bid. And, of course, money from Microsoft could be permitted to buy one copy as well.

But, what would happen to the "Windows" product? Well. I assume the successful bidders would immediately form their own "private" standards group such that any changes to the code over time would conform to "their common standard". Applications would cease being bundled with the OS. That would benefit all consumers. Being able to buy a "windows" product from 6 or 8 different suppliers should also assure competitive prices rather than monopoly prices.

Would Windows be fixed? Well. My guess is that HP and IBM will make damn sure their version is more reliable than any product Microsoft has ever put out. That should be reasonably easy to do. It may take some investment, but unlike Microsoft, HP and IBM both have a good reputation to protect.

If this were done, it is also very unlikely that the market would just jell back into a monopoly state. IBM is not going away. Hp is not going away. Same with many of the other players in the industry. Major OEM such as HP, IBM, Compaq and others would most likely hold their market positions and be willing to sell their version of Windows to smaller OEMs. Most importantly there would be competition for that market.

It is not necessary to keep a monopoly in order to maintain a standard in the industry. There are many standards in the industry now. (Windows now is not a standard simply because it is proprietary. Proprietary products are never standards, only dominant.)

Most importantly both large and small software developers would have an opportunity to focus upon the products they think they can best develop. Markets for operating systems as well as all kinds of applications would be much more fair. This is particularly important for internet related technologies.

The absolutely worse scenario as we advance into the next millennium is to have any one company so dominant that they suppress superior and advanced technologies simply because they did not develop them. Witness both Java and Navigator.

Consumers deserve the benefits of real and active competition on both price and quality for operating systems and all applications. Software developers world wide deserve fair and open markets for their technology.

Microsoft Corporation has proven that it will abuse any power in the market it can gain, suppress competition whenever possible and harm consumers in the process by forcing them to buy unwanted and unneeded products.

Microsoft Corporation is the one corporation the industry just does not need nor benefit from.

July 22, 1999 - Just how much financial harm has Microsoft caused consumers anyway?

Dean Schmalensee made a big issue out of the DOJ failing to prove harm to consumers in the antitrust trial. Well. The Dean knows that antitrust laws are not consumer protection laws and he knows that consumer harm does not need to be shown. The Microsoft PR machine just wants to misrepresent the charges against them.

But, since the Dean raised the issue. The question does have an answer.

Go ahead. Answer the question posed below:

It is very easy to prove Microsoft has harmed consumers by the billions of dollars.

http://www.lamlaw.com/DOJvsMicrosoft/BILLIONS.htm

You do not think so?

Offer a rebate of $35 to all Windows 98 customers.

All consumers then have a choice:

1) they can send the money back to Microsoft if they choose to keep and use IE.
2) or, they can send the money to Netscape if they choose to use Navigator.
3) or, they can send the money to Opera if they choose to use that browser.
4) or, they can keep it if that system does not use the internet (not every machine logs onto the internet).

You are more than welcome to tell me how many consumers will choose options 1, 2, 3 and 4.

Go ahead.

Add up the consumers who you think will pick #2, #3 and #4. Multiply that by $35. Viola. Financial harm to consumers.

Microsoft Corporation in the antitrust trial tried to convince the judge that over 100 million copies of Navigator were picked by consumers and downloaded. So. I assume that Microsoft would suggest 100 million or so would pick #2, right? (this according to Microsoft).

100,000,000 times $35 is 3.5 billion according to my calculator. Does Dean Schmalensee think that 3.5 billion is not a sufficient figure to qualify as consumer harm? Or, maybe numbers just confuse the poor guy?

And, do not forget the numbers for choices #3 and #4. Just how many computers used in business applications fit #4? A couple hundred maybe?

Billions in damages can be shown many ways. But, consumer harm is not the issue in the antitrust trial. Microsoft knows that for a fact. And, that is why for PR purposes they make such a point about the lack of proof regarding consumer harm. They simply want to confuse the public about antitrust law.

July 19, 1999 - More on the Bristol case

12:04 PM PDT - I guess antitrust law and software markets are just too confusing for juries?

As I have suggested since the Bristol case was first filed, Microsoft does not have a monopoly product in NT. But, apparently the jury in the Bristol case could not even get that far. Apparently they did not even understand that workstation and server markets existed.

This is truly a risk in jury trials.

Of course, Microsoft Corporation will claim that decision proves they do not violate antitrust law. Well. We all know that OJ Simpson did not kill his wife either. Case decisions do not really ascertain reality. They only decide the legal result. They only decide whether the legal system is going to provide a remedy. In the OJ case, Mr. Simpson was techically found not guilty. That was the verdict. But, that does not mean he did not kill his wife. If you can not understand that distinction, you do not understand the legal system we have.

However, the Bristol case does point out one other factor in legal proceedings. And, it does apply directly to Microsoft. Just because you violate the law and know you did so is not necessarily a reason to accept that conclusion or change your business practices. You can always hope that the trier of fact (judge or jury) will misunderstand the issues of the case and render a bad decision in your favor. Obviously, this is a large part of Microsoft's plan in failing to settle the DOJ case.

Microsoft could easily sell and distribute IE separately from the OS and clear up the DOJ case. They are only hoping they can violate the antitrust law and get away with it. It is this obvious attitude that has corrupted Microsoft Corporation.

11:30 AM PDT - Microsoft Corporation ISVs and OEMs better start to wise up

If you think that Microsoft Corporation has any interest in mind other than its own, think again.

A lot of Microsoft ISVs have, up to this point in time, supported Microsoft in its defense of the antitrust charges pending before the various courts. They have done this both publicly and privately. The Bristol case (and others) should sound a clear warning.

Historically, major computer software companies have helped others establish themselves in the marketplace. Both IBM and HP have helped Microsoft Corporation enormously over the years.

Microsoft Corporation in turn seeks only to destroy any company that does not do precisely as Microsoft Corporation wants.

Wise up kids.

July 16, 1999 - Bristol always had a tough case to prove.

It is hardly a surprise to find the decision in the Bristol case lets Microsoft off the hook.

The Bristol case was primarily about NT not the consumer OS product Windows 98. Windows NT does have competition. NT competes with OS/2, Linux and Unix versions. That is an important distinction.

Non-monopolists (NT not being a monopoly product in its marketplace) are pretty much free to deal or not deal with other companies as they see fit.

The overall result of this case however is harmful to the industry. Bristol is all but wiped out. Cross platform tool availability is reduced. And competition is reduced.

Remember how hard Dean Schmalensee tried to prove Windows 98 had competition? Well, he will have to continue to rely upon ghost stories a bit longer, I suppose.

July 14, 1999 - Does Microsoft play favorites in the marketplace?

You know. Where they charge one company a high price to set the price in the market agreeing to promote the company that signs on and knowing that any company without such promotion will refuse to pay the high price? Just so that one company will go away? It appears they do.

Of course, then Microsoft says "look, market price". But, the price only makes sense if Microsoft uses their monopoly power to promote your services.

It is just another way for a Monopolist to get more money in exchange for selling their power.

And, yes that does violate the antitrust laws.

The Bristol case is being heard by a jury. However, Bristol should get a favorable decision.

July 13, 1999 - Bristol does have a tough case to prove

But, Microsoft continues to falsify evidence.

Bristol has a tough case to win. There is no doubt about that.

But, just what is Microsoft claiming when they argue that Bristol can license NT source code into "perpetuity"? Is that the same as saying you can buy Windows forever, you only have to pay the price we set?

Microsoft constantly makes non relevant legal claims hoping that the public will be fooled off of the real issues at stake. A few days ago Dean Schmalensee wrote an article in the Boston Globe arguing that the DOJ failed in their case since they failed to show consumer harm. Well. The Dean knows that consumer harm is not required to be shown in antitrust cases. Consumer harm is just not relevant. Preclusion of competition is the issue. If competitors are precluded, consumers are presumed to be harmed. The Dean knows that but his PR bones (bought will money from Microsoft) just have to mislead the public as to the legal issues involved.

And, now we have this claim by Microsoft about perpetual licenses of the source code. That claim is meaningless. It is no more relevant than a claim by Microsoft to never charge for IE. Remember that claim coming from Bill Gates? Dis-proven in court as Microsoft claims also to charge more for Windows as "features" are added. IE does not exist if it is not a feature.

Microsoft markets by deceit.

July 12, 1999 - Monday

12:20 PM PDT - Microsoft does design its products to disparage the products of competitors

The Caldera case against Microsoft is just an example. Microsoft Corporation today posts notices with Windows 98 that a boot manager will fail to operate if it is not first removed from the system prior to a new install. It is a false statement. A lie, in other words. But, Microsoft Corporation continues to misinform its own customers if that makes it more difficult for consumers to use non-Microsoft products. In Windows 95 Microsoft just said a boot manager needed to be re-enabled. In Windows 98 they decided to lie about it completely and just say it will not work anymore. That is false. It only needs to be re-enabled.

But, Microsoft Corporation knows that when it propagates false information, some consumers will actually believe them. It is called the use of deceit to gain additional sales ... and that is consumer fraud.

July 11, 1999 - Sunday

10:28 AM PDT - Dean Schmalensee continues his advocacy for the Microsoft Monopoly outside of court as well - I guess he really wants a big fat bonus.

It is one thing for an economist to testify about monopolies and the harm they cause to consumers. It is another for an Microsoft Corporation advocate (who happens to be an economist) to present false evidence in a court of law. Dean Schmalensee obviously falls into the latter category.

During his sworn testimony he constantly ignored all anticompetitive acts of Microsoft Corporation and instead substituted arguments and issues outside of his expertise to avoid any hint of implicating his sponsor. Instead he "argued" that superior technology accounts for all gains made by Microsoft and that protection for piracy eliminated the harmful affects of per processor licensing, etc. He or ERDA also went to great pains to discuss all of the economic factors applicable to the computer software industry and then incorrectly concluded that they do not create barriers to entry or do not make competition improbable. He and ERDA are paid to be blind. I doubt that a single CEO in the industry thinks the Dean is correct. Not one. Even Bill Gates would disagree.

Dean Schmalensee was not a witness at all. He was only arguing the case for Microsoft on the witness stand. And, he ignored his own expertise in the process. The Boston Globe article is just additional proof of that. He is simply paid to advocate the financial interests of Microsoft Corporation.

There is nothing wrong with paid advocates. PR agencies and lawyers exist for that reason. But, expert witnesses are supposed to apply their expertise to the facts of the case. Dean Schmalensee has refused to do that. He insists solely upon being the advocate.

July 8, 1999 - Thursday

12:51 PM PDT - The Caldera Suit heats up a bit

The Caldera suit does have similar claims to those of the DOJ case.

In the DOJ case, Microsoft illegal acts were directed toward Netscape.

In the Caldera case, Microsoft's illegal acts were directed at Caldera (actually the DR-Dos product).

In both cases, Microsoft used its monopoly power in their attempt to preclude competition. The DOJ case will only ask for injunctive relief (telling Microsoft want they must do or splitting up the company). On the other hand, Caldera is the first of possibly a number of cases asking for money damages. Actual antitrust damages proven in court can be tripled.

As I have mentioned upon more than one occasion, should Microsoft be found to hold monopoly power (an almost certainty) and be found to have used that power to preclude competition (thus violating antitrust law) other companies may file additional law suits to recover damages caused by illegal Microsoft activities.

IBM could sue for damages in regard to OS/2 and even lost sales on PCs shipping with Windows (they had to pay too much for Windows).

Netscape (AOL) could sue for being unable to sell products once Microsoft ruined the market for any browser application. (Does anyone know how to calculate 100,000,000 units times $35 or so and then triple that figure?) Microsoft has already testified in this case that over 100 million copies of Navigator had to be given away simply because of their illegal business activities.

And do not forget Stac Electronics (cross platform disc compression market ruined by Microsoft bundling), Novell (network client market ruined by Microsoft bundling), Lantastic (cross platform networking software ruined by Microsoft bundling) and whatever you do, do not forget the financial harm to all consumers forced to buy these products.

Microsoft Corporation tries very hard to preclude competition and forces consumers to pay the price.

All consumers since Windows 3.11 should get rebates for the cost of Networking software they were forced to buy.

All consumers since IE was bundled with the OS should get rebates sufficient to "purchase" any browser of their choice.

Microsoft Corporation should be required to pay to competitors triple the amount of damages they sustained due to illegal Microsoft business practices.

When all of that occurs, then this will be over. In the meantime, you simply have one corporation, Microsoft Corporation, violating antitrust law and hoping to avoid being held liable.

Nothing in the comments above is news to Microsoft lawyers. They know how harmful Microsoft Corporation has been to consumers and competitors alike. They also know that the monopoly is being maintained illegally. They are just trying to avoid the liability.

Home - Lewis A. Mettler, Esq.