This presentation is prepared for open discussion
before the SDF Windows SIG
Wednesday, August 4, 1999
Microsoft Silicon Valley Developer Center
Presenter/Moderator:
Lewis A. Mettler
Attorney at Law and Software Developer
Should Antitrust Laws apply to
High Technology Companies?
The issue raised by the most recent litigation between the Department of Justice, Caldera, Bristol and others versus Microsoft Corporation is rather profound and not necessarily a new issue. The debate is taking place not only in the courtroom but in many public forums.
Contact Information:
SDF www.sdforum.org or call (408) 494-8378
Windows SIG www.sdforum.org/sigs/windows/index.html
Lewis A. Mettler, www.lamlaw.com (408) 505-0660
Rights to be considered
Keep in mind when discussing these issues that many parties have basic rights that need to be addressed:
* Existing Companies involved in the litigation or fact patterns
* OEMs/ISVs providing applications and having an eye on future products that compete directly with Microsoft products including operating systems.
* Current shareholders of Microsoft Corporation
* Current employees of Microsoft Corporation
* And, consumers
An outline for a rough evening:
* A quick list of current actions pending against Microsoft
* A quick review of a few key historical cases
* Some issues raised
* Some proposed remedies for the Microsoft case
A quick list of current actions:
Caldera vs. Microsoft
Caldera charges that Microsoft precluded competition for DOS or Dos like operating systems (Dr-Dos, PC-Dos) by bundling the Windows (GUI) with MS-Dos. Microsoft responds that Windows 95/98 is a single product.
Bristol vs. Microsoft
Bristol charged that Microsoft withheld access to source code or required unreasonable fees to be paid for ongoing access to that technology. Microsoft responded that terms were fair and identified another company willing to pay the price.
This was a jury trial decided in Microsoft's favor although Connecticut laws were found to be technically violated.
DOJ vs Microsoft
The DOJ has charged Microsoft with having monopoly power in the consumer OS marketplace and using that power to preclude competition. Microsoft has responded arguing that its OS and the browser are a single product and they should be permitted to sell it that way.
A quick review of a few key historical cases:
DOJ vs. IBM - 1960-70s
The DOJ charged IBM with precluding competition by leasing hardware and bundling both hardware and software thus precluding competitors offering compatible hardware or alternative software.
This action was eventually settled with IBM agreeing to sell hardware outright to other leasing companies and permitting alternative operating systems to be combined with the hardware.
DOJ (or others) vs. Data General - 1970's
The DOJ charged Data General with bundling its minicomputer hardware with its operating system precluding competitors from having a viable market for alternative operating systems.
This action was resolved by Data General agreeing to allow customers to buy hardware only and securing their own operating system and/or compilers, etc.
DOJ (or others) vs. Hewlett Packard - 1970's -
The DOJ charged Hewlett-Packard with bundling its minicomputer hardware, operating system, DBMS and compilers.
This action was resolved by HP agreeing to sell compilers and its DBMS as separate optional items permitting Oracle (and others) to offer language compilers and DBMS systems without being disadvantaged by all HP customers being required to first purchase the Hp version.
(This issue may have been resolved prior to a complaint actually being filed.)
The significance of these instances is simply that they all occurred during the mid 1970's and the issues are strikingly similar to the current ones. Also of interest is the fact that IBM, Data General and HP can hardly each have a "monopoly" at the same time they are competing against each other, right? Or can they?
Is it coincidence that Microsoft had its start during this time but was not rubbed out by the big boys of the time?
Some issues raised:
DOJ vs. Microsoft
* Per processor licenses and the effect upon competitive entry into the marketplace
* Consent decree agreement not to make IE a pre-requisite for purchasing the OS
* Consumers all required to purchase IE if acquiring a Microsoft or Apple OS.
* Preference and promotional agreements with OEMs and ISVs
* Software is malleable eliminating any need for "cooperative" products to be sold as a unit
* Software is easily installable by the manufacturer, OEM or customer eliminating any need for product packages to be pre-decided by anyone but the consumer.
* Significant consumer and OEM demand exists for separate products.
* Microsoft's attempt to access the AOL IM service without AOL approval
(Did I miss some?)
Some defenses:
* The OS and browser is(are) a single product
* Copyright law affords Microsoft a unilateral right to decide product definitions
* Consumers have a choice not to buy Microsoft products at all.
* Significant products offer competition now and in the future
* Ease of use dictates that software be pre-installed for consumers
* The purchase of both the OS and browser benefits consumers
* A single OS product available to consumers offers benefits
(Did I miss some?)
Some proposed remedies for the Microsoft case:
Remedies generally fall into one of two categories: Conduct and restructuring
Conduct restrictions
* Regulate what agreements Microsoft can enter into
Per processor agreements? Exclusive promotion? Preferred promotion? Disadvantaging a competitors product?
* Regulate what products Microsoft can offer to the market
Kept out of certain markets by court order?
* Regulate what products may or may not be packaged with the OS
Should the browser be separate? Networking? Utilities? Games? Multimedia applications. Internet applications? GUIs (as on Linux)? GUIs as on OS/2? Should DOS be dropped?
* Regulate what product requirements Microsoft may place upon OEMs, etc.
Which products must be pre-installed? Which products are permitted to have proprietary pre-requisites.
Required Licensing
* Require Windows to be open source
* Require Microsoft to license key products to all comers
* Require Microsoft to license source code for key products to all comers
Restructuring
* Split Microsoft along product lines
You guess.
* Split Microsoft into three companies each having all products
Three companies that may or may not compete as they eliminate each other.
* Split Microsoft along product lines and split the OS company 6 to 8 times and sell each one to a different major player in the industry on a bid basis. (IBM, HP, Compaq, Symantec, Oracle, Sun, Dell, Gateway, Inprise, Novell, Caldera, Corel and others may want to buy one.) This assumes all buyers will form a standards organization.
* Other combinations. (Perhaps Office products and Internet products should also be split?)
Above all you have to decide what you intent to do with a court ordered remedy. Do you just want to regulate a monopoly through the courts or special legislation? Or, do you want to remove the monopoly power and let the market progress until it gets out of whack again?