IT vendors give their verdicts on Microsoft antitrust decision

Friday's ruling that Microsoft "enjoys monopoly power" in the PC operating system business rings true to the industry behemoth's software competitors, but PC hardware vendors did not appear to feel as strongly about the initial decision.

Known for its hardball negotiating tactics with PC manufacturers and its success in marginalising or eliminating vendors in a number of software product areas, competitors said that Microsoft has too much control in the IT industry. But IT vendors did not seem to feel that Microsoft's business practices will likely change because of the judge's finding of fact.

Mitchell Kertzman, chief executive officer at Liberate and former CEO of Sybase, and a longtime opponent of Microsoft's business practises, typified that attitude.

"I don't think that MS is going to change its behavior and that things won't really change until the rest of the case plays out," he said. "I'm a little concerned that people will think that Microsoft did this stuff in the past and the industry changed and that there won't be punishment."

George Vradenburg, senior vice president of global and strategic policy at America Online, issued a cautiously worded written statement that did not go so far as to welcome the ruling, but did imply that the company now hopes Microsoft will be compelled to change its ways.

"The judge's finding -- that Microsoft has a monopoly in operating systems and is maintaining its monopoly position through its business practices -- has profound significance and implications," he wrote. "The critical issue now is how to structure a speedy and effective remedy that protects consumers, increases competition and innovation and, importantly, prevents Microsoft from maintaining or using its monopoly power in the future."

America Online's success in the market was cited during the case by Microsoft as an evidence that Microsoft does not have a monopoly.

"Today's finding lays to rest many of the arguments Microsoft presented in its defense. Most importantly, Judge Jackson affirmed that the antitrust laws do apply to the information technology industry, and that anticompetitive behavior in our industry is no different than anticompetitive behavior in any other industry," said Ken Wasch, president of the Software Publishers' Association in Washington.

"There's a combination of egregious behavior [from Microsoft] and the underlying economic structure in the software business that suggests that some solution other than totally free competition may be in order," said Joseph Alsop, CEO at Bedford, Mass.-based Progress Software. In particular, Alsop said that consumers really have no alternative to buying Microsoft's Office application suite.

Ransom Love, CEO and president of Caldera, had a one-word reaction to the decision: "Hallelujah!" Caldera has its own lawsuit against Microsoft which heads to court in January.

"[The decision] feels very validating," said Nancy Pomeroy, director of corporate communications at Caldera Systems in Orem, Utah, noting that the decision shows people in the industry that Microsoft's practices have been crushing competition and innovation. "It's what we alleged all along and we look forward to getting [Microsoft] in front of a jury."

Officials at longtime Microsoft foe Sun Microsystem also applauded Friday's decision, saying in a statement that the judge's "determination that Microsoft has monopoly power in the market for PC operating systems is supported by a wealth of evidence."

In reference to Microsoft's aggressive investments in telecom and cable infrastructure, Sun officials recommend that Microsoft "be prohibited from buying the distribution channels of the future (e.g. cable and wireless) and from buying rather than inventing technologies" with "Microsoft's unfettered use of a cash hoard created out of monopoly."

Reached later Friday, Sun's President and Chief Operating Officer Ed Zander said he was pleased with the court's findings.

"We always thought that Microsoft was a monopoly, and that they had exhibited business practices that violated the rules of what monopolies are about," Zander said. "Right now, I think (the findings are) good for free enterprise. That's what our country's about, so I think it's a good day for competition."

But despite the clear anti-Microsoft findings, PC manufacturers - many of whom suffer from the software giant's allegedly anti-competitive licensing business practices - were reluctant to take sides in the case.

"We're really not going to comment directly on the trail to date, our rational being simple: we watched the trial along with the rest of the industry, but it's not a Dell issue, it's a Microsoft issue," said Dell spokesperson T.R. Reed. Other major PC manufacturers and Intel issued one-line comments expressing neutrality.

Meanwhile, vendors in the Linux community hoped that finding means that PC vendors will feel more free to offer alternatives to Windows.

"Look at the Gateways, Dells, and Compaqs who have been threatened with increased license fees if they put on the wrong Office suite," said Marc Torres, president of SuSe, one of the largest Linux distributors worldwide, with headquarters in Germany and Oakland, Calif. "I hope this will allow for more aggressive alternative marketing without Microsoft and allow vendors to operate without fear."

Others in the Linux community - as well as Sun and other ISVs - wished that ultimately Microsoft will be forced to open up its source code to the developer and corporate community.

"In the long term, regardless of any decision, Linux will remain a threat to Microsoft," said Sam Ockman, president of Penguin Computing, in San Francisco.

Standing in Microsoft's corner is The Center for the Defense of Capitalism, a Spotsylvania, Va.-based organization that opposes antitrust laws. A representative of the organization said he was not surprised by the judge's characterization of Microsoft as enjoying Monopoly power.

"I think what he's saying, ultimately, is that extraordinary success in business is dangerous and it must be stopped," said Nicholas Provenzo, executive director of the organization. The organization is not affiliated with or funded by Microsoft, Provenzo said.

"All that Microsoft has done is produce a product, try to improve it and offer it for sale in the free market, where customers could take it or leave it," Provenzo said.

Analyst Rob Enderle, vice president at Giga Information Group, in Santa Clara, Calif., said he expected a settlement between Microsoft and the Department of Justice. Otherwise, the judge could impose limitations on Microsoft that would be "extremely draconian," with such stipulations as directed oversight, Enderle said. Enderle stopped short of expecting the judge to break up the company if no settlement is reached.

"I don't think the judge will get away with breaking the company up," said Enderle. "I don't think the case is strong enough to destroy the company."

Enderle reasoned that previous breakups of monopolies involved companies that by their very nature could not allow competition, which is not the case with Microsoft.

"I think there's enough evidence of emerging competition here to allow Microsoft to continue to exist," Enderle said. "There will be a set of rules and regulations to make sure Microsoft isn't prematurely killing these competitors."

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More about America OnlineCalderaCaldera SystemsDepartment of JusticeGiga Information GroupIntelMicrosoftPenguin ComputingProgress SoftwareSoftware Publishers' AssociationSuseSybase Australia

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