Bill Gates Monopoly

This has not been a great month for Microsoft. The monopolistically determined ruler of computer software, (the $40 billionaire, Bill Gates) must have known that his software bundling tactics, his predatory pricing forays, and his multiple intimidations of the companies he deals with would eventually invite responses. With Microsoft controlling about 90% of the operating systems market and comparable domination of spreadsheets, word processing and other software, the reluctant enforcers of our nation’s antitrust laws have awakened a bit.

On October 20th, the Justice Department filed a complaint in federal court to stop Microsoft from forcing manufacturers of personal computers (such as Compaq and Gateway) to include its Internet browser when they install Microsoft’s Windows 95 operating system.

The Department also wanted the court to declare parts of Microsoft’s non-disclosure agreements with companies to be a violation of a 1995 consent agreement with Microsoft. The Department asserts that such gag impositions prevent people from coming forward to report antitrust violations to their government.

A glimmer of who might be coming forward can be seen in the depositions that the Department took of a Gateway official, James Von Holle and Compaq software procurement official, Stephen Decker. Both testified that they wanted to offer the Netscape browser as an option on their computer but Microsoft made them back down due to its dominant position in operating systems.

Further investigations of Microsoft are underway by attorneys general in Texas, California, Massachusetts and a growing number of other states. Congressional hearings are being planned. The European antitrust authorities are active as well.

Also Sun Microsystems has filed a comprehensive suit against Microsoft alleging that the software giant violated various agreements regarding its use of Sun’s Java language which is compatible with all operating systems, thereby posing a major challenge to Bill Gates.

So far, none of these and other criticisms of Microsoft is altering Microsoft’s strategy to control desktop computing and the Internet all the way to electronic commerce such as banking, real estate listings, and travel reservations. Gates is pushing into cable TV, publishing and anything that has a toll gate upon which Microsoft can become the dominant gatekeeper. Upon hearing of Attorney General Janet Reno’s action, Microsoft’s Executive Vice President, Steve Ballmer exclaimed, “to heck with Janet Reno.”

It is important to note that computer software specialists and commentators with whom I have spoken are nearly unanimous in their view that Microsoft has not been an innovator. It has either duplicated other companies’ systems and applications or has bought out companies and roared into the market with multiple anticompetitive practices.

Fear of publically speaking out against Microsoft’s practices is rampant not just in the software industry but even in some publishing, travel and other circles we “have to deal with them”, said one executive.

Microsoft has so many ways to silence companies, even those they are selling to — not letting them in on the development committee changes in time, signaling to other companies to shun a ‘Microsoft-unfriendly firm,” raiding the technical talent with huge up-front bonuses or moving into their line of business propped up by billions in monopolistically achieved profits flowing in part from what the Justice Department called its monopoly in operating systems.

Microsoft’s profits are greater than companies with far larger revenues. It is a massive cash cow machine.

Our antitrust laws used to be enforced against companies with much smaller market shares. A ninety percent share would have brought a per se enforcement action in the Sixties or Seventies.

The struggle with Microsoft is one between its drive for a controlled information highway under its domination and an open information highway accessible by innovators and quality competitors.

In his book, The Road Ahead, Bill Gates argued for a dialogue over the future of the information highway. Accordingly, next month on November 13 and 14, Essential Information and I are sponsoring a conference in Washington, DC on Microsoft and its Global Strategy (http://www.appraising-microsoft.org/). Participating will be some corporate critics of the software Giant, academic analysts, commentators and, we hope, Bill Gates.

Thus far, Gates has not sent a No to our invitation. His reputation for boldness should not stop short of meeting his critics on a level playing field before a knowledgeable audience and the press corps.