- The Washington Times - Monday, May 22, 2000

Armchair debates over whether Microsoft should be split "snap" or "julienne" style aside, reading the actual
government breakup proposal in all its unrelieved arrogance is jarring.
If Washington truly believes the technology marketplace is incapable of policing itself and that corporate breakup qualifies as sensible public policy, no intervention is off-limits anymore. Like Microsoft, nearly everybody "bundles," gives software away free, favors some partners over others, places limits on the use of their software, and wants to "crush" competitors. Companies beat up each other, but consumers benefit.
The real futility of sacrificing this industry to chainsaw-wielding regulators is the fact that the "Wintel" computing paradigm has already been "broken up" and disciplined by the marketplace. Today, what can be done on a desktop computer with a hard drive typically can be accomplished on the Internet. Bandwidth, not Microsoft, is the only barrier.
Online "hardware": Remember when a 20-megabyte hard drive was a big deal? Now, Yahoo, FreeSpace, I-drive and numerous others offer free, secure and remote data storage online, allowing access, manipulation, backup and sharing of files from any connected computer or enabled device in the world. Music and video file sharing is already shaking up entire media industries.
Online applications: Setting aside well known off-the-shelf software that competes with Microsoft Office, free and increasingly sophisticated Web-based word processing, spreadsheet and Web publishing tools openly threaten Microsoft's heavy metal suite. Examples include Sun Microsystems' Star Office and the myWebOS.com office application suite.
AnyDay, Yahoo and uncountable other websites offer free calendars, address books and other productivity tools that typically once required disk installation. Relatedly, Flashbase offers online business database services, potentially bypassing database programs like Microsoft Access. E-mail, of course, has long been free all over the Web.
Even fax capability like that bundled with Windows is available free from Web outfits like Fax4Free and eFax. Users can set up free fax numbers and send and receive free faxes using their free e-mail accounts. Phone calls over the Internet without downloading or installing a program on the hard drive are made possible with services like DialPad.com.
Any aspirations Microsoft may have had to dominate business services through traditional applications or its bCentral website face threats from such advances, as well as sites like iconomy.com, FreeMerchant, and even Yahoo, which provide routines that allow clients to build entire stores online. Bundled services often include free banking (including checking and bill-paying), free business Website hosting, traffic logging, and auction tools.
Competition in operating systems stubbornly persists: There is probably no turning back from the move away from desktop applications toward Web computing. Yet competition in the operating system realm remains heavy.
Macintosh's popular iMac is the obvious example, but there are others. When the Justice Department's case was filed in July 1998, 30 U.S. companies already offered computer systems preinstalled with the competing Linux operating system. Today there are at least 78. Several investments in Linux and the Be OS have come from companies like Intel and Dell with the wherewithal to give Microsoft a black eye which incidentally is how markets properly police themselves. Dell, long a Microsoft supporter, even offers Linux pre-installed on laptops.
No portal monopolies: Despite the fear that Microsoft's dominant position in operating systems could lead to its dominating content on the Internet, people seem to insist on clicking wherever they please.
As of February, MSNBC ranked seventh among news, information and entertainment sites. In the crucial search site and shopping site categories, Microsoft didn't make the top 10. In fact, production of online entertainment shows on the Microsoft Network was canceled, as were music and movie review sites. It is hard to dominate content while canceling it.
Furthermore, AOL's purchase of Netscape and the proposed merger with TimeWarner block Microsoft's already remote chance of Internet domination. More likely is that an equally unwarranted future case against the AOL-TimeWarner will be forged in D.C. Incidentally, nothing stops America Online from making Netscape the default browser for its 21 million subscribers, which would pretty much take care of the Microsoft browser "monopoly" prominent in this case.
The Windows PC is increasingly just one among many ways of accessing the key services of the Internet Age: Not only do Web applications threaten Microsoft applications, it is not even necessary to run Windows to use them.
Personalized information in small packages: Some Palm hand-helds allow limited wireless Internet browsing and even feature a collapsible keyboard. Smart phones include features like e-mail, instant messaging services, and program execution. AOL has arrangements with several wireless data carriers, device and mobile phone makers to further inject itself into our consciousness. Likewise, MicroStrategy's Strategy.com unit and Oracle offer timely and personalized information to individuals via the Internet, telephone and wireless devices. AvantGo offers similar content services over hand-held devices.
Gaming consoles: The Sega Dreamcast and the upcoming Playstation II will be Web enabled, allowing users to take advantage of Internet applications and "hardware" without Microsoft in the background.
Television: WebTV is owned by Microsoft. Nonetheless the phenomenon of surfing the Web by television represents awareness that the world fundamentally does not need PCs running Windows to access the Internet. Any of dozens of companies besides Microsoft could have purchased and expanded WebTV.
Information appliances: The Netphone I-Opener is a stripped-down $299 "Internet appliance" that features e-mail and Internet browsing capabilities without the rest of the PC functions (i.e. no Windows operating system is needed). The term "information appliance" has acquired stranger significance lately: A GE prototype networked refrigerator allows access to the Web and the ability to control appliances.
Regulating or breaking up any technology under the auspices of antitrust will target "threats" better addressed by the marketplace, and freeze the technology sector into a timid stance painfully aware of the selective nature of antitrust aggression.
A company like Microsoft may grow large under capitalism, but never as large as the capital markets and the opposing business interests that desire to crush it. The biggest barrier to Internet growth is not Microsoft but lack of the bandwidth necessary for Web applications and wireless devices.


Wayne Crews is director of competition and regulation policy at the Competitive Enterprise Institute.

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