Sometimes people simply refuse to see the light. Even after the volumes of empirical and mathematical evidence became irrefutable, a vocal minority refused to believe that the earth revolves around the sun. Today, a group of bitter Microsoft rivals is leading a similar vocal minority that is so blinded by its hatred of Microsoft that it can’t see facts.
After more than five years of litigation, the Department of Justice, Microsoft and a group of state attorneys general reached a fair and reasonable settlement of the antitrust case against Microsoft in October 2001. After the settlement was approved by U.S. District Judge Colleen Kollar-Kotelly in November 2002, all of the remaining state attorneys general joined the settlement, except for Massachusetts.
Cheered on by some of Microsoft’s biggest rivals, Massachusetts appealed the settlement, arguing that it didn’t go far enough to punish Microsoft and open up the market to competition. As it waits for an appellate ruling, this anti-Microsoft faction is arguing that the company is shirking its responsibilities and the settlement is proving completely ineffectual. If only they would take off their blinders, they would see that this case has drastically changed the industry and that competition is healthy.
From the beginning, it was clear to virtually everyone that the settlement was in the best interests of the industry, the economy and consumers. The agreement removed the cloud of government regulation that had been hanging over the entire industry and sent the message that it was time to focus on innovation and competition, instead of regulation.
Judge Kollar-Kotelly found the settlement to clearly be in the public’s interest and commended the parties for reaching a reasonable conclusion. In her ruling, she commended all parties to the decree, particularly for “the quality of the fruits of their collaborative labors … Far from an amalgam of scattered rules and regulations pieced and patched together to restrict Microsoft’s anticompetitive business conduct, the proposedfinaljudgment adopts a clear and consistent philosophy such that the provisions form a tightly woven fabric.”
Today, Microsoft is one of the most regulated companies in America. As a result of the settlement, Microsoft and all of its business practices are being monitored by a compliance committee of its board of directors, the Department of Justice, 18 states’ attorney generals’ offices, a team of technical experts and a federal judge. There is also the small but vocal group of competitors and critics who will take any and every complaint to the above-mentioned regulators. Microsoft is even banned from engaging in many of the same business tactics that competitors can use against it. Any inference that the company got off easy and is recklessly disregarding the settlement is laughable given all those layers of monitoring.
Despite the hyperbolic rhetoric from these few critics,theevidence clearly shows that Microsoft is complying with this settlement and the industry is getting more competitive every day.
All parties to the settlement have commended Microsoft’s compliance and its willingness to solve any issues. Microsoft has already made a number of changes based on the input of the Justice Department, the states or others in the industry.JudgeKollar-Kotelly pointed out at a recent status conference hearing that the settlement appeared to be working as planned.
In addition, Microsoft is facing growing competition in the market for operating systems and other software. IBM, Novell and Sun are spending millions to develop and improve Linux alternatives to Windows and Office on the desktop. China has already declared Linux the nation’s official operating system, and the Israeli government is planning to replace all its desktop Windows software with Linux. On the corporate front, IBM itself is planning to move its entire 319,000-employee company to Linux. Linux already has a 23 percent share of the market for operating systems for larger-server computers and is expected to more than double its share of the desktop market by 2007. In fact, a recent article on Cnet.com reported that the Linux server share increased 90 percent from 2002 to 2003.
The evidence is clear and irrefutable: Microsoft is living up to its obligations, and competition is thriving throughout the software industry. The mythologies on which the anti-Microsoft cabal bases its cries for more regulation of Microsoft have been shattered. It is time for it to step back and watch innovation, competition and growth take over.
Gene Schaerr, a partner in the D.C. office of Sidley Austin Brown & Wood, is antitrust counsel to the Association for Competitive Technology.