Don - This decision from Judge Jackson is the best legal field guide I've seen to the new economy. It's great. This judge really gets it!
Robin - What do you mean?
Don - The judge appears to understand why and how people have been fighting the battle they've been fighting about software. Where Microsoft has been getting its competitive advantage and what it's been doing to keep it. What's more, there's a clear account of the relationship between big fish like MS and perhaps Sun and Netscape and the thousands of smaller developer who have to cope with program interfaces and live and die on the the competitive possibilities that the big fish allow them.
Note: Don says to pay particular attention to Paragraph 18 of Judge Jackson's ruling, which says the market MS controls is for PC operating systems, and also says Mac, Linux, and handheld appliances aren't in the same "ballpark" as PC OSes. Two other critical paragraphs Don notes are numbers 33 & 34, where the Judge describes why he considers that MS controls that market.
Paragraph 38 talks about the economics of software and #39 talks about positive network effect, or "why if everybody else has a piece of critical software you have to get it too." Paragraph 50 specifically mentions Linux, but Don says "I'll leave that one to you guys to decide how spot-on it is." :)
Beyond that, you might as well read the decision yourself. Don says, again, "This Judge really gets it!
Now back to the questions...
Robin - Now what happens? Does every software company that feels MS ever abused it file on them?
Don - I'm going to read to you from paragraph 93 ... "It is Microsoft's corporate practice to pressure other firms to halt software development that either shows the potential to weaken the applications barrier to entry or competes directly with Microsoft's most cherished software products." These are Judge Jackson's words for what happens to you if you try to compete with Microsoft. A lot of software company will be sharpening their word processors tonight...
Robin - How do you think consumers will react?
Don - When they realize that they've had to pay more for computers because MS has charged high prices for their OS, they may take the issue more personally. It's close to certain that someone, somewhere will file a class action suit.
Robin - What about the "browser wars" that actually started the whole thing? Where do they fit into all this?
Don - It looks as if (he stops for a moment to laugh some more) the Judge is finding that MS went after Netscape with both guns blazing, giving Explorer away with one hand and preventing Netscape's installation on new computers with the other, and that all of this was done for anti-competitive purposes. The other thing I'm seeing on the browser wars is that it's pretty clear that the Judge did not buy MS's story on why MSIE was bundled with Windows. He says, "Microsoft's actions have inflicted [collateral] harm on consumers who have no interest in using a Web browser at all" because Win98 runs more slowly it would if they hadn't put the browser in.
Also in paragraph 173 -- which I just quoted part of -- it says,"Microsoft has forced Windows 98 users uninterested in using [it] to carry software that, while providing them with no benefits, brings with it all the costs associated with carrying addtional software on a system. These include performance degradation, increased risk of incompatibilities, and the introduction of bugs."
Note: (At this point Don starts laughing and says, "It gets even better..") Really, you do need to read the decision for yourself! Don says, "You get the feeling that the Judge is a disgruntled Windows user!" But unlike most disgruntled Windows users, this one has the power to do something about it. Right on, Judge Jackson!
Robin - But Don, all the lovely legal language and Windows-knocking aside, isn't this decision going to end up getting appealed forever?
Don - Yes. However, it is unlikely that an appellate court will want to get its hands under the hood of the relationship between Windows and browsers and between MS and its competitors at level of detail shown by Judge Jackson's findings. It's possible to overturn this but it would be hard.
Robin - Don, how much do you figure MS has spent on legal fees so far, and how much more are they going to spend before this is over?
Don - I'm guessing that they've spent more than $50 million so far. And when you say "when all this is over," if you include the industry suits and class action suits brought by private plaintiffs, you could could be talking about real money. Even for MS.
Robin - What's "real money"?
Don - It depends on whether someone nails them for damages. A $10 rebate for each customer who has bought Windows would run into billions. When you add in the damages that could be claimed by other software makers besides Netscape [like Corel], and by users who ended up with MS products, perhaps at excessive prices, because others weren't available, then only the sky is the limit.
Robin - Do you think Bill Gates will have a "House For Sale" ad in the Seattle newspapers next Sunday?
Don - It depends on how fast and far Microsoft's stock price drops. It's already started to drop, according to a story that just went up on ZDNet.
Robin - Don't forget: all that happened today was that Judge Jackson decided MS was naughty. He didn't say what kind of punishment they should get, which he won't do until he hears a whole new set of arguments. Don's best guess is that the ruling on punishment won't come out "until early next year."
Don Weightman and I will try to get a "Microsoft antitrust legal issues" follow-up together by sometime next week. Or perhaps you would like to do it? If so -- and if you're qualified -- e-mail email@example.com and we'll talk about it.
- Robin "roblimo" Miller