GOODIES TO GO! (tm)
November 8, 1999 -- Newsletter #53
GOODIES TO GO! (tm)
November 8, 1999 -- Newsletter #53
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Greetings, Weekend Silicon Warriors,
This newsletter was written on Saturday, Nov. 6, 1999. If any of the facts have changed over the days before you received this e-mail, I apologize in advance.
Did you hear...
>Big news! Friday evening, a federal court judge ruled that Microsoft does indeed enjoy a monopoly in the computer market. Don't dance just yet, it isn't quite over. You'll find much more in the newsletter below.
>Did you know there are always embedded programs and internal jokes in programs? There's a flight simulator in Excel and if you enter about:mozilla (then hit Enter) in the location bar of Netscape Navigator, you'll get a verse. Well, here's a new one that falls in with today's topic. If you are running Microsoft Word 97, write this on this page:
I want to see Bill Gates dead.
Then highlight the text and choose Thesaurus from under the Tools menu. You can also go right to the Thesaurus by the keystroke Shift and F7. Read the responses. You'll be amazed.
>Just when you thought the news couldn't get much worse for Microsoft, a new Word 97 Macro virus (a la "Melissa") has been found. The virus, called W97M.BMH, is wicked because once you have it, killing it is near impossible without formatting your entire hard drive. The virus, often referred to as just BMH, has the ability to save information in your computer's start- up registry. If you kill it in one place, rebooting will simply bring it back.
And now onto today's topic...
III. MICROSOFT'S POWER IN THE RELEVANT MARKET
33. Microsoft enjoys so much power in the market for Intel- compatible PC operating systems that if it wished to exercise this power solely in terms of price, it could charge a price for Windows substantially above that which could be charged in a competitive market. Moreover, it could do so for a significant period of time without losing an unacceptable amount of business to competitors. In other words, Microsoft enjoys monopoly power in the relevant market.
The above statement comes from the just-released transcripts of Civil Action No. 98-1232 (TPJ) MICROSOFT CORPORATION vs. STATE OF NEW YORK, Attorney General ELIOT SPITZER et al. (Full transcript available: http://www.cnn.com/interactive/computing/9911/ microsoft.finding/microsoft.html)
Microsoft Corporation has been found in violation of the Sherman Antitrust Act, ''1 and 2 and many state statutes now appear to be in a great deal of financial peril. The ruling came late Friday and it will take through Monday or better to see how the financial world will react to the ruling. Monday's stock market will be telling.
Through the actual trial itself, many didn't believe Microsoft would be found guilty because the stock continued to rise. In fact, the stock was made part of the famous Dow Jones industrial average not two weeks ago.
Now, don't think that this thing is over and break out the good champagne just yet. Microsoft has been found to enjoy monopolistic power. That does not mean they're monopolists. For that to be proven, the government must prove the remainder of their lawsuit.
Here's the deal. You can pretty much guess what a monopoly is from the board game. One company basically stands above all others carrying all the power and making it near impossible for others to compete. That means no price competition and consumers are left at the mercy of the company.
That's Microsoft, right? Uhhh, maybe. The law that overrides monopolies is the Sherman Act (mentioned above). It states, in so many words, that monopolies are not illegal if the company receives the monopoly through common business practices or through market forces that simply elevate the company to the level of monopoly. The act states monopolies cannot be gathered through "predatory practices."
There are, in fact, many legal monopolies in specific markets, Kodak and IBM just to name a couple.
"So, what's going to happen to Microsoft?" many ask with champagne bottles at the ready.
At this point it's just conjecture because there isn't a ruling yet. That could take upward of a month. It appears the judge would like Microsoft and the lawyers to come up with some sort of deal between them rather than taking up more court time. My guess is that that will occur rather than more trial and more videotape of Bill Gates answering questions.
"So, um, what's going to happen?"
I can only write about what I think is going to happen. Remember that this is only my opinion and cannot be backed up by anything other than my brain!
The big problem is not the operating system itself, but I believe that will come into play. It's that pesky Internet Explorer browser that has everyone in a bind. What to do with it is the real question.
There will not be a recall as I have heard suggested. The logistics of it are just mind-boggling. There will not be a free updated version of Windows sent to every household and business already running the operating platform. Again, mind- boggling.
I believe that Microsoft will agree to stop forcing the MSIE browser into packages being sold to computer manufacturers. I can also see a Microsoft Web page offering software patches and programs that allow consumers to yank MSIE off of their computer if they want.
I would sooner believe that aliens would land in my front yard then believe that Microsoft would carry rival software in their operating system. Can you imagine getting a new computer and Netscape, Opera, and Cello are already on the machine? Whether you think it's a good idea or not, I believe, is immaterial. Microsoft will never allow that and would tie up the idea in the courts for an eternity.
If Netscape were still a company unto itself I would suggest a large cash settlement. Now that it's been sold, I don't see that happening. I could see cash payment to companies that were "forced" to carry the MSIE browser, but I don't think it would be fair. IBM, Compaq, Dell, and the like are huge companies now. Offering them cash payments would be saying that carrying the MSIE browser somehow harmed their business.
I can see Microsoft being forced to flat-line their prices, though. They shouldn't be allowed to sell software for a lower price to those companies they like for one reason or another. That would even the playing field. I could also see all company contracts with Microsoft becoming null and void. It would then be up to each company whether to resign or go with another system. I'll bet money that the majority simply sign back up with Microsoft. It has been successful thus far.
The lawyers sure can't tell Microsoft to give money to charity. If I'm not mistaken, Bill Gates is about to become the greatest philanthropist in history.
What I hope does NOT happen, and from what I've read I'm not alone, is that Microsoft itself is broken up into smaller companies in order to create competition. We have already seen this fail in American history. Remember when Ma Bell (the phone company) was broken up into multiple Baby Bells? It just created many smaller monopolies.
If Microsoft is broken up, what will that do to stocks? What will it mean to operating systems? There would have to be many different Windows systems. That might get confusing, don't you think (condescending tone added for impact)? Plus, if many companies are creating operating systems, Microsoft might have to make many of their trade secrets public. It's up to you whether or not you think that's good or bad.
I don't see Microsoft being broken up. However, if it is, can we call each company a "Baby Bill?"
Hey! Speaking of Bill, what does he think of all of this? Ever the businessman, he said that Microsoft was evaluating the findings. He went on to say that this would be part of a long process. It appears as if Bill Gates is going to fight this to the bitter end. He has deep, deep pockets.
We should hear either a ruling or a deal within a month. I think that's what all sides really want. Microsoft especially would like this all to go away, but not without a deal Bill feels is fair to him and his company. If the American government asks for too much, this will become a real fight that will drag on and on.
I don't know that Microsoft really wants that, even with Bill Gates's statements. If it goes further into trial, questions will need to be answered:
- Did Microsoft really try to muscle Netscape into a deal where Netscape could have the Mac and UNIX market if they left IBM for Microsoft?
- Did Microsoft prop up Apple with the full intent of trying to get them to embrace MSIE?
- Did Microsoft muscle IBM to drop their O/S operating system through huge price hikes?
- Does Bobby love Jenny?
- Will Mary get back together with Phil?
- Is Ramon really Joey's evil twin brother?
These and other question will probably never be answered in this century's version of Microsoft Soap.
And that's that. Thanks for reading.
Joe Burns, Ph.D.
And Remember: I just bought a pool table. It'll be delivered by the time you read this. Do you know where the term "pool" table came from? A pool hall once meant a place where many people could place a bet, usually on horse races. Since there was time to kill between races, billiard tables were installed to pass the time. The term "pool" just stuck to the table.