Date of publication: April 12, 2000

"The Sins of Microsoft"

(This ran as an editorial on NPR's "Future Tense," the morning after the court ruling against Microsoft)

It may not rank with the Kennedy assassination or the Challenger disaster, but Judge Thomas Penfield Jackson's ruling that Microsoft violated antitrust law made yesterday a special day.

People will rightly disagree about the severity of Microsoft's offense -- whether it was a mortal or a venial sin to give away Internet Explorer with every copy of Windows.

Personally, I don’t think it was that big of a deal, or something that Netscape or SUN Microsystems, the victims of this mischief, would not do in Microsoft's place. I am on record as opposing the antitrust lawsuit on its legal merits.

But the decision goes beyond points of law. It is a decision of juridical karma. It is a rarity in the rough game of capitalism to stand up and say, "Hey, no fair" to whoever is winning.

Free enterprise, after all, isn’t patty-cake.

And yet that is what happened. You can count the times it has happened on the scale of the Microsoft decision on one hand, without invoking your thumb.

And this decision comes at the same time when other companies, in a host of industries (Qwest, Cisco, AOL, Intel) are grabbing for the same ring that Microsoft went for, to cast a shadow so long, and so frightening, that competition withers away.

This decision sends them a message too: Follow the rules, or head for the penalty box.

Judge Jackson's decision is on a par with the protests of environmentalists, labor unions, and other parties at last December's World Trade Association meeting in Seattle. They too saw a brutal order developing without input from the governed.

It's as if a force coalesced out of our very weakness, drawing strength from the might of bullies. Maybe the mice can’t kill the cat -- but by publicly holding it to certain standards of behavior, we effectively slip a bell around its neck.

It's as if Microsoft's true sin has nothing to do with bundling Internet Explorer. It's about 20 years of arrogant behavior and competitive brutality. What goes round comes around.

It's not over yet, of course. Microsoft will appeal this case and any judgments against it, to the Supreme Court if need be. And they might well win. But win or lose, Microsoft is a chastened giant, and will never darken our sky again the way it used to.


For more of this kind of thing, read Mike's book Transcompetition, about how to deal with unethical giants in the marketplace

 

 

 

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by MICHAEL FINLEY

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Comments on this column:

Michael, today's story fits with what's going on here. Since an almost non-violent revolution several years ago, Indonesia conducted its first truly democratic election last year - the first in the country's 50+ years of existence. More than that, there are a lot of questions being asked now about the difference between freedom and democracy, capitalism and free trade, and about human rights. These are broad-brush questions a feudal society is asking itself and others. Most importantly, people are listening to the answers.

Now, the USA -- warts and all -- has become here something of an example of what rules to use and which ones to lose in making a new society. After all, the essence of democracy really isn't its institutions but, rather, how people treat each other as they interact. The article today kind of fit all this.

Hope things are going well with you. Today is the Hindu New Year on the island of Bali. For a full 24 hours there are no cars driven, cooking done, loud noises, or lights allowed. In the West we start the new year with wild celebrations; for Hindus the year begins with quiet reflection. "Selamat Nyepi" or Happy New Year 1922.

F. S., Jakarta


I'm not so sure about the "comes around part." The bad guys do win sometimes and live to enjoy their ill gotten gains. Witness the lives of many of the robber barons of 100 years ago.

Gates did not look a bit chastened in the news video clip I saw last night. He's the one responsible for the arrogance and competitive brutality, and he has not changed his spots. Only time will tell whether MSFT will darken our sky again.

With industry developments, the question is probably moot. MSFT seems to be trying to diversify away from software and move into the content business. They have enough money to be an important player no matter what game they choose to play. If at first they don't succeed they have enough money to let them keep trying till they do succeed, just as they did with Windows.

Who knows what the price of MSFT stock will be over the next few months, but I think it a safe bet that 5 years hence it will be even more golden than ever.

Still I get a certain satisfaction out of seeing a bully be punished.


First, I love the Internet because I can send email like this.

Second, I'm not familiar with your work but based on a scant glance it looks like a full body.

Third, this is not meant to be a flame but your commentary this morning was interesting and I think that you have a poor understanding of Microsoft/Seattle/anti-trust/The Valley and how it all fits together. Ask yourself some simple questions:

1) If Netscape was treated so unfairly how has it been able to distribute 150 million+ browsers?

2) Why does AOL base its browser on Internet Explorer?

3) Talk to some web developers who have solid experience. What browser do they use and why? What do they think of Netscape Navigator/Communicator? How do they feel about Microsoft?

4) Would someone like Jim Clark or Andreesen step back as the head of the most valuable company in the world to focus on "nerdy" programming? How about, "Name another top dog in any company in America that would step back into the trenches." That's why MSFT is the most valuable company in the world. They don't cry or make up excuses when they get beat. They are hardcore and they get back to business.

Netscape knew it had a broken business model and that's why they died 3 years ago. Their browser is a failure and their enterprise servers are a failure. I hear Netscape 6 is supposed to be WAY BETTER than IE. Time will tell.

J. E.

My reply: Thanks for the feedback.

I use IE. It's been better than Netscape for at least 2 years. I agree.

I am on record as opposing the DOJ lawsuit. I think it is unfair. I don't think Microsoft is a true monoply. And as the editorial said, Microsoft didn't do anything its competitors don't do.

What I was trying to get across on NPR's deadline and in 575 words was that MS is paying a price for being a bully for 15 years. (Not just to Nestscape or SUN, by a long shot.) This isn't good law, but it's how karma -- what goes around, comes around -- works.

This is something I am perhaps an expert on -- how to deal with bullies in the marketplace. ("Transcompetition," my last book, was about this.) It's substantially the same dilemma as dealing with Misolevic or Saddam or Hitler -- fighting against people with superior force and the will to use it. People's best chance is often to squeal like stuck pigs, and keep squealing until help arrives. The DOJ event was a classic pig squeal.

While I disagree with the law, I understand the deeper justice that arises from it. Microsoft needs to be chastened for its excesses -- if it isn't, we'll have a raft of aggressive companies that put MS to shame.

I wouldn't count on Netscape 6 making a big comeback. -Mike


The interesting element of the entire Microsoft case is, as you point out, not necessarily the case against Microsoft itself, rather it is about the entire principle of ultimate authority. The principles of free enterprise are, like all other models of social dynamics, subject to constant evolution, this means that as new threats are posed either to the model, or, as in the case of Microsoft, by the model, new defences against abuse have to evolve to cope.

I am a supporter of the rather unpopular view that there is such a thing as organisations which have too much power and that there is definitely a problem with the concentration of economic power in too few hands. I see this issue as a major challenge to the continued validity of the free-enterprise model in its current form. I am wary of the rapid concentration of power being caused by the mergers of bigger and bigger partners. Opponents of this view would say that ultimately the free-market is self-regulating; only the strong survive, and by definition, these are the organisations which will provide the most benefit to society.

I am forced to ask one simple question; Where in the entire philosophy of the capitalist or free-market model does it mention benefit to society? Sure, the message is clear that an organisation will not succeed if it does not offer what society wants, but this does not mean that the organisations in their own right are interested in the society within which they function except in as much as they wish to sell goods to them.

I argue that an organisation is effectively an organism with rules which put it into direct conflict with the humans that make up the organisation. Humans are but a component of an organisation, once an organisation is formed, it immediately inherits instincts, the primary instinct being to survive. In surviving, the organisation may well feel the need to remove excess costs, these may or may not be humans. in short, an organisation is a sentient entity. Humans are simply combined in such a way as to make this entity function, but an individual human has little impact on the organisation.

Now if I extend my argument, it must hold true that the bigger the organisation, the less the impact of individual humans on the organisation. Hence, as the organisation becomes bigger, the pathology shown in its disregard for the human components of its structure will grow. One has only to look at actions taken by managers in the name of organisational efficiency or "rightsizing" or "downsizing" or whatever the current buzzword is to see that these same managers would not readily execute the same practices on people if they were outside of the structure of the organisation. No, the organisation has rules which are not human-friendly, and, in order to succeed in terms of the organisation's imperatives, often humans may have to sacrifice fellow humans.

I also feel that organisations which are too large are a threat to democracy itself, particularly as long as there are no really effective checks on "Donations" made to politicians, simply put; the more money you have, the greater your influence.

I must add as a last point that I am not a radical, or do not see myself as one. I am a supporter of the bulk of the free-market model, and applaud it as the most sensible model of social and economic interaction under most circumstances. What I am wary of is the growth of organisations to sizes and degrees of economic concentration so far unseen in society. I believe that there is much to the statement "Power corrupts". I am also aware, that if what I say is true, that organisations are sentient, then they may well balance their actions if they perceive that they are damaging the society they exist in. This entire area is of great interest to me, I feel that we sit at the beginning of a new age, the age where the organisation will become the dominant entities on our planet, the consequences will be interesting to see.

S.K.


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