4.03.00
An Unsettling Antitrust Case

4.03.00
The Ph.D. with the Lamp

3.31.00
Elian, Still in the Middle of the Ocean

3.31.00
The Clintonization of America

3.30.00
A Real Shipwreck

3.29.00
The Dead Baby Thing is So Over

3.29.00
Are Gun Locks Like Aspirin Caps?

3.28.00
Putin Together A Government

3.27.00
The Dangers of Mandatory Gun Locks

3.24.00
What Hath Ward Wrought?

3.24.00
Leave E-commerce Alone

3.24.00
E-mailgate

3.23.00
Senator, You're No Ronald Reagan

3.23.00
Against Microsoft: A Primer For Conservatives

3.22.00
Kessler Control

y walking away from a chance to settle on seemingly quite reasonable terms, the government has chosen to keep the Microsoft theatrics on stage for quite a while. That delay will soon prove to be a serious tactical blunder.

Some complications are inherent in mixing old antitrust with the new economy. The most obvious dilemma is that legal proceedings grind on very slowly while technology changes at Internet speed.

Suppose the Judge goes along with Joel Klein and the software lobby and proposes breaking Microsoft into three or four separate pieces. Such a draconian "remedy" itself, as well as any rationale the Judge might spin for it, would surely be hung up in court for at least two or three years. The government has already been "investigating" Microsoft for a decade, at the behest of Microsoft’s rivals, and these investigations required many agile redefinitions of complaints to keep pace with new technology. But the Judge’s "findings of fact" cannot be revised, and are already looking stale. After Judge Jackson formally charges Microsoft with some assortment of specific offenses, such explicit charges are almost certain to look quaintly moot within two years.

Another complication is that antitrust prosecutors are obviously baffled by technology, which makes them dangerously dependent on lobbyists disguised as experts. Five years ago, a compliant Justice Department allowed Netscape, Oracle, and Sun Microsystems to define the case against Microsoft in ways that pivoted on sci-fi speculations about the alleged importance of one brand of browser (Netscape’s) and one language (Sun’s Java) for writing software. In reality, neither Netscape nor Java ever offered an "alternative platform" to Windows, but the Internet itself certainly did. Internet languages like "html" are indifferent about which operating system or browser you choose, which makes the choice of operating system and browser depend on convenience and cost. The centrality of the Internet also means the "applications barrier" at the core of the government’s argument is increasingly irrelevant. Sure, there are more applications (mostly games) available for Windows. But how many apps do we need on a local hard drive once nearly everything (particularly games) becomes available online? Few of us use even half the goodies in a typical Office Suite, and excellent suites are readily available for such systems as Mac, Linux, and Solaris (and Sun’s Star Office is free).

The government’s archaic obsession with browsers for the "Intel-based PC" is also becoming less and less relevant with each passing day. The "new browser war" began with wireless devices for getting online — smart phones, personal digital assistants (PDAs) and miniature laptops. The vast majority of these gadgets bypass Microsoft’s handy blend of Internet Explorer and Windows — one that pleases consumers and troubles the government. Nokia and Sony plan to make their phones smarter with the Palm operating system, which also powers PDAs from IBM and Handspring. Others like Motorola and Psion use EPOC from the British firm Symbian. The UP.Browser from phone.com is a leader in the "new browser war," while neither Netscape nor Microsoft is a significant player.

The Judge could, of course, claim that browsers and operating systems attached to small screens don’t count. That would be no less arbitrary (and no less vulnerable on appeal) than his decision to exclude Apple, Sun, and Palm from the "relevant market" in which Microsoft competes.

Unfortunately for the government, some powerful big-screen PC alternatives will be available later this year — notably interactive AOL-TV, and the dazzling Sony Playstation 2 with its DVD drive. The next generation of 256-bit "Internet gaming consoles" from Sony, Sega ,and Nintendo will not fit the government’s definition of a computer, because (like computers from Apple and Sun) they do not use Intel microprocessors. Yet these "game" machines on steroids are faster than PCs costing four or five times as much, and offer vastly superior 3-D graphics and Dolby sound for playing DVD movies, stereo CDs, and games online and off. They could provide an excellent base for digitalizing the entire house. By adding a keyboard and/or voice- recognition software, a game console could also serve for word processing and other office chores.

Japan’s "game" machines face only one potentially serious competitor — Microsoft. The X-Box, which Microsoft hopes to have ready by late next year, will run a slimmed-down version of Windows 2000 on a Pentium III-600 Internet machine, complete with hard drive. Microsoft will then become another manufacturer of computer hardware bundled with proprietary software, like Apple, Sun, Palm, and Sony. Yet proponents of splitting Microsoft into pieces never leave a slice for hardware, much less for the expert mix of hardware and software the X-Box requires.

Any scheme to carve up Microsoft would surely slow or stop the X-Box project — to the great delight of Japan. Yet for the DOJ to admit that a Windows-based Internet game console is a serious alternative to a PC would be to also admit that Sony, Sega, and Nintendo (not to mention Palm, Nokia, Motorola, and AOL-TV) are part of the "relevant market" in which at least three different versions of Windows will have to compete. And since this larger market is virtually defined by ease of using Internet, the government’s dream of yanking Internet capabilities from future versions of Windows amounts to forcing this nation’s most valuable enterprise to roll over and play dead.

In order to depict Microsoft as a company with no competition, yet many bullied competitors, the trial focused entirely on only one version of Windows rather than all three. That is because Windows NT/2000 has little more than a third of the lucrative $5.7 billion network and Internet server market (Linux has 25%), and Windows CE struggles to hold even a fourth of the exploding market for hand-held devices. Ignoring Windows 2000 and Windows CE helps create the illusion that Microsoft dominates some clearly-delineated market for "Intel-based" single-user PCs — a bizarre definition of the market that somehow manages to exclude millions of computers made by Apple, Sun Microsystems, Palm Pilot, and others.

In the post-PC era, however, it will not be so easy for the government to maintain the Internet as the focus of its complaints against Microsoft (hence the curious emphasis on browsers) while simultaneously pretending that numerous new ways of using the Internet without Windows are unworthy of inclusion in the narrow submarket that Microsoft supposedly monopolizes.

The broader and less focused any proposed remedies are (i.e., pretending to change specific conduct by letting lawyers and lobbyists redesign the corporate structure), the more time the whole exercise will require. And the longer this case drags on, the more likely it will be that it eventually ends up as an obsolete and discarded embarrassment, like the 17-year crusade against IBM.

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