A monopolist in sheep’s clothing

You can’t blame people for being suspicious.

When Microsoft hosted a conference call, as it did Monday, to discuss its plan to comply with the U.S. Department of Justice’s antitrust settlement, its motives were immediately called into question. Some analysts labeled it a public relations

exercise. Others saw it as a retread of details Microsoft has already revealed. Few industry observers seemed willing to take the message at face value — that the world’s biggest software company is dutifully following the letter of the law and putting at least part of its intellectual property into the public domain for the first time.

Before we examine that, let’s look first at what’s not happening. Whatever it discloses to PC companies and developers, Microsoft is far from making any of the concessions demanded by the nine states and the District of Columbia which are still prosecuting it. Compared with the relatively mild remedies imposed by the courts so far, these plaintiffs are out for blood. Their demands include a second, middleware-free version of Windows, a cross-platform version of Office to be available through auction and the entire source code for Internet Explorer.

These sanctions are among the items under consideration by U.S. District Judge Colleen Kollar-Kotelly, who must also decide whether the settlement is in the public interest. This makes Microsoft’s timing all the more important. By putting on a show that demonstrates the company is acting in good faith, a cynic might argue, Microsoft could avoid stiffer penalties. There is already evidence to suggest Microsoft has recognized the inevitability of some changes, and has begun making them before it is asked. Having lost a few battles, executives are clearly in the process of determining the lesser evils. This is a standard part of any settlement process and should not surprise anyone. Indeed, Microsoft could argue it could do no less for its shareholders than to rectify the company’s image as much as possible before final remedies are imposed.

None of this should take away from the significance of what’s going on here. To release some control over its APIs and communications protocols is not something a company like Microsoft does easily. As the keys to improved integration of non-Microsoft applications with Windows, the disclosure of 272 APIs and 113 protocols immediately allows other companies to be more competitive. The emphasis here is on “”more”” competitive — we are not witnessing a 360-degree turn. At least one analyst has taken this to the extreme, telling a U.S. computer magazine that this could help Microsoft fend off threats from Linux. That’s a bit of stretch. There is a difference between opening up your APIs under duress and fostering a community of sharing where code is freely tinkered with and improved upon. Whatever else happens, Microsoft is still one company operating on its own.

In some respects, a real test of the settlement’s impact will come from the reaction by the computer makers. These are companies that have been working with Microsoft for a long time, and have gotten accustomed to its market dominance. A few of them, like Gateway and HP, have been vocal critics of Microsoft during the trial, but it behooves all of them to fully explore the limits of the middleware control open to them. Only then will we have a sense of the additional steps Kollar-Kotelly needs to take.

If justice is really blind — and the initial settlement suggests as much — the industry may have to act like a seeing-eye dog.


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