Microsoft

Double trouble

In the second installment of his special four-part series, Ed Bott discusses a Microsoft Challenge of a different sort. See what he has to say about Judge Jackson's decision and the repercussions of the Microsoft breakup.


Someday, someone will write the definitive history of the Microsoft antitrust trial. When they do, I hope they get a chance to sit down with Bill Gates and ask him what he could possibly have been thinking when he sat down for the infamous videotaped deposition in August and September 1998. In 20 hours of testimony, Gates, reputedly one of the world's smartest men, came across as sullen, uninformed, and barely capable of stringing together a complete sentence.

If this was a conscious tactic for dealing with the government, it had disastrous results. When Judge Thomas Penfield Jackson issued his Final Judgment last week, he attached a scathing six-page Memorandum and Order that called the company "untrustworthy," "disingenuous," and "unwilling to accept the notion that it broke the law or accede to an order amending its conduct." In other words, Judge Jackson was steamed.

The judgment itself is simple, direct, and brutal:
  • Microsoft gets chopped into two companies, one with the rights to sell Windows, the other owning every other Microsoft product. Bill Gates has to choose one company and completely divest his interest in the other.
  • Microsoft faces severe restrictions on its contracts. It can't punish a computer maker for choosing to change the Windows startup screen or delete a Windows component, and it can't offer exclusive deals to any other company.
  • Microsoft has to publish its price list for Windows and offer exactly the same terms to every company it deals with. If a computer maker chooses to delete a component, such as Internet Explorer or Windows Media Player, Microsoft has to slash the price of the operating system in proportion to the amount of code used by that component.
  • To add insult to injury, Microsoft has to devise its own breakup plan (subject to approval by the court, of course), and it has to hire and pay a chief compliance officer who is responsible for (among other things) snooping into all e-mail by Microsoft executives.

Which'll it be: Windows or apps?
So which company will Bill Gates choose? If I were Bill, I'd ditch Windows in a heartbeat and put all my chips on the applications company. If you read the Final Judgment carefully, I'm sure you'll agree with me. The order basically wipes out everything that makes Windows such a potent threat in the PC marketplace. Under the judge's order, Microsoft has to publish every one of its APIs—no fair holding back a few secrets for the Office team. Of course, since the Office guys will be at a different company, that sort of cooperation is illegal anyway.

The judgment prevents the Windows group from any further development of Internet Explorer: The Windows company gets a royalty-free license to distribute the current version of IE, but "the license shall not grant the Operating Systems Business any right to develop, license, or distribute modified or derivative versions of the Internet browser."

And in every future version of Windows, the Windows company has to offer OEMs and end users a way to remove "all means of End-User Access" to "Middleware products," which include "Internet browsers, e-mail client software, multimedia viewing software, Office, and the Java Virtual Machine," as well as future technologies like voice recognition software.

In essence, Judge Jackson has decreed that future Windows development can focus only on the Windows kernel and closely related components that make up the classical definition of an operating system—hardware drivers, memory management, the file system, and other assorted bits of plumbing.

Meanwhile, the applications company faces only one restriction: It can't get back together with the Windows company for at least 10 years. Meanwhile, it can do nearly anything it wants with Office, BackOffice, Internet Information Server, Outlook Express, MSN, Expedia, and dozens of other products and Web-based services.

Okay. Imagine you're a hotshot code jockey working at Microsoft. Which company will you choose to work for? The one with an unlimited assortment of product lines? Or the one where you're probably going to be assigned to cleaning up device driver code for SCSI adapters? Not much of a choice, is it?

As a consumer of Microsoft products, you'll still want Windows. But if the DOJ and the judge have their way, you'll have the option to choose a stripped-down version that you can then customize any way you like, using products from Microsoft's applications company or from any third party you want. Next week, I'll explore just how many of those third-party products you're likely to see.

Look for a new Challenge next week!
For the month of June, I've prepared this special four-part series on Microsoft and the challenges it faces in the months and years ahead. Look for a brand-new Microsoft Challenge next week, on Thursday, June 22, with the results in my regular column on July 6.

Editor's Picks

Free Newsletters, In your Inbox