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Microsoft’s calculation
By: Editorial Board
San Jose Mercury News
Posted: 10/22/01
With a party-now, pay-later mind-set, Microsoft passed up a chance to shape penalties to its liking now that courts have ruled that it broke antitrust laws. It pulled out its calculator and figured it would be far better off stalling than settling.
On Friday, the company and the Justice Department told U.S. District Court Judge Colleen Kollar-Kotelly that they remained too far apart to settle their case. Kollar-Kotelly, in return, has asked Boston University law professor Eric Green to lead three weeks of intense mediation.
The failure to reach a deal was not surprising; it is less than two weeks from the formal launch of Windows XP, Microsoft’s new operating system. Microsoft will be months ahead and billions of dollars of XP-sales richer by the time that Kollar-Kotelly, Justice and a posse of states finally get to put a noose around the company, sometime next spring at the earliest.
After speaking with both sides, Kollar-Kotelly said she was satisfied that they had been diligent. But attempts to mediate a settlement have already failed once, and if history is an indicator, Kollar-Kotelly will come to change her mind _ at least about Microsoft’s good faith.
Nov. 2 is the deadline for mediation. After that, Microsoft will spend months preparing for a hearing on penalties that Kollar-Kotelly has set for March. Then, after the judge sets the sanctions, Microsoft can file appeals to try to put the penalties on hold.
Meanwhile, it will be flaunting its monopolist powers with XP, which Chairman Bill Gates will formally unveil Oct. 25th in a New York extravaganza and a $200 million ad blitz.
XP, nearly all reviewers agree, has plenty going for it. It is a much more stable, crash-resistant, customer-friendly operating system.
But it incorporates the anti-competitive tactics that are the crux of two courts’ findings against Microsoft. XP is engineered to drive users to Microsoft’s own software products. These include its instant messaging service, digital photography and multimedia players for downloading audio and video files. There is currently vigorous competition in these markets. But it will not last if Microsoft is allowed to manipulate XP’s code and use coercive practices.
Microsoft used its monopoly power to smother Netscape’s Internet browser; that is past. The court must focus on preventing Microsoft from using XP to extinguish current and future technologies.
Microsoft is betting that the government and courts will never catch up to XP, and the penalties will come too late to prove effective. But if sales lag amid a slumping economy, then damage to competition and innovation could prove manageable and reversible.
Consider that a silver lining to the technology industry’s troubles.
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