In November 2002, Microsoft agreed to abide by the terms of a consent decree with the department of justice and most of the states after the antitrust ruling against Microsoft. The decree included a number of milestones, which you can find described on numerous sites, including Microsoft's (http://www.microsoft.com/about/legal/settlementprogram/default.mspx). The decree states that third parties may submit complaints concerning Microsoft's compliance with the Consent Decree.
This decree was supposed to expire November 12th of this year (this past Monday). However, at the last minute it was temporarily extended – temporarily meaning a decision will be made no later than January 31, 2008. So what happened?
Some of the states such as New York, California, Connecticut, Iowa, Kansas, Minnesota, Massachusetts, and the District of Columbia (not technically a "state") are now seeking to extend the decree for an additional five years, as they claim it hasn't diminished Microsoft's monopoly. However, Judge Colleen Kollar-Kotelly says the decree wasn't supposed to do that - it was to correct anti-competitive policies.
Judge Kollar-Kotellly (who has been called Microsoft's probation officer), extended the decree and gave Microsoft, the Department of Justice (DOJ), and the states time to respond. Microsoft of course, opposes an extension. The DOJ filed an amicus brief siding with Microsoft, arguing that the consent decree has been effective and that competition will not be undermined in the software market if the decree was allowed to expire as originally intended. The states have until November 16th to respond. They want to be sure that Vista complies with the consent decree, and the DOJ says that it does.
Some other interesting developments in this case include Google's actions in June of this year, when it was disclosed that the company had petitioned the US government to extend its oversight of Microsoft's business practices. Google claimed that Microsoft is continuing to abuse its monopoly and violate the terms of the decree. Those concerns included Microsoft's including its desktop search product as a part of Windows Vista - since having both search engines running slows down the PC. Google claimed this was is in violation of the judgment in the antitrust case [which requires Microsoft to allow end users to remove middleware; although it is not clear that search engines were considered middleware at the time of the decree, and search engines was not one of the 5 categories specified by the decree]. Microsoft, in SP1 is fixing this problem in Vista, although that has not stopped Google from continuing to complain. Google and Microsoft have been at each other’s throat for some time.
While Microsoft (of course) says its been meeting competitors such as Google half-way, the competitors will always want more. That's the nature of the beast.
Interestingly enough, Microsoft claims that Google's success in itself is a notable example of how open and competitive the software industry has become! Its not unprecedented for Microsoft's attorneys to cite a competitor's success this way. During the European Commission case, Microsoft pointed to the success of Apple's iTunes as an example that competition was thriving in the market for digital media players (see my previous blog entry discussing this at http://www.networkworld.com/community/node/20074). The success of Flash, which is on almost 100% of computers, is also used as evidence of the level of competition in the industry.
This is an issue on which few people have a neutral opinion. Either you love Microsoft or you hate it. The question is: has the consent decree accomplished what it was intended to do? Was the consent decree even needed? That is the important question, not whether Microsoft screwed up its testimony (in the case) about removing Internet Explorer from Windows 98 or if Bill Gates wasn't photogenic for his video-taped deposition. But where Microsoft is concerned, debates seem to center on whether you like the company or not.
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Kerrie Meyler, a Microsoft MOM MVP, is an independent consultant and trainer with more than 15 years of Information Technology experience. A previous senior technology specialist at Microsoft, she focused on infrastructure and management solutions, presenting at numerous product launches. More recently, she presented on Operations Manager 2007 and gave several podcasts at TechEd 2007.
Kerrie has worked with Microsoft Learning to develop Microsoft Official Curriculum (MOC) for several courses, including the Implementing Microsoft Operations Manager 2000 course, and did the beta teach for that course.
Kerrie is the lead author of Microsoft Operations Manager 2005 Unleashed and Microsoft System Center Operations Manager 2007 Unleashed
Check out an excerpt from System Center Operations Manager 2007 Unleashed, Chapter 3: Looking Inside OpsMgr.
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The settlement did worse than nothing.
Microsoft should be charged under RICO
Microsoft has been under scrutiny of the federal government and has been involved in numerous lawsuits in which federal court judges issued preliminary rulings that Microsoft was guilty of criminal activities even before the DOJ lawsuit. Microsoft's solution to these criminal activities was to offer favorable settlements in which all transcripts of the case were sealed. About the only public record of these rulings were the paper copies of trade journals such as Computerworld, E-Week, PC Weekly, and Network World. Unfortunately, the electronic archives are consistently purged of such records and can't be found using Google and other popular search engines.
Fraud, Extortion, Sabotage
Sabotage
In related cases, Microsoft DID obtain it's monopoly illegally by sabotaging competitors such as DR-DOS, GEM, DesqView, OS/2, Unix and Linux. Microsoft paid huge settlements or fines, as much as $3 Billion to IBM, but continued to use their extortion tactics - threatening to revoke ALL licenses to MS-DOS or Windows if an OEM offered competitor products as an alternative to Microsoft's Windows. The result is that the OEMs became partners in Collusion, conspiring to exclude competitors from the market.
Fraud
The FTC investigated Microsoft for Fraud and their use of Vapor-Ware to prevent OEMs and corporate customers from switching to competitor products.
Obstruction of Justice
Microsoft requires that potential employees, partners, and others involved in negotiations sign nondisclosure agreements intended to obstruct justice. Even corporate and OEM licence agreements contain non-disclosure agreements which were used to obstruct FBI and DOJ investigators by requiring that a Microsoft lawyer be present. The lawyer would tell the person being interviewed that they could not answer questions because of the nondisclosure agreements.
Contempt of Court
Even during the duration of the Antitrust settlement, Microsoft has continued to defy the courts. One of the terms of the settlement was that Microsoft was not allowed to interfere with attempts to market competitor products such as Linux. Microsoft didn't expressly forbid OEMs from advertizing or shipping machines that could run both Linux and Windows, but they did require that OEMs get approval in writing for any ad using the Microsoft trademarks and logos, and any hardware/software configuration which included Microsoft Licensed software.
Microsoft approved new drivers and certain other configurations almost immediately, and most ads could be approved in less than a day. On the other hand, ads which mentioned Linux were usually delayed and nut approved until after the magazine deadlines had passed, or just not approved at all. Configurations such as Dual-Boot Linux/Windows, Desktop Virtualization, and even virtualized clients were delayed or just not approved.
Extortion
In the case where Microsoft was found to be in contempt of the 1993 court decree, Microsoft revoked the Licenses of Compaq for their most popular computer line because Compaq removed the IE icon from the desktop and put the Netscape in it's place. In effect they used extortion to force an OEM to exclude a competitor from the most cost-effective distribution channel available.
Extortion and Blackmail
In the Antitrust case, Microsoft threatened to not license Windows 95 to IBM if they continued to sell OS/2 (extortion), when IBM didn't accept those terms Microsoft demanded a complete license audit and demanded payment for machines that were shipped with OS/2 and NOT Windows (Blackmail), and then when that didn't work, they publicly announced the license violations and demanded a huge cash payment from IBM.
Fallout of the unenforcable settlement
IBM has dumped it's PC business entirely and turned it over to China.
Gateway stock has crashed so far that it was on the verge of being delisted after several quarters of deep losses due to Microsoft's draconean tactics.
Bribery?
There even seems to be indications that Microsoft and/or it's executives may have made illegal donations to charities which were actually money laundering operations for George W Bush's campaign during the 2000 primaries and may have been a key factor in his election (bribery). There have even been links between the Gates foundation and charities used to launder Republican political contributions. Could there also be similar contributions to winning democrats?
The settlement did nothing
Ironically, it may be better for competitors if the consent decree is NOT extended.
Microsoft has already overplayed their hand with Vista, and has alienated corporate CEOs and CFOs with the forced upgrades to Windows XP when Windows 2000 was more than satisfactory. When Microsoft declared Windows NT 4.0 obsolete and demanded that corporate customers upgrade their servers to Windows 2003 at substantially higher rates, corporate customers often opted to switch as many applications as possible to Linux or Unix.
With Unix systems getting faster and cheaper, and Linux systems getting more powerful, corporations have been able to put more workload on fewer Linux and Unix servers, and at substantially lower cost.
Linux servers have lead to much more interest in Linux desktop and Open Source Software such as Firefox, Open Office, and hybrid options such as cygwin, which allows Linux applications to be run on the Windows XP desktop.
If the decree is extended, competitors and state's attorney's general would try to push for compliance, which the Bush administration will ignore, telling the judge to do nothing.
If the decree not extended, OEMs, corporate customers, and hardware vendors will know that now, when Vista is not so popular, is the best time to start to stand up to Microsoft.
OEMs are looking at Apple and the success of OS/X and Leopard. They are looking at the Microsoft profits resulting from double-charging OEMs and triple-charging corporate customers and looking at the collapse in prices of Vista machines which have dropped below the price of XP machines, and the customers willing to pay extra for XP. Meanwhile, their own profits from PC sales are evaporating. Most of the OEMs are now making "Linux-Ready" machines with OpenGL graphics cards, Linux ready WiFi, and other "Linux oriented" hardware, which seems to be selling at better prices than the "Vista Only" machines.
Retailers such as CompUSA have closed most of their retail stores, and other chains such as Best Buy, Circuit City, and Staples have stopped restocking "Vista Only" machines. It seems that machines offered with Vista Home Premium are not selling well at all, especially since there are so many license restrictions.
With no hope of court intervention, there might be a "fast break" where OEMs start offering product lines featuring Linux or Unix on desktop an laptop PCs which will be displayed in the retail stores.
Can Microsoft compete effectively when retail customers can "test drive" Linux machines sitting right next to Windows machines. Could Vista beat Ubuntu "Gutsy Gibbon", SUSE Linux Enterprise Desktop with a full suite of preinstalled applications (including several competitive applications in each group)?
Government oversight is not the ticket in the tech industry
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What this whole Microsoft antitrust thing proved was that government oversight is mostly just a distraction. The tech industry's ability to make its top players obsolete with "disruptive" technology is what rules the market. Microsoft did compete unfairly and, many would say (with good reason), it still does. But that still won't keep it in power forever. If it continues to anger its user base, they now have options in every direction for alternative technology. The government didn't do that.