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the Software View: Do not pass GO
Welcome back, gentle reader. I wanted to share with you some of the technology I'm using in projects I'm currently working on. For one Internet database project, I'm using a combination of JavaTM applets on the client and CGI/Perl on the server. Another project I'm currently working on is a Java Server Pages project. JSP is a Sun technology that ships with the Java Web Server 1.1.1 It's very cool. I'm especially proud because the above projects don't use a single line of Microsoft code.
For those of you with Internet and World Wide Web access and a Netscape Navigator web browser, please point your browser to:
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Scroll down the page and you will spy a link entitled, "Current views web log (fresh news daily! Click reload, clear the browser cache)" The daily news page is also known as a "web log". It is en vogue and the fashion of these days to call it that. Click on the link, click "reload" on your browser or clear your browser cache to ensure that you always receive the freshest, hottest daily news concerning Java, Linux, XML, and the software industry! The link never changes, but I will be updating the HTML file page behind it every day. Please, do take a gander at it every day.
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Now, dear readers, on with this week's episode of the Software View!
Just some tidbits to pass on. On May 11, 1998, Microsoft booted a 64-bit Alpha version of Windows NT for the first time. 64-bit computing allows you to read data from main memory in bigger chunks, support larger hard disc drives, and may take advantage of Intel's VLIW (Very Large Instruction Word) chip instruction set technology.
Here's a funny quote. Read it carefully! I finally got it after reading it three times. It's worth a chuckle. Futurist Ted Nelson's words on Microsoft and its operating system proved prophetic: "All power corrupts, and obsolete power corrupts obsoletely."
I got this gem from Mike Masnick, who runs the techdirt web site. This gem had me rolling on the floor laughing.
http://dialogboxes.com/windows/
And now, dear reader, on with this week's episode! Much ink has already been spilled in writing about the recent antitrust lawsuits against Microsoft. Brace yourself, dear reader, for I am about to add to that ton of ink. But my ink will be bits, digital, 1's and 0's. When I was a child and growing up, I used to play this fun game with my brothers and sisters called Monopoly. If I was unlucky, I would sometimes draw a card that read, "Do not pass GO, do not collect $200". Well, Microsoft plays a real game of Monopoly, collects real money, and on the scale of billions of dollars.
In an upcoming episode of the Software View, I will explain in depth the dynamics of software markets, the virtuous cycles, essential facilities, lock in, and the economic theories of increasing returns and network externalities. Suffice it to say, Microsoft currently enjoys a monopoly in desktop personal computer operating systems (about 90 percent market share). And I just read in a USA Today article, that Microsoft also enjoys a 93 percent market share in desktop office suites like word processing, spreadsheets, etc. These two hugely profitable businesses are the two pillars that prop up Microsoft's economic value.
History is replete with government antitrust lawsuits against dominant commercial firms like Standard Oil, AT&T, IBM, Alcoa, Kodak, now Microsoft, and possibly Intel. Computerworld magazine's David Moschella wrote a great article that aligned Microsoft with the woes of big tobacco companies. Like the FoRK list's Robert Harley wrote, "Denial ain't just a river in Egypt." Microsoft abhors the idea that what's happening to the tobacco industry today may be a preview of what it will face. Denial is bad. If Microsoft could learn from Big Tobacco's mistakes, it might spare itself future trouble. Bill Gates' claim that Microsoft doesn't have a monopoly on PC operating system software is like tobacco industry execs testifying that smoking doesn't cause cancer. Both are an insult to common sense. When you view the increasingly vehement attacks on the tobacco industry and Microsoft, you see that much of the animosity stems from that initial big lie.
Momma always said, "Do as I say, not as I do." Let's look beyond what Microsoft says and let's view their actions. Their actions signal their true intentions. Microsoft had restrictive per-processor licenses with their personal computer OEM's (original equipment manufacturers) like Dell, Gateway, and Compaq. Microsoft charged the OEM's for computers shipped, even if those computer had non-Microsoft operating systems like IBM's OS/2. It was cheaper for the OEM's just to load Microsoft operating systems on all their computers. Microsoft also kills competitors by bundling software into its OS. Examples are QEMM memory management, Stacker doublespace disk drive software, and more recently, Netscape's Navigator. Microsoft also attacks competitors on the price front. Because we all pay a tax to Microsoft for every PC bought, they have a constant revenue source; thus, they undercut competitors on prices. Recent examples include Microsoft SQL Server's lowball price versus Oracle's database and Microsoft giving away Internet Explorer. This is software dumping at its finest.
Jim Barksdale, CEO of Netscape, said it best. Microsoft is an "essential facility". In order for Sun or Netscape to sell software, they must be able to run on Microsoft Windows. Microsoft does not have to run on Solaris; thus, it does not have to endure the same market discipline. All software companies today have discovered that when they purchase Microsoft software, they are actually funding a ruthless competitor. Every software company in existence has to have an answer to the Microsoft question. Because the truth of the matter is, if any software company happens to stumble upon a billion dollar market like Netscape did with web browsers, Microsoft will swoop down and try to crush you. Venture capitalists won't even dare fund any software company that tries to take on Microsoft in its core markets. Bottom line: Microsoft suppresses innovation. Here's the problem. If you stumble upon a billion dollar market like Intuit or Netscape, all of a sudden you appear on their radar screen and they will try to crush you. The reason is that they must continue to feed their stock price, which keeps their options hungry employees happy. Also, the collusion and sharing of code between the applications and operating systems groups at Microsoft prevent any outside company from becoming a threat in the Windows software market. ComputerWeekly wrote, "Take Netscape. A little company develops the world's first popular Web browser and becomes an overnight success. Did Microsoft really need to develop an alternative Web browser, then throw millions of dollars at trying to oust the Netscape product? If IBM could license the Netscape Web browser, why not Microsoft? Surely the software giant could spend its money more wisely on helping to build better information technology." And fix the bugs that exist in its current software.
Rick Ross wrote it best, "It would be fantastic if Microsoft shipped 100% Pure Java with every copy of Windows 98. It would also be great if Microsoft would offer Windows IE users the same Java choice they have offered Macintosh IE users for a long time. Mac IE users get to choose for themselves which Java implementation their browser will use, from among the Apple JVM (Java virtual machine), Microsoft's VM, or the Metrowerks VM. I don't understand why Microsoft gives Mac users a choice, but refuses to do the same for Windows users?"
When Microsoft tried to absorb Internet Explorer into Windows, it was a clear case of tying. IE is sold as a separate product for other OS's. Tying violates Section 2 of the Sherman Antitrust Act of 1914. Microsoft has monopoly power and has acquired and maintained that power through exclusionary and predatory acts. Microsoft operating systems are installed on a large percentage of the PCs being shipped today; thus, Microsoft has monopoly power. Because of network externalities, it is virtually impossible for anyone to challenge Microsoft's dominance on the PC desktop. The law prohibits Microsoft from engaging in exclusionary and predatory acts that lead to monopoly or that maintain an existing monopoly. Since Microsoft has been attempting to exclude rivals on a basis other than efficiency, it is fair to characterize its behavior as predatory. Microsoft has engaged in various exclusionary practices in order to maintain its monopoly or to extend that monopoly into new markets, primarily the Internet. Microsoft integrated Internet Explorer into Windows. Then Microsoft proceeded to give Internet Explorer away, which amounts to predatory pricing. Companies have been unsuccessful in selling applications that compete with Microsoft because Microsoft takes unfair advantage of undisclosed APIs in its operating systems in order to make Microsoft's applications work better than those of its rivals. Microsoft uses vapor-ware announcements to freeze out more nimble competitors already shipping running software.
So now the question is, what do we do about Microsoft? Well, the Department of Justice was very sly in their answer. They proposed that Microsoft should ship a copy of Netscape Navigator with every copy of Windows98. There is a well-developed and long-standing antitrust principle known as the "essential facilities" doctrine, prohibiting a monopolist that controls a vital means to competition from denying reasonable, nondiscriminatory access to competitors. It is the same principle that the government used in 1984 to require AT&T to allow other telephone companies to access AT&T's lines, eventually providing consumers with choices in long-distance service. This is similar to the must-carry laws that force cable operators to carry third-party content on their networks. Jim Barksdale, Netscape CEO, says, "The must-carry laws say that if you control a basic facility, you have to offer people a way to get into the pipe somewhere or other. So you either put the products in at the top of the channel - distributed by Microsoft - or you open up the middle of the channel." AT&T was also forced to carry MCI's original voice traffic over its network. The government doesn't choose to define what an "operating system" is or isn't, instead they just want Microsoft to level the playing field, or to at least appear to level the playing field. Regardless of whether the Department of Justice is successful, we are already witnessing a new day dawning. Mighty oaks in tiny fissures grow. With the arrival of the Java platform, may a thousand flowers bloom ...
Sincerely,
Mark Kuharich
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