Microsoft's rivals "delighted"

Such was the reaction of Ransom Love, chief executive of Linux operating system seller Caldera Systems, after hearing of Judge Thomas Penfield Jackson's finding that Microsoft misused monopoly power. "No one wants to see Microsoft go under--we all just want to see them play fair," Love said.

Love's response represents the thoughts of several companies who have found themselves at odds with Microsoft. For them, it indicates that there may come a time when they'll have a clearer shot at nabbing Microsoft's customers.

"My basic reaction is I'm delighted by the findings," said Jim Barksdale, the former chief executive at Netscape and one of the central figures in the case. "I thought my team worked so hard at Netscape to overcome a lot of this. I'm glad the judge understands this and agrees with it.

"I don't think anybody knows what it is to be in the direct onslaught of Microsoft until they've been there," he added.

Jackson's findings, released today, cite the Linux operating system as well as BeOS from Be Incorporated as examples of just how hard it is to dislodge Microsoft from its position of dominance.

"Several [software makers] have announced their development of (or plans to develop) Linux versions of their applications. To date, though, legions of [software makers] have not followed the lead of these first movers," Jackson said in the findings. "Similarly, consumers have by and large shown little inclination to abandon Windows, with its reliable developer support, in favor of an operating system whose future in the PC realm is unclear."

Microsoft didn't back down from its position that Linux is a competitor, though, arguing that the government defined the competitive landscape too narrowly and therefore excluded Linux.

"The government has defined a very narrow market, one which we think doesn't reflect the realities of the competition we face," said Bob Herbold, chief operating officer of Microsoft, in a news conference today. "This is freshly reinforced by the Linux phenomenon."

Be Incorporated chief executive Jean-Louis Gassee was encouraged by the findings.

"I like the shift in the perception that this might cause," Gassee said in an interview. "The practical consequences [are] too early to tell, but in psychological terms, I think this might open doors. I think today's findings of fact will alter everyone's calculus about Microsoft."

One problem for new operating systems is that software developers are naturally attracted to the dominant operating system, which makes that OS even more dominant, Jackson said. "While a niche operating system might turn a profit, the chicken?and?egg problem...would make it prohibitively expensive for a new Intel?compatible operating system to attract enough developers and consumers to become a viable alternative to a dominant incumbent in less than a few years," he said.

"The chicken-and-egg problem has made life difficult for us," Gassee said.

The Software and Information Industry Association (SIIA), an advocate of antitrust law, praised the finding.

"Jackson affirmed that the antitrust laws do apply to the information technology industry, and that anticompetitive behavior in our industry is no different than anticompetitive behavior in any other industry," Ken Wasch, president of the group, said in a statement.

SIIA, however, argued that the best approach for the future would be for Jackson to lay down a rule for Microsoft and then stand aside. The court should "adopt a remedy that creates a new relationship between the dominant operating system provider and the rest of the industry, while eliminating the need for the government to remain as a watchdog of software business practices," Wasch said in a statement.

"Bullying PC computer manufacturers"
James Love, director of the Consumer Project on Technology and a longtime Microsoft foe, was gleeful.

"The court has determined that Microsoft engaged in a litany of anticompetitive actions, bullying PC computer manufacturers and engaging in numerous actions of technological terrorism against [its] competitors," he said in a statement.

Netscape is at the center of the case against Microsoft. To counter the rapid ascendance of Netscape's Web browser, Microsoft quickly created its own software, Internet Explorer, and then tied it in with the workings of the Windows operating system. America Online purchased Netscape a year ago.

California Attorney General Bill Lockyer described the fate of Netscape as tragic.

"Netscape was arguably the most innovative company on the planet," he said. "It was basically crushed by the actions of Microsoft. That can't be undone, but there ought to be efforts made to make sure that can't repeat itself."

Sun Microsystems, a company that rarely misses an opportunity to challenge Microsoft and that's locked in a separate legal battle of its own against the software giant, was quick to come up with new guidance based on the findings. Sun said in a statement that Microsoft's aggressive acquisition strategy should be curtailed--particularly its forays into investing in companies with network technologies.

News.com's Joe Wilcox, Stephanie Miles, and Sinead O'Brien contributed to this report.