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MS critics want a clean fight

Microsoft critics agree they?d prefer a clean fight over government intervention, but Microsoft has to put away the brass knuckles first.

WASHINGTON--Many of the speakers at yesterday's Appraising Microsoft conference here agreed they'd prefer a good clean fight over government intervention, but Microsoft (MSFT) has to put away the brass knuckles first.

Critics and competitors detailed how Microsoft uses techniques they called Microscope on Microsoft "coercive licensing"--deliberate changes to products to ensure incompatibility between generations of products, selective disclosure of technical information, and the use of intimidation and money muscle against its competitors to stay on top in the computer industry.

But for all the horror stories, speakers didn't call for Microsoft to be broken apart, the usual punishment for badly behaved monopolies. Instead, most attendees suggested curbs on Microsoft's ability to dictate the rules of the game.

"I think a lot [of what happens] has to do with Microsoft's conduct," said attorney and longtime Microsoft foe Gary Reback. If Microsoft's licensing schemes were struck down, and if the company would make technical information accessible to all comers--including its own divisions--on equal basis, the free market might work, he added.

"If Microsoft behaves itself as a good corporate citizen, follows the rules of the road, and competes fairly, I think we can count on the free market," Reback said. "But if Microsoft continues to say 'to heck with Janet Reno,' the attorney general of the United States, then maybe they are going to force more draconian measures on themselves. It's up to Microsoft."

Most speakers agreed with Reback's sentiments, to one degree or another, but few were optimistic that Microsoft would abandon its bad old ways voluntarily. In fact, consumer advocate Ralph Nader, who headed the conference, and others said it can't. The company's business model, the way it compensates it employees, and how it spends money all are predicated on its current high margins in the Windows operating system business. As those margins shrink, Microsoft is forced to find more high-margin businesses.

"I call Microsoft 'The shark,' " said Mitchell Kertzman, CEO of database maker Sybase, a Microsoft competitor in the lucrative database and server software market. Kertzman explained that the company has to keep swimming and eating to survive, and winds up swallowing everything in its path.

The problem with Microsoft, as these critics see it, isn't that it's a monopoly, but that it's a voracious one. Economist Richard Arthur of the Sante Fe Institute said short-term monopolies are actually a healthy and natural part of the high-tech economy, because short-term monopolies spring up when a standard is adopted. He compared the rush to capture new high-tech markets to land rushes. "If these land rushes are, by nature, winners take all, or winners take most, let them be run fairly. Let everyone start behind the same starting line...using the same rules, albeit [on] different race horses," Arthur said.

Sun Microsystems' CEO Scott McNealy agreed that Microsoft chairman Bill Gates is just doing his job, though perhaps too zealously. "We as CEOs get paid to create dominance in one market so that we can move into other markets," said Scott McNealy, "but at some point...there is a role for government."

Nader said intimidation was a key facet of Microsoft's anticompetitive tactics. He said he intends to outline specific cases today. The legendary consumer advocate seems to think that Microsoft's problems are less business-oriented than personality-driven.

"Gates and [Microsoft executive vice president of sales Steve] Ballmer have gotten themselves into this mindset that if they don't control everything, if they don't try to control everything, they'll control nothing. They're mesmerized by IBM and Digital missing the bend in the road. Remember that from [Bill Gates's] book, The Road Ahead?" [Intel CEO] Andy Grove is that way, too. And that leads to an incredible ruthlessness and aggressiveness on the part of those companies."