Commentary: Microsoft must play fair

The software giant must cede control, to PC makers and others, of the selection of software and services to be layered on top of the operating system.

2 min read
By Thomas Bittman, Gartner analyst

The key to the original antitrust decision, upheld in appeals, was that Microsoft held a monopoly on client operating systems and kept that monopoly through illegal means.

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States balk at settlement proposal

At issue was Microsoft's behavior with companies and its technology strategy of bundling and integrating functions that competed with third-party products. At that time, the only open issue was the remedy to be imposed on Microsoft.

The original remedy--which was not upheld--was to split Microsoft into potentially competing companies. The aim? To create a quasi-competitive environment that would make Microsoft's technology strategy moot (since the "middleware" would belong to a company separate from the operating system).

The current settlement proposal, however, addresses Microsoft's behavior much more than the original remedy. The software maker is required to work with companies--regardless of their plans to use Microsoft's or its competitors' products and services. Microsoft already has begun this activity. In terms of integrated technology development, the company must cede control, to PC makers and to end users, of the selection of software and services to be layered on top of the operating system.

However, Microsoft wouldn't be forced to charge less if a PC maker chooses to remove features, another component of the original remedy. This rule, however, omits technologies that Microsoft deems off-limits in order to preserve security integrity--such as authentication and digital rights management. By not addressing authentication technology, the agreement may expose loopholes involving Microsoft's controversial Passport authentication system.

Finally, the settlement focuses on the Windows client operating system and involves only the server in terms of opening up changing communication interfaces between the client and server.

Today's shaky economic and international climate benefits Microsoft in this settlement. If the settlement is approved, the critical element would be the specific wording in the consent decree that would put teeth in policing Microsoft's interactions with original equipment manufacturers (OEMs) and others.

Yet Microsoft's bundling and integration technology strategy is hardly disrupted. Left up in the air is how the states and the European Union will react. Gartner believes more legal action against Microsoft is likely in the next few years concerning technology integration--especially on the server--and expects increased concerns about Microsoft's online business services, such as its 2001 purchase of Great Plains Software.

(For a related commentary on the proposed settlement of the Microsoft antitrust case, see Gartner.com.)

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