Tie Them Up, Don't Break Them Up

BOSTON (05/08/2000) - I recently admitted I couldn't get excited about the Microsoft Corp. antitrust case because I believe it will die on the vine, a victim of the appeals process, rapidly evolving markets and shifting political agendas.

I didn't say whether I think the company should be broken up, which is an entirely different question. While I think the issue will ultimately prove moot, I fall into the camp that believes something should be done, but that something is not divestiture.

Breaking the company in half to create a Windows company and an applications/ Internet company is, to use Microsoft's own rhetoric, an "extreme measure" that does not fit the crime and does more harm than good. A strong Microsoft is, and continues to be, good for users and the industry.

Think about how we have benefited from having a stable, industry-standard platform and a host of compatible products from a number of vendors that run on it. And while the company is often slighted as having never invented anything, think about how much innovation can be attributed to having Windows as a common denominator. Without that platform, would we have seen even half the developments we have?

Has the company abused its position? It seems so. The failure of Netscape is an outright shame, and certainly that was only the most visible result of Microsoft's tyrannical practices. Should Microsoft get away with that behavior in the name of being a driven competitor? No.

But breaking up the company isn't the answer. While I think Microsoft would survive such an ordeal - probably even thrive - the idea of the government trying to handicap this industry gives me the heebie-jeebies. Do we really want to take on that uncertainty for the promise of, what, Office applications on Linux? It hardly seems like a safe gamble.

A surer bet would be to impose some of the controls that are called for in the Department of Justice's proposal, and just leave it at that. Some of the controls are things like requiring Microsoft to establish uniform licensing terms, allowing OEMs to support competing products without fear of reprisal, and requiring the company to release APIs in a timely manner.

The wrap against this approach is that it would be hard to regulate, and there is some truth to that. But when you balance it out, the risks of this approach are less weighty than asking Washington to second-guess Redmond.

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