Assessing the Fallout of the Antitrust Case

SAN MATEO (06/12/2000) - The dust is starting to settle on the 2-year-old Microsoft Corp. antitrust court battle, but the fallout will be felt for years to come. The proposed dismantling of the world's most successful software company represents the end of the footloose and fancy-free days of the industry and the beginning of heightened government scrutiny. With the maturation of the IT industry has come vendor consolidation and a growing need to keep dominant players from abusing their power.

Government oversight of computers and telecommunications is nothing new. From AT&T Corp. and IBM Corp. to Cisco Systems Inc. and Intel Corp., IT vendors have had to explain their actions.

Microsoft's behavior during the court hearings has been counterproductive, however. By carrying its hardball tactics into the court room -- and the public eye -- Microsoft has been deemed "untrustworthy" by presiding U.S. District Judge Thomas Penfield Jackson. By contrast, Intel, which has a similarly dominant position in its market, fessed up to its heavy-handed ways and settled during a recent U.S. Federal Trade Commission investigation.

From an IT vendor's perspective, settling not only gets regulators off its back, but it also avoids dragging in judges or juries to make technical decisions. Consider Jackson's definition of middleware, which he seems to confuse with applications -- Office, BackOffice, Web servers, etc. Microsoft now has to contend with a set of short-term restrictions on its "middleware" products, even as it plans its appeal.

An increase in government scrutiny has serious implications for IT executives, who have an interest in the case both as consumers and enterprise purchasers but should be more vocal. From a corporate perspective, stable vendors that provide integrated products are preferred -- but as consumers, we value choice above all.

Of course, a change in administration could change the government's outlook on regulation, but regardless, the IT industry is now the engine of growth in the U.S. economy and will only see more outside examination.

Does antitrust enforcement have a role in the fast-moving IT industry?

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