MS/DOJ - Users split on effects of a Microsoft breakup

Some corporate users interviewed yesterday after Judge Thomas Penfield Jackson ordered that Microsoft be split in two for engaging in anticompetitive business practices were split on whether the breakup will be good or bad for their companies.

Evan Benrubi, vice president of systems and technology at Transamerica Intellitech in Miami, applauded the judge's breakup order. "It's a good thing, and it's logical," Benrubi said. "It's OK to be big but not to be controlling."

But Benrubi said Transamerica Intellitech is a heavy user of Microsoft's products and may find it harder to deal with the two separate companies that Jackson's final judgment would create - one for Microsoft's operating systems, the other for its applications and Internet Explorer Web browser.

"It will be two entities, and you'll have to figure out which (one) to call for service and support, which will suffer," Benrubi said.

Bill Brong, supervisor of technology development at PPL Utilities in Allentown, Pa., also said he's in favor of a breakup. "It will create a competitive environment, and I understand why there was an antitrust trial," Brong said. Third-party developers mostly develop software with Windows in mind, but breaking up Microsoft may give Linux and other operating systems a better chance to attract attention, he added.

In addition, Brong said some of Microsoft's products don't integrate well with software from other vendors. For example, PPL uses Netscape Navigator as a Web browser, but it will also have to install Internet Explorer in order to use Microsoft's Outlook e-mail software, he said. And some applications that were designed to work with Netscape Navigator don't always function properly with Internet Explorer, Brong said.

On the other hand, the mechanics of appealing the breakup order and then potentially separating the company will likely be a big distraction for Microsoft, Brong said. "It will be a software company becoming legally focused," he said. "Things will just stop (in development). It will take a long time to pull (the company) apart." Technical support, which "is not great to begin with," also could suffer, Brong said.

John Amos, director of financial services at McKesson HBOC in San Francisco, had a pithier reaction to the breakup order. "Oh man, that sucks," Amos said. "Microsoft participated in some anticompetitive activity, but to have one vendor offer the gamut of software (we need is) a great thing."

Amos said he's not a big fan of Microsoft. McKesson HBOC recently implemented a Web environment based mostly on Microsoft's software, and Amos said the San Francisco-based drug distributor and software vendor had trouble integrating the Microsoft products with Oracle Corp.'s database. But Microsoft has done "more good than bad," he added.

Jim Vellella, manager of network servers at the University of Pittsburgh Medical Center, said the medical facility hasn't seen much flexibility from Microsoft on its software pricing. Vellella just signed new licensing agreements with Microsoft, but his dealings with the company were "not much of a negotiation," he said. "They gave me a price (and said), 'Here's what you are going to pay.' That's the end of the negotiation."

But Vellella added that he doesn't expect a breakup of the company to change things that much. "I'm going to be surprised if this results in a price break for me," he said. "I don't see how this benefits the end user.

Even if Microsoft's applications business is split off into a separate company, it won't have much incentive to lower prices "unless they want to do it for public relations purposes," Vellella said. "There's no competition for them from the application side to speak of."

And like Benrubi, Vellella added that one potential downside of a breakup would be the need to deal with two companies instead of one. "That's probably the only thing that I've got some concerns about," he said. "It's probably going to add some overhead to my day-to-day operations."

Meanwhile, one legal observer said Microsoft will have a good case on appeal.

"The appellate judges will focus strongly on Judge Jackson's failure to find real anticompetitive effects," said Hillard Sterling, an attorney at Gordon & Glickson in Chicago. "There's no evidence any competitor was effectively blocked from entering or competing in a market."

That could be "a serious crack in the foundation" of the case, Sterling said. He added that Jackson faces a strong risk of being reversed by an appeals court because the evidence against Microsoft is tenuous and "rests on a patchwork of anecdotes that bear little resemblance to the original case filed."

The evidence also doesn't reach the high burden of proof required for an antitrust case, especially one seeking the breakup of a company, Sterling added.

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