The Implications of the Microsoft Decision

FRAMINGHAM (04/10/2000) - I find it hard to get excited about the Microsoft Corp. antitrust case. The damage has already been done, the market has moved on and, at this point, even the most extreme outcome - breaking up Microsoft - would probably backfire and only serve to strengthen the company.

What's more, the whole legal process is so drawn out that, despite the judge's findings, chances are by the time Microsoft exhausts its appeals, the original complaints will look silly and the government will have lost its fervor. Look back at the IBM Corp. antitrust case. It lasted more than a decade and finally in 1981, just dried up and blew away.

But let's run through some basic scenarios with the most extreme possible remedy in mind, which is divestiture:

Will breaking up Microsoft be good for the industry?

To my mind, yes. Mini Microsofts - possibly grouped along operating systems, application and Internet lines - would be forced to become better industry citizens and this should spell opportunity for other players. While the change wouldn't be evident overnight, slowly the Mini Microsofts would have to embrace other vendors to meet customer needs.

Will breaking up Microsoft hurt Microsoft?

It certainly would be harder for Mini Microsofts to walk in lockstep, but Microsoft has perfected the manner in which it works with third-party suppliers, so developing compatible products would be a cake walk. The potential downside is time to market. That could take longer.

How about from a business point of view?

Many folks think Microsoft would be more valuable to investors broken up. One company would sell the industry-standard PC operating system. Another would push the most widely used and successful group of PC applications. And the final group would hawk the most popular Internet browser and attendant tools.

Will breaking up Microsoft hurt consumers?

No. Cost is not much of an issue any more, and the technology is very simple to use. Those two items would not change with the creation of Mini Microsofts.

Will Microsoft really be broken up?

No. Divestiture is an extreme remedy the government, regardless of which administration is in power, won't favor. By the time all the appeals are raised the market will have changed dramatically enough to undermine the whole thing.

My guess is the case dies on the vine. How can you get excited about that?

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