Users Question Impact of Trial And Remedies

FRAMINGHAM (04/10/2000) - The verdict is out: Microsoft Corp. has broken the law. And it's now up to Judge Thomas Penfield Jackson to determine what punishment or remedy will remove Microsoft's "oppressive thumb" from the competitive process, starting with a hearing on May 24.

But because the industry moves so fast, corporate users remain skeptical about the antitrust trial's ultimate impact.

"By the time it is resolved, the industry will have moved on to a different model, and operating systems with integrated browsers will be a moot point.

Score this one for Bill in the long run," said Michael Crowley, CIO at Campbell Soup Co. in Camden, New Jersey.

What many end users don't want, according to a Computerworld poll conducted last week, is a breakup of Microsoft.

Of 132 information technology professionals polled by Computerworld, 70 percent agreed with Jackson's verdict that Microsoft used anticompetitive and predatory practices to keep its monopoly in desktop operating systems. That's a stark change from a similar survey in November, in which only 39 percent of IT users surveyed agreed with the judge's findings of fact.

But less than 20 percent said Microsoft's actions warranted breakup, and just about half favored some government regulatory action as a remedy.

Corporate users such as Paul Maier, technical services manager at AGA Gas Inc. in Cleveland, worry that a breakup will only make their jobs harder. "It's going to lead long term to more interoperability problems," he said.

"If they are really interested in the consumer, the judge will force Microsoft to release base-level code into the open market," said Bryan Johnson, a systems analyst at ANR Pipeline Co. in Detroit. "Any developer who wants access to that code could have it, but Microsoft would get final say [about] what gets added into Windows." Such a remedy would put all developers on equal footing, he said.

A Lighter Side

But Danny Reynolds, information systems manager at Milliken Millwork Inc. in Sterling Heights, Michigan, said a breakup could have a positive impact. "If they split up the [operating system] from the applications, then maybe the remaining applications business would have to develop for Linux or other platforms," he said.

Yet Reynolds said users have "to wonder about the relevance of this verdict now with the explosion of the Internet and the many ways to access information with so many providers and variables."

Jackson will receive a remedy proposal at the end of this month from the U.S.

Department of Justice and the 19 states that brought the lawsuit two years ago.

He may seek an injunction against Microsoft during the remedy phase that is aimed at preventing any future predatory business practices and forcing the company to make some immediate changes.

Breaking Up Is Hard to Do

But legal experts say Jackson couldn't order an immediate breakup.

Microsoft can petition the court to stay or delay the judge's injunction, but success "is certainly not a foregone conclusion," said Tyler Baker, an attorney in the antitrust division of the Justice Department in the early 1980s and now a partner at Carrington, Coleman, Sloman & Blumenthal LLP in Dallas.

The judge could also attempt to send the case directly to the Supreme Court to circumvent a lengthy appeals process.

Baker said he doubts that would happen, however. "The Supreme Court is not set up to have a case of that complexity dumped on them," he said.

The verdict did give Microsoft's arguments some credit. Jackson gave Microsoft "a tidbit" when he said that, by themselves, the vendor's exclusive contracts didn't violate antitrust laws, said Yee Wah Chin, an antitrust lawyer at Squadron, Ellenoff, Plesent & Sheinfeld LLP in New York.

Most of Microsoft's legal problems in this trial stem from its decision to integrate Internet Explorer into the operating system, while pressuring companies to use its browser and not promote Netscape.

Those actions don't warrant a breakup, according to some observers. "Those sound like conduct issues to me," said Michael Cusumano, an MIT management professor who studied browser wars in the book Competing on Internet Time:

Lessons from Netscape and its Battle with Microsoft.

Cusumano said Microsoft officials asked him for advice on a settlement, and he recommended that they accept a conduct remedy. Such a remedy would keep the company's Windows monopoly intact, he said. "They felt very strongly about retaining their right to put whatever they want into Windows. They think they are in a good [legal] position," Cusumano said.

Microsoft has insisted throughout the trial that it wouldn't agree to anything that forces it to give up its "freedom to innovate" - its ability to determine what is included in the operating system.

But the effectiveness of any conduct remedy is unknown.

For instance, if the court required Microsoft to produce two separate versions of Windows - one with full features and another stripped-down version - PC makers aren't going to use the latter, said Mike Gotta, a senior research analyst at Meta Group Inc. in Stamford, Connecticut. "I don't think people will go to market with a watered-down version of Windows," he said.

Court-ordered remedies, unlike a breakup, would also involve ongoing government oversight of some kind.

"It's hard enough to coordinate an IT infrastructure, and that's all we need - lawyers and judges to coordinate it," said Jerry Lynch, director of operations at the Online Computer Library Center in Dublin, Ohio, which has 1,200 desktops running Windows NT. Lynch allows users to choose between Netscape Navigator and Internet Explorer.

A breakup appeals to Bob Sanowski, IT manager at UnitedHealth Group Co. in Phoenix. "I think a breakup would be great," he said. "It would spawn a whole bunch of other companies," as the AT&T breakup did.

"Breaking up the company would hurt me and my business the most of any remedies," said Paul Kirk, senior vice president of MIS at United Companies Financial Corp. in Baton Rouge, Louisiana. "We like a single point of contact from a vendor, and it's easier to contact one company for site licenses for all desktop needs. Breaking up Microsoft would mean I would go negotiating with new corporations for the parts split off, and I wouldn't know the viability of those companies."

But nothing will be certain until appeals run their course.

"I'm pretty confident that they will win the appeal - at least I'm hopeful," said Tom Jeffrey, vice president of information systems at K-B Toys in Pittsfield, Massachusetts. "I don't trust Bill Gates very far, but I trust the government even less, so if it's a matter of siding with the government or Gates, I'll pick Bill."

Also contributing to this article were staff members Kathleen Ohlson, Kathleen Melymuka, Julia King and Maryfran Johnson.

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