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Editor's Note: Microsoft Guilty as Charged

The World is Changing, but Microsoft Isn't

  • April 3, 2000
  • By Kevin Reichard

Guilty.

No surprise that Judge Thomas Penfield Jackson found Microsoft Corp. guilty of antitrust violations, ruling that the software giant sought to illegally protect its Windows monopoly in an effort to thwart competition. The company did so in two ways: by illegally integrating Microsoft Internet Explorer into Windows (an attempt to wipe out Netscape Navigator and create a browser monopoly) and by using contract restrictions that punished computer manufacturers for offering other operating systems.

It was expected by the stock market: earlier today traders wiped $79 billion from Microsoft's market value while dropping the stock price by 15 3/8 to 90 7/8. The impact was also felt in the wider Nasdaq, where tech stocks were battered in the largest NASDAQ point collapse ever.

This is merely the start of the legal process: Jackson still must issue his sanctions (which could involve breaking up the company), which will undoubtedly be followed by years of appeals from Microsoft. The firm has felt all along that an appeals court would be more sympathetic than the hard-nosed Jackson, so don't be surprised if Microsoft asks for the appeals court to review this on an expedited basis.

Short term, this won't affect the operating-system wars. Windows 2000 has already established itself as a player in the server world, although probably not to the extent that Microsoft anticipated years ago when initially mapping out its operating-system plans. Windows in all its forms is still a remarkable cash cow.

Long term, this marks the beginning of the end of Microsoft--a remarkable story in the annals of business history. We're on the verge of the new paradigm in computing devices: everything is getting smaller and faster in terms of both hardware and software. We're seeing amazing new technologies from the likes of Nokia, Qualcomm, and Transmeta that will give us new definitions of exactly what constitutes a computing device. And we're looking at new ways of doing business: the openness in Open Source will be felt in the open market, where everything Microsoft will be scrutinized to the max. Can Microsoft operate without the bully club of a monopoly? That remains to be seen.

And where is Microsoft in the midst of this computing revolution? On the sidelines. The very attributes that are essential in tomorrow's Internet device--small footprint, high reliability, open architecture--are all present in Linux and lacking in anything offered by Microsoft. And instead of devoting its resources to developing an operating system for this market, Microsoft will be focused on the plethora of civil lawsuits that are already filed.

Yes, in the short term there will be some anguish in the court's decision: my personal stock portfolio was hit by the general battering in the NASDAQ, and although I don't own any Microsoft stock, I'm sure that my mutual funds will take a hit today as well. But long term the hit is well worth it: Microsoft has single-handedly stifled innovation in the personal-computing world, and it's about time Microsoft paid for its bad karma.

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