Re: Nation piece

["Scott K. McGrath" <mcgrats@ix.netcom.com>]

  Andrew; Good article.  I was agreeing with you up until the very last sentence.
  
  Consumers are -not- going to rise up in revolt against Microsoft in -my-
  lifetime.  Hell, if you ask someone what word processor they use, they'll most
  likely say "Windows 95"...
  
  They do not know the difference between an application and an operating system
  and, frankly, they don't care... The fact that some company has an illegally
  obtained stranglehold on the market means zip to them.  -If- they decide to
  change their word processor, and that is a -BIG- -if-, they'll have to upgrade
  their operating system.
  
  At that time, they'll be told by the geek in CompUSA that "Sorry, you can't run
  that on your machine.  If you want to run it, you'll have to upgrade to the
  latest machine which has the latest OS on it and, oh, by the way?  It also has
  that software on it, all ready to go!"
  
  The solution to the problem is left to the student...
  
  Scott K. McGrath
  mcgrats@ix.netcom.com
  
  Andrew Shapiro wrote:
  
  > At 11:56 AM -0500 11/23/97, Louis Proyect wrote:
  > >1) The latest Nation Magazine has a piece by Andrew Shapiro, who lurks
  > >here, on "Hard Drive on Microsoft".  Unfortunately, the article has not
  > >been included on the electronic version of the Nation, so I can't crosspost
  > >it like I did Andrew's previous article. Perhaps he will feel motivated to
  > >post it here, but if he doesn't, it is worth tracking down.
  >
  > Thanks for the mention, Louis.  Here it is.  Feel free to post elsewhere
  > with c. notice intact.
  >
  > Andrew
  >
  > *******
  >
  > Andrew L. Shapiro
  >
  > HARD DRIVE ON MICROSOFT/ c. The Nation, December 8, 1997
  >
  > In a few weeks, Justice Department lawyers will go before Federal Judge
  > Thomas Penfield Jackson in Washington and argue that Microsoft is in
  > contempt of a 1995 antitrust consent decree, by which the company settled a
  > government antitrust suit and agreed not to engage in certain practices.
  > Justice claims that Microsoft has breached that agreement by forcing
  > computer makers who license its Windows operating system to also license
  > its Web browser, Internet Explorer. On its face, this would appear to be
  > little more than an obscure dispute about software. And yet, no matter who
  > wins, this latest round of *United States v. Microsoft* has the potential to
  > be much more: a call to arms for renewed antitrust enforcement and a
  > grassroots campaign for democratic values in the digital arena.
  >
  > The government's ongoing scrutiny of Microsoft is quickly becoming its most
  > serious antitrust matter since the 1984 breakup of AT&T, and is arguably a
  > litmus test of how corporate power will be reconciled with consumer rights
  > in the information age. Antitrust is so talismanically focused on
  > competition that it is easy to forget that the purpose of this body of law
  > is not to protect companies but consumers. Usually, this means preventing
  > unfair monopolies. Sometimes though, as in the case of utilities, it means
  > have one closely regulated firm dominate the market. Either way, at the
  > heart of antitrust is the idea that government must save capitalism from
  > its own own excesses in order for markets to work at all
  >
  > Over the past few decades, antitrust has been ignored by regulators,
  > winnowed by the courts and ridiculed by Chicago-school free marketeers such
  > as Robert Bork. Yet there have been signs recently that the Clinton
  > Administration is trying to make antitrust relevant again.  And none too
  > soon. Microsoft is leveraging its market power--using predatory pricing and
  > strong-arm tactics--to expand into almost every part of the new online
  > communications and commerce sphere [see Shapiro, "Memo to Chairman Bill,"
  > November 10]. It has the natural advantage of what economists call "network
  > effects," which cause certain successful communications products to get an
  > artificial boost, ultimately dominating a market and locking in customers.
  > This prevents competing, perhaps superior, products from getting a fair
  > shake. (If lots of people have VHS format video players, for example, it
  > makes sense for you to buy VHS instead of Betamax. Unlike Windows, though,
  > no one owns the VHS standard.)
  >
  > Microsoft's rapaciousness was laid bare in a recent internal memo: "We are
  > challenging ... newspapers, travel agencies, automobile dealers,
  > entertainment guides, travel guides, Yellow Page directories, magazines and
  > over time many other areas." No wonder the company is perceived to be a
  > threat by companies ranging from I.B.M. to Times Mirror to Bank of America.
  > Nathan Myrhvold, chief technology officer, has acknowledged that the
  > company wants to get a cut of every online transaction.  With $9 billion in
  > cash, it can afford to bet on any number of paths for the future -- PC,
  > cable, wireless, etc. (Bill Gates himself has invested heavily in
  > Teledesic, a $10 billion satellite venture.) The company even makes an
  > interactive Barney doll, for god's sake.
  >
  > Despite all this, Justice's current action is no sure thing. The consent
  > decree prohibits Microsoft from forcing computer makers who license one
  > product, such as Windows, to license any other product, such as Explorer.
  > But a key clause states that the agreement does not prevent Microsoft from
  > "developing integrated products." Justice argues in its brief that Windows
  > 95 and Explorer are distinct, pointing to the fact that they have been, and
  > to an extent still are, developed and sold separately. Microsoft says
  > that's irrelevant since "integrated" implies the combining of two discrete
  > things and many Windows features existed as separate software before and
  > after being incorporated. To resolve this dispute, Judge Jackson will be
  > cast in the role of digital metaphysician, forced to ponder what, after
  > all, an operating system is. My hunch is he'll agree with Microsoft that
  > this is something that should be decided by software developers and
  > consumers, not by the court.
  >
  > That's not to say that Justice's claim is without merit. The consent decree
  > was meant in part to prevent Microsoft from using the licensing process to
  > protect its operating system (OS) monopoly, and there is substantial
  > evidence that it is trying coercively to do so. Microsoft controls upwards
  > of 90 percent of the OS market. But, as Justice notes, the Windows hegemony
  > faces a new threat from browser software made by Netscape and others that
  > might do away with the need for an OS, and particularly from Java, the
  > "platform independent" programming language developed by Sun Microsystems.
  > Because it is mostly an open, nonproprietary standard, Java has quickly
  > developed a following and is poised to become the lingua franca of the Web.
  > By forcing Explorer on PC users, Microsoft is undoubtedly trying to foil
  > the momentum of Java and other new Windows competitors.
  >
  > This would appear to be a classic example of illegal anticompetitive
  > behavior. But Judge Jackson will probably not look favorably on the
  > government's attempt to turn what is essentially a contract dispute into a
  > full-scale antitrust litigation. Moreover, Microsoft will argue that its
  > "monopoly" can no longer be assumed if Netscape and Java pose such a
  > distinct threat. In this round, then, Justice is unlikely to get the relief
  > it seeks -- preventing Microsoft from requiring Windows 95 licensees to
  > take Explorer. Even if it did, the remedy would probably be moot soon
  > because Microsoft intends to integrate a browser into future versions of
  > its OS, such as Windows 98. To prevent this, Justice would probably have to
  > initiate an entirely new antitrust lawsuit, which would take years and then
  > still might not succeed, given today's weak antitrust precedents.
  >
  > All of which sounds like Microsoft wins and the consumer loses; but it's
  > not so simple. While Assistant Attorney General Joel Klein and his
  > colleagues at the Antitrust Division will never admit it, hauling Microsoft
  > into court now is as much a strategic and public relations move as a legal
  > one. Antitrust officials at Justice and the F.T.C. have been trying for
  > years to rein in this giant, with little success. The brilliant thing about
  > using the consent decree is that Justice can keep Microsoft on the
  > defensive, raise consumer awareness about the company's cutthroat tactics,
  > and encourage industry to come forward with evidence of unfair dealing.
  > Legal purists may not like it, but these hardball tactics can work.
  >
  > Since Justice announced its charge on October 20, reports of other shady
  > practices by Microsoft have surfaced; Senator Orrin Hatch has held
  > hearings; and Ralph Nader convened a two-day conference in Washington that
  > drove Gates into a tizzy (he ranted to shareholders about a "witch hunt").
  > Though the event would have been better had Gates accepted Nader's
  > invitation to participate, a few interesting ideas were proposed. Antitrust
  > expert Lloyd Constantine suggested amending the Sherman Act to make
  > leveraging monopoly power from one market into another a clear violation of
  > the statute. Economist Garth Saloner argued that standards made dominant
  > through network effects should not necessarily remain proprietary. And
  > Jamie Love of the Consumer Project on Technology said that government could
  > use its purchasing power to keep markets competitive. There was even a
  > little levity, as attorney Gary Reback recounted the story of what happened
  > after Microsoft bought the Funk & Wagnalls encyclopedia for a cd-rom
  > edition: the entry on Gates describing him as ruthless morphed into one
  > reporting that "he is known for his personal and corporate contributions to
  > charity and educational organizations."
  >
  > Hearings and conferences are just a first step toward educating ourselves
  > about the ways in which Microsoft and other large companies are threatening
  > much of the Net's potential. Microsoft's tendency to restrict content and
  > bolster Big Media is antithetical to the healthy chaos of cyberspace and
  > should be opposed. The Java-Windows battle highlighted by Justice also
  > demands our attention. Arcane as these debates may seem, we must become
  > familiar with the way in which these tools affect our interaction with
  > information and the world at large. As Steven Johnson writes in his
  > fascinating new book, *Interface Culture*, technologies in the digital age
  > "serve as buffers, translators, tour guides." As such, we need to seek out
  > those interfaces that best reflect our political aspirations. If Java
  > allows for more user control and flexibility than Windows, then perhaps it
  > deserves our support (see javalobby.org). But there are other standards,
  > like Linux, that are even less proprietary than Java. The cyberpolicy
  > groups that mobilized netizens on free speech and privacy should organize a
  > campaign to inform us about these issues and to keep competition online
  > fair and robust.
  >
  > It would be nice if there were a simple solution to this
  > quandary--nationalize Windows? break-up Microsoft?--but there isn't. What
  > we can do now is press antitrust authorities at the state, federal, and
  > international levels to scrutinize Microsoft's practices (as we do the same
  > ourselves); explore the possibility of strengthening antitrust laws to
  > compensate for the regressive rulings of the last few decades and the
  > challenges of the digital era; and actively support interfaces and
  > standards that are as open and democratic as possible. Judge Jackson may
  > not find Microsoft in contempt. But if the company fails to changes its
  > ways, the consumers of the world eventually will.
  >
  > Andrew L. Shapiro (ashapiro@thenation.com), a fellow at Harvard Law
  > School's Center for Internet & Society, is writing a book on the politics
  > of new media.
  >
  > END
  > -------------------------------------------------------