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FWD: Browser Wars and Antitrust

  This is a message sent by Jim Robertson to the ABA antitrust list.
  Subject: Browser Wars and Antitrust
     Date: Thu, 9 Oct 1997 18:51:58 -0600
     From: "Jim Robertson" <jimr@capsoft.com>
       To: "ABA Antrtrust List" <AT-MEMBERS@ABANET.ORG>
  I have read this discussion with much interest and have some comments.
  No one has mentioned that under a consent agreement Microsoft changed
  some of its licensing practices.  In particular Microsoft agreed not to
  charge OEMs for Windows on a per CPU basis.  This particular practice
  made it very difficult for products such as OS/2 Warp to make inroads in
  the computer industry.  (There are other issues such as IBM's failure to
  provide an easier installation method, lack of compatible drivers for
  the new software, etc. that contributed to OS/2's lack of acceptance).
  Although Microsoft did not admit wrong doing, I think that the consent
  agreement at the very least is an acknowledgment by Microsoft that it's
  practices skirt the edge of the improper use of monopoly power. 
  It has been stated that there are not barriers to entry in the operating
  system market with sites to IBM and Macintosh as existing as competitors
  which prevent Microsoft from charging monopoly pricing.  I think there
  are significant barriers to entry.
  1) Industry analysts have estimated that OS/2 Warp cost IBM in excess of
  $2 billion dollars in development costs alone.
  2) Demands for compatibility with existing applications is difficult to
  achieve because Microsoft (rightfully) has protected its trade secrets
  and does not disclose the information a competitor may need in order to
  be compatible (note that IBM had a licensing agreement that allowed it
  broad access to the Windows 3.x source code which allowed OS/2 to have
  Windows 3.x compatibility and that OS/2 has no Win 95 compatibility and
  IBM has no access to Win 95 code).
  3) Any new operating system must work with existing hardware. This
  necessitates hardware manufacturers to write drivers to make their
  hardware compatible with the new operating system.  This is a
  tremendously difficult marketing problem (or a very expensive money
  problem should the new competitor try to pay hardware manufacturers to
  write drivers for the new OS).  (Note again that lack of drivers was a
  contributing factor to OS/2 Warp's lack of market acceptance).  
  4) Microsoft has adopted IBM's mainframe tactic of freezing the
  marketplace by pre-announcing products and features in response to
  viable competitors. (Windows 95 & 98 announcements and changing feature
  set as an example).  This particular tactic was prohibited in IBM's
  consent decree.
  Another issue is tying.  Microsoft has successfully driven products out
  of the industry though tying the features of those products to the
  operating system.  Often this was the result of including features that
  should be a part of the operating system to begin with (undelete feature
  for example), but this past performance should worry any software
  developer and intelligent consumers.
  Regardless of how Microsoft acquired its position in the operating
  system (especially in the operating environment - user interface)
  market, Microsoft has in the past used, IMHO, anti-competitive devices
  to maintain its position and leverage its position in operating systems
  into the Word Processor market, the spreadsheet market, the database
  market, etc.  As proof I offer (non-exclusively) the consent decree and
  the displacing of WordPerfect and Lotus through changing the operating
  system printer interface and the API for Windows 3.0.
  Microsoft also realizes that the User Interface (UI) is a key to gaining
  user acceptance in the market place (as opposed to the underlying
  technology).  Therefore, it's attempt to control the Internet browser
  which has become in many respects the most often used UI on the PC, is,
  again IMHO, an attempt to maintain its hold on the operating system
  market and extend that dominance to the emerging world of applets, push
  technology, and distributed applications.
  However, in the end I am not sure what remedy should be applied
  (splitting Microsoft into an OS company and an APP company has been
  suggested and seems somewhat attractive on its face). Antitrust
  litigation has tremendous power and as a generally conservative person I
  worry about using that power.  In the end, I do think that Microsoft's
  practices, at the very least, deserve some strict scrutiny and
  investigation because of the past behavior of Microsoft and the
  potential long term effect on the US economy and consumers of continued
  anti-competitive behavior.
  ««««««««««««««««««««    »»»»»»»»»»»»»»»»»»»»»
  Jim Robertson           Capsoft a division of 
  jimr@capsoft.com        Mosby Matthew Bender
  801-354-8000            2222 South 950 East
  fax 801-354-8099        Provo, Utah 84606
  I speak for me only.