We've tried hard not to send out special issues, on the theory that we publish opinions, not news.  You probably have too much to read, anyway. But in this case, we thought it best to write while we were feeling passionate about the winding down of the Microsoft Anti-Trust events.

We've written about Microsoft's aggressive and successful behavior -- and its competitors' reactions -- before, most recently on 8/8/01, What do you want Microsoft to do? http://www.wohl.com/wa0155.htm, so you know that we strongly support software vendors -- not governments or judges -- deciding what to ship in software packages.

Therefore, it is with mixed feelings that we read the news of the day.

What Happened Here?

Microsoft and the Department of Justice (DOJ) have come to a proposed settlement, with the help of court-selected mediator, Eric Green, subject to approval by U.S. District Court Judge Colleen Kollar-Kotelly. Microsoft hopes that the States Attorneys General will also accept this settlement, rather than continuing to proceed against Microsoft in hopes of a harsher (and separate) settlement.

The terms are technical, but understanding them is straightforward enough:

• Microsoft will, in the future, allow hardware distributors to bundle competitive and complementary products to Windows on their systems and to display icons representing non-Windows products and features on the desktop.  They cannot threaten vendors or discriminate against them if they choose to do so.
  
  

• Microsoft must offer vendors (and customers) the opportunity to choose different "middleware" (the DOJ defines this as such products as Internet Explorer, Windows Media Player, Windows Messenger, Outlook Express and their successors, and upgrades and fixes to such products. These things must occur at varying time periods over the next 12 months.
  
  

• Vendors must be treated evenly with respect to pricing, marketing programs, and other benefits, except for differences related to the volume of Windows sales that vendor provides.  In some cases, vendors must be treated in groups (top ten, next ten) rather than individually, in calculating such discounts.
  
  

• Microsoft must publish the API's that allow Microsoft middleware to interoperate with Windows.  This must occur no later than 12 months from now and with the last beta release of each major future beta. Communications protocols must also be supplied.

Microsoft's Reaction

Microsoft Chairman Bill Gates sounded elated and relieved that his three-year-long ordeal was over.  It was "long, complex, and draining," Gates said.  But Microsoft learned a lot, not just about the process, but also about how to be a leader and how to deal with uncertainty. Many analysts believe that much of Microsoft's problem with the DOJ could have been minimized or avoided if the company had acted early on with more respect toward the process and the government's power. Perhaps that was part of what Microsoft learned.

Gates said that the settlement was a "fair compromise" and that he hoped that the State Attorneys General would review and agree.  "Litigation is never a good thing." Gates admitted, clearly glad that the process seems to be nearing its end.

What Does It Mean?

The impact of the settlement agreement will vary, depending on its audience, but it is unlikely that the outcome will surprise many.  For all of its early saber rattling, it seemed unlikely in the extreme that the DOJ would take Microsoft, one of the major engines of the economy, apart in the middle of a deepening recession.  Once the break-up was off the table, the only questions were what would the penalties be and how would they be overseen and enforced.  We'll get to that in a minute.

To Microsoft, the settlement means there will be no breakup, no need to remove the browser from Windows, but for the next five years they will operate with the knowledge that rules are in place to insure their competitors have a better chance to place products into the market. Bill Gates says the settlement "allows Microsoft to keep innovating on behalf of consumers."

Competitors may think of that as marketing spin, but for many users Microsoft is an important player and few users would welcome the added complexity, for example, of buying a browser separately and integrating it themselves.  Convenience, high levels of product integration, and a single point of support for problem-solving are good, from the user's point of view.  It remains to be seen whether the settlement will have any significant effect on encouraging or discouraging product variety or price competition, both valuable to users, and both concepts that competitors argue are injured by an aggressive monopolist.

ISVs (independent software developers) are not necessarily so happy.  A few have already expressed their belief that the settlement simply leaves Microsoft in a too powerful position to monopolize more markets. We'd point out that there are many ISVs who make their success on platforms Microsoft builds and markets so there is obviously more than one point of view here.

What Happens Next?

Several things.  The judge must agree to the settlement.  Likely.  The states attorneys general may or may not go along (I'd guess that it's about 75; 25 in favor of their dropping the suit now).

A three-man Technical Committee will review Microsoft's behavior for the next five years, looking for instances where the prohibitions or requirements have not been properly met.  A lot depends on who they are and what their point of view might be.  We'd assume (given the restrictions on their previous, current, and future employment) they are likely to be academics that don't do developer consulting or attorneys or software consultants who practice in areas that Microsoft doesn't work in.  In some sense, that may make them at once more objective but less qualified to understand the issues.  We'll hope for smart people.  We'd like to see someone who cares strongly about the development process, someone who cares a lot about users, and someone who is firmly aligned with the Open Source community and the renegade developers.

More important may be how seriously the government, who gets to enforce the settlement, takes the Technical Committee's advice.   For that, we'll have to wait.

Don't expect Microsoft to stop trying to be very successful.  It's in their genes.  If they were willing to put all those goodies into XP just as the government was deciding their fate, they'll continue to do whatever they think is best for Microsoft and best for their customers and leave it to the government enforcers to say where they must stop.

Now, I think, it would be nice if we could focus on creating (and selling) great software.  The economy could use a lot more effort in that direction.

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