Microsoft Brief

Ongoing trial coverage of U.S. v. Microsoft, and what it means — if anything — for you. This week: Microsoft’s schoolyard defense


You have to admit we’re better off with Microsoft than with its monolithic predecessors. They were religious about hardware; Microsoft is religious about software. The Church of Microsoft is a whole lot easier to join than the high priesthood of the IBM mainframe, the secret blood-cult of VAX, or even the Unix reformation.

At least at first. Microsoft doesn’t demand outrageous membership fees up front, but they pass the plate more often. They’re friendly. Everyone is welcome — as long as they’re not a third-party software vendor.

But what is the chief spiritual fruit of the Microsoft Mission? It’s what one MIS director of my acquaintance refers to as “flabbubberware”: software that’s fat, slow, and designed to appeal to the greedy and lazy in all of us, while really only serving to advance Microsoft’s special strategic interests. Buy it, and your immediate salvation is assured, but you compromise the long-term health of your soul. It’s a kind of “indulgences” for the Information Age. (We have all sinned and fallen short of the glory that could have been. Amen.)

But this era is about to come to an end. In the trial we’ve all been waiting for, Microsoft’s defense was in tatters this week, hoisted up on the evidence of the company’s own e-mail. (See for yourself; it’s all up on the Department of Justice’s Web page, and it’s a lot more entertaining than Paul’s letters to the Romans.)

First, Microsoft’s lead attorney John Warden tried to show that Netscape and the government merely hallucinated that Microsoft had tried to divvy up the browser market illegally in a 1995 meeting with Netscape. “It’s fantasy,” he claimed. The trial devolved to the he-said, he-said level until the DOJ pulled a fast one on Monday, Oct. 26, unveiling a surprise letter from Silicon Valley attorney Gary Reback that bolsters its version of the facts. Microsoft abruptly switched from calling the meeting a fantasy to calling it a “setup.” (See timeline below.)

Then Warden argued that Microsoft’s behavior was OK because everybody was doing it. Microsoft pulled out yet more e-mail and showed that AOL and Netscape together colluded to ruin Microsoft (although that honeymoon didn’t last long before Microsoft wooed AOL away with its money and power in the form of the AOL icon on the Windows desktop.) This defense is a schoolyard classic, to which my mother always responded, “Two wrongs don’t make a right,” before hauling me off by the ear for a spanking.

Microsoft’s defense may wash on the evening news, but in actual court, Judge Jackson is likely to side with my mother. As the judge knows, a company with a monopoly is held to a different standard than others. It’s kind of like expecting the oldest child to set a good example. What is legal for a Netscape is not necessarily legal for a Microsoft. And even if it could be proven that Netscape itself was a monopoly at one point (not so farfetched as it sounds), Microsoft’s the one on trial.

Other weak arguments from Microsoft this week: (1) They’re not a monopoly because there are no barriers to entry in the software market and (2) Microsoft hasn’t hurt consumers or even Netscape, which is still open for business.

Oh, please. In a classic industrial-age monopoly like Standard Oil, competitors can’t get a foothold because the One Big Guy has rigged things so the startup capital required is immense. In the software industry, of course, all you need is two lunatics in a basement writing code. Lunatics are pretty cheap. But their products, even brilliant products, are not always very salable. That’s because the Information Age has its own, more subtle barriers to entry, namely the stuffing inside the heads of corporate decision-makers. Economists have a fancy name for this. They call it “network effects.” In reality, what this means is that corporations shy away from buying desktop software that isn’t Microsoft’s, for fear it won’t be compatible with other software in their organization or with what their partners and customers are using. It’s as though all the restaurants in the land had died and been replaced with McDonald’s to ensure universal burger predictability. It’s nice when you’re on the road in the middle of nowhere and you need a quick bite, but it really sucks when what you want is some high-quality California cuisine.

Which of course explains how Microsoft both has and hasn’t hurt consumers. Yes, its products will do, but… As for the claim that Netscape is in robust good health, that’s kind of like the HMO approach to patient care: “What? Still breathing? Come back and visit us when you’re not feeling so good.”

One other interesting fact that came to light this week: Netscape is a much more fun place to work than Microsoft. At Microsoft, middle-level managers spend all day sending each other serious e-mail bragging about their “cool” new features and the marketshare they are going to gobble. At Netscape, they get to make fun of themselves. On Tuesday, Oct. 27, Microsoft attorney Warden quoted a Netscape e-mail that described Navigator as “faster than a dog with no legs, if the dog’s up to his waist in treacle. And dead.” Microsoft Enemy No. 1 Jim Barksdale explained, “We allow our employees to let off steam this way. Mostly they complain about the food in the cafeteria.” Now that’s genuinely cool. Religious zealots of any stripe are tiresome, but at least the Unix and Mac longhairs are having fun. I’ll take them over a Microsoft flyboy any day.


TRIAL TIMELINE:
The first eight days
(the trial recesses Fridays)

Monday 10/19 To speed things up, all witness testimony has already been submitted on paper. Cross-examination begins immediately. DOJ’s Boies makes a three-hour opening statement in which he lays out the government’s case and tries to undercut Microsoft’s credibility by contrasting Gates’ taped deposition — in which Gates, Reagan-like, claims to remember nothing — with old e-mails, in which Gates is clearly in deep.

Tuesday 10/20 – Thursday 10/22 For three days Microsoft cross-examines Netscape’s Barksdale. In written testimony, Barksdale claims Microsoft tried to divide the browser market with Netscape, keeping Windows browsers for itself and letting Netscape have the leftover crumbs. When Netscape refused, Microsoft threatened to crush the upstart. Microsoft counters with a surprise memo that has Netscape chairman Jim Clark begging Microsoft to buy the company. Later, it appears Clark acted on his own without knowledge of anyone else in the company. Microsoft cross-examination implies that the Microsoft plot to divide and conquer was a figment of the combined imaginations of Netscape honchos Barksdale and Andreesen. “It’s fantasy,” says Microsoft lawyer Warden.

Monday 10/26 DOJ produces a surprise letter from attorney Gary Reback that describes the disputed meeting between Microsoft and Netscape. Microsoft switches from saying it was a fantasy to saying it was a “setup.”

Tuesday 10/27 DOJ releases AOL testimony that it agreed to use Internet Explorer in exchange for Microsoft posting the AOL icon on the Windows desktop. The DOJ also contends that Apple agreed to use Internet Explorer lest Microsoft abandon Office for the Mac and destroy Apple. Hoisted on its own petard: DOJ produces an internal Microsoft document that says the No. 1 reason people switch to Internet Explorer is because it comes preloaded on their computers.

Wednesday 10/28 More juicy e-mail from the DOJ: In this one, an At Home executive describes Gates “exploding” at TCI’s John Malone in 1996 and “threatening to bury this company, buy cable operators, and do whatever it took to crush At Home, since we are obviously so anti-Microsoft that it’s criminal.” But then Microsoft unleashes its own surprise: An e-mail which shows Netscape and AOL plotting together to “kick the shit out of the beast from Redmond.” Microsoft says their collusion shows that Microsoft’s behavior is standard practice in the industry.

Thursday 10/29 Microsoft filibusters with a prolonged cross-examination of AOL. The much-anticipated playing of Gates’ videotaped deposition is delayed.

Up Monday: Avadis Tevanian, senior vice president of Apple Computer.

Cate T. Corcoran has been writing about Microsoft since 1994. She recently completed a six-month series on the company and antitrust issues, called “Vs. Microsoft,” for TheStreet.com.