MONOPOLY HOUNDS OR JUST SMART BUSINESS PEOPLE?
January 21, 1998
Return to this forum's introduction.
in this forum:
What laws are involved in this dispute? Is Microsoft's practices monopolistic? What is an "operating system"? Why doesn't the Justice Department let the market play out? Can competition and integration co-exist? What are the larger issues of this case? Viewer comments.
January 13, 1998
A background report on the Microsoft anti-trust case.
October 21, 1997
The Justice Department formally files its anti-trust complaint against Microsoft.
August 6, 1997
Microsoft takes a bite out of Apple.
June 11, 1997:
Netscape and Microsoft agreed to limit access to private information online.
September 20, 1996:
Tom Bearden reports on the cyber war between Netscape and Microsoft.
Browse the NewsHour's coverage of cyberspace and the law.
PBS's Robert Cringley muses about Microsoft. December 25, 1997 and January 15, 1998
U.S. Department of Justice
Microsoft's response to the Department of Justice's actions.
Microsoft and Netscape
Peter Becker of San Francisco, CA, asks:
I believe that the panel members missed the key point of the "browser war." The issue is clearly much bigger than simply whose browser is dominant.
An Internet browser is not, by itself, a very significant piece of software. One way to think of it is like a television receiver. It knows how to communicate with other computers (called servers) such as the one I am logged into as I send this message. The kinds of information that can go between the server and browser are becoming quite sophisticated, which means that the rules for how to communicate between the browser on the PC and the operating system of the PC are also becoming more complex. If the server operating system and the browser do not agree on how to communicate, then all I get is garbage.
While Microsoft clearly controls the operating system market for PC's, it is not the dominant player in the much more lucrative server market. Sun, HP, DEC and IBM are all major players. Microsoft wants to dominate that market and offers server operating systems (called NT) as products. As with the PC, if you dominate the operating system, you can drag a lot of other software sales with it.
Microsoft competes with Netscape, Sun and the others about what the standards should be for interactions between the browser and the server. However, when 90% of the browsers are Microsoft, and I want to use Internet technology, whose server software will I select? Microsoft, of course since it gives me maximum compatibility.
The issue is thus not the browser per se, but rather the question of whether this tactic will stifle competition in other major segments of computer hardware and software by forcing everyone to accept the MS standard (and presumably their software solutions as well). That is what has Justice (and Sun, Dec, IBM, Netscape) most concerned.
I would appreciate comments.
Mr. Rule, attorney for Microsoft, responds:
There is no question that the functioning of any network, including the Internet, is smoother and more efficient when all the participants are using the same standard. But it is also important to remember that the most attractive standards are those that are the most open, accessible, and robust. Microsoft understands this and much of its success historically is due to its ability to make its products more accessible to consumers and to applications writers. How successful Microsoft will be on the Internet will also depend on whether consumers, ISPs, and others find Microsoft's products more attractive than the alternative. All Microsoft really wants is an opportuntiy to compete without unwarranted interference from the government.
Who preordained that Netscape/Sun/Oracle should set the standard? Why should they be spared competition from Microsoft? Certainly, Microsoft was not (and is not) spared from the competition of IBM, Novell, and Apple (to name but a few) in developing and selling operating systems. The irony of your question is that it is Netscape, not Microsoft, that has a dominant position in Internet browsers; were it not for competition from Microsoft, Netscape would have virtually 100 percent of the market. Moreover, as I have explained earlier, Microsoft has not engaged in exclusionary conduct vis-a-vis Netscape -- Navigator works well on Windows 95 (which includes IE functionality) and can function as the default browser. To the contrary, it is Netscape that is trying to use exclusive arrangements with OEMs and others to freeze Microsoft out of the market and thus maintain Netscape's dominance. Indeed, it is reasonable to infer that Netscape doesn't like the integration of IE into Windows 95 -- not because it excludes Netscape from OEM desktops (many machines today are shipped with both Navigator and IE on the desktop) but -- because it prevents Netscape from persuading OEMs to exclude IE from the desktop.
Notwithstanding Microsoft's reputation as being aggressive, it has not chosen to complain to the antitrust authorities about Netscape's tactics. Rather, Microsoft is prepared to let consumers and the marketplace decide the outcome of the competitive struggle. Given the superior reviews for IE and Microsoft's constant efforts to improve its products, Microsoft is confident it can win in the marketplace -- even if Netscape chooses to employ exclusives. And I hope you will agree with me that computer and Internet users not DoJ lawyers are better situated to determine who should win the competition.
Mr. Black of the Computer & Communications Industry Association responds
I think the viewer here has in many ways made my point for me. The issues here are clearly more complicated than solely "who will win the browser wars" or any individual market. The larger question looms regarding the impact of Microsoft's dominance to competition and innovation in our entire industry.