Thursday, July 30, 2009

The Department of Justice should take a hint from the Microsoft suit: Don't go after Google.

Easy to agree with conclusion of this article at Slate, but not the premises...

“The antitrust prosecution against Microsoft was misguided. To be sure, the government had the facts right—in the late 1990s, the software giant looked unbeatable.”

You think they are beatable now? Apple, the only serious commercial competitor switched to Intel processors, and the majority of Apple computers now dual boot to Windows, or run virtualization software that runs Windows in a window. These copies of Windows which must be purchased separately actually make more money for MS than the copies bundled with a new computer. Apple isn't a competitor, it's a partner.

'When Gates learned that Intel was building a chip that would let programmers deploy enhanced graphics within non-Microsoft operating systems, he wrote to Intel CEO Andy Grove, "I don't understand why Intel funds a group that is against Windows 95." Intel stopped developing the chip.'

And what has changed now, other than they have learned to use the telephone rather than e-mail for these communications? Everyone now depends on Intel, for almost all computing where Microsoft has an interest. The exceptions are fringe, and not insurmountable. Yes, if everyone replaced every PC with an iPhone Microsoft would be in trouble, but that's not about to happen. I'm quite sure that everyone at the Department of Justice that has an iPhone (and there are probably quite a few) are using them to connect to machines running copies of Windows and Office that together cost more than the iPhone itself. While there is a huge infrastructure needed to earn Apple what it makes on that iPhone, for Microsoft, all they produce is a tick mark on a spreadsheet somewhere where DoJ keeps track of how many Windows/Office licenses they “need”.

“The theory behind the prosecution was that Microsoft's mobster tactics would raise the price of software and slow down innovation. But that didn't happen.”

How do you measure something that didn't happen? This reminds me of young people who say things like “If it weren't for Microsoft we wouldn't have the PC as it exists today.” Maybe not. Maybe we would have something more reliable, using less power, not prone to spyware or pop-ups, free from spam. There a lot of innovations that simply didn't happen because both Microsoft and Intel sucked all the oxygen out of the room. The threats posed to MS/Intel by either Google or Apple are all future tense and speculative.

“It got beat anyway. Many of Microsoft's assets turned out not to matter, because upstarts like Google and old foes like Apple found ways to innovate around them.”

With MS still holding majority share in all of these areas and making enough profit every year to buy thousands of small businesses, you have a very creative definition of “beat”.

“Windows and Office—that it was blind to opportunities in new markets. Microsoft couldn't make a Web e-mail system like Gmail, because that would have threatened Outlook.”

But that's exactly what they are doing. “Hotmail” as they used to call it is the equivalent of Gmail in almost every respect that matters... only your get a few more features from it if you happen to be using Windows and Internet Explorer. Office Live will give, again, steadfast Microsoft supplicants like the DoJ full online versions of their favorite applications. The advantage of Google products will evaporate overnight. What's the primary difference between the Google way of doing things and Microsoft way? Google doesn't lock you into a single OS or single Office suit. Microsoft does. Advantage Microsoft.

“Yes, the first iPod didn't work on Windows. In time, it would help render Windows irrelevant.”

Get back to us when Slate or the Department of Justice replace all their desktop PCs with iPhones.

“Google has the resources to keep fighting these fights, and eventually it may win. But nothing in Google's history guarantees success.”

Now you're talking sense. Google's market share could evaporate almost over night. Transition from Windows to Android or anything else could take years (ask the Europeans). Google has the resources to fight Microsoft's well entrenched monopoly now. But setbacks in search would see most of these efforts that threaten Microsoft starved of funding.

“Varney has said that antitrust enforcement is a key tool for regulators to keep the economy running smoothly. But in the tech business, antitrust regulators are often too slow, fighting battles long after they've ceased to matter to consumers.”

I don't know about Varney's politics, but her statements about technology smack of cluelessness. If DoJ is like other federal agencies I've worked with, the top several layers of entrenched bureaucrats are clueless about technology as well. It's not clear they understand the law either. As far as the economy goes, this is a bad time to accuse anyone in Washington of understanding it. Remember that unemployment in Washington is hovering around two percent.

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