Micro$oft Monitor

Published by NetAction Issue No. 22 January 28, 1998
Repost where appropriate. See copyright information at end of message.


One Small Victory Over Microsoft
Campus Technology Takeover Still On Hold
About Micro$oft Monitor

One Small Victory Over Microsoft

A report by Nathan Newman, NetAction Project Director

Advocates for open technology standards won a minor victory this past week with Microsoft's agreement to honor the initial court order pursued by the Department of Justice. That initial court order prohibits Microsoft from forcing computer makers to give Internet Explorer automatic placement on every Windows desktop as a condition for purchasing Windows itself.

Combined with Netscape's announcement that it will be giving Navigator away free just like Explorer, there is now a glimmer of hope that Microsoft's Internet juggernaut will be successfully challenged.


to Expand the Investigation

For more information, contact Nathan Newman, at: .

Keep in mind that this victory should be acknowledged for the rather minor step forward that it is, since the agreement addresses the rather gratuitous coercive tactics used by Microsoft. The Department of Justice has not yet fully addressed the monopolistic advantages Microsoft has that makes coercive agreements a sideshow to the real economic power it has within computing.

The fact that Microsoft has chosen to give Explorer away has always marked the fact that this is not a traditional battle for "market share" between competing products, but rather a battle for technological and economic control of far more than just browser software.

NetAction has maintained that Microsoft should be barred from giving away its software as a prima facie act of monopolistic dumping.

On one hand, if Microsoft is serious that it's only concern is with "integrating" Explorer into Windows 98, its history of free browser software giveaways up to this point must be treated as predatory pricing aimed at enhancing the value of its existing operating system monopoly. The very fact that Microsoft is integrating Explorer into Windows should be a basis not only for exploring monopolistic practices in the marketing of browser software, but in the sales and building of Microsoft's core operating system itself. By integrating various kinds of software into its operating system, Microsoft has liquidated whole areas of software competition while increasing the Windows "tax" it collects on nearly every personal computer sold. The absorption of Explorer into Windows would make its giveaway of "free" Explorer software expensive for consumers over the long term if history is a guide.

The Department of Justice is emphasizing the monopoly aspects of Microsoft's marketing of Internet Explorer, but the proposed integration with Windows 98 should be cause to reopen the broader issue of Microsoft's monopoly of the whole desktop operating environment. NetAction has called on the DOJ to push for Microsoft to spin off its operating system as a separate company from its applications and Internet divisions.

At its heart, however, the controversy over browser software is about the most fundamental power issues of the information age -- who will control the technical standards that underlie the Internet and who will control Internet commerce for the new century.

Microsoft's approach to giving browsers away is about controlling Internet standards embedded in the browser not in order to win shares in that "product" market but to sell to a whole slew of other market areas through the raw exercise of the control of technical standards, rather than through competition in those areas.

Dumping browsers on the market for free is not about gaining "market share" in any traditional sense, but about controlling those standards and the billions of dollars that will flow to the company that controls them. If the dominant Internet browser is designed not to "read" a certain kind of information -- a kind of graphics, software effect, etc. -- then web page designers will be loathe to use that kind of information or technology, while they will have to support software standards that are compatible with the dominant browser. And if you are a software company like Microsoft selling web servers and web design software, and are also involved in an array of Internet commerce, you have an overriding interest in controlling those Web standards.

The Department of Justice has to move beyond its particularistic focus on browser software to vigorously support the principle of open technical standards controlled by no single company. Without the possibility of developing proprietary standards, Microsoft will have to compete based on innovation rather than raw economic power.

NetAction urges you to email the Department of Justice and ask them to support the following principles:

  1. Divestiture: At a minimum, Microsoft's Windows operating system monopoly should be split off into a separate company from the application and Internet divisions. This would end the inherent opportunities for abuse of one company competing in application markets while controlling the "field" of competition as well. It may also prove necessary to separate Microsoft's application and Internet divisions.

  2. Restrain Predation: Stop Microsoft from giving away browser products. Since $0.00 is below any measure of cost, it meets the traditional test for predatory pricing (sustaining below cost pricing with monopoly profits in order to drive out competition and then raise price).

  3. Licensing: Microsoft should be forced to discontinue any licensing practices (NT, database server, etc.) that restrict customer dealings with competitors or require customer use of Microsoft products. Exclusive dealing and tying the purchase of one product to purchase of another should be unlawful for this monopolist where linked to the operating system.

  4. Open Standards: The government should more vigorously support open standards processes and endeavor to defend open standards developed through industry standards processes from anticompetitive abuse by Microsoft.

  5. Consumer Involvement: The government must establish processes to ensure participation by Internet users in public policy decisions effecting consumer use of the Internet, including appropriate mechanisms for addressing complaints about product marketing and the quality and reliability of Internet services.

Campus Technology Takeover Still On Hold

NetAction has other progress to report in the fight for open computing standards. Working with faculty, students and staff throughout the state of California, NetAction has helped to rally opposition to a technology deal that would give a for-profit corporation owned by Microsoft, GTE, Hughes and Fujitsu monopoly control of technology at the 360,000 student California State University (CSU) system.

After NetAction Program Director Nathan Newman and other CETI opponents testified at a January 6 hearing of the state Legislature, support for the CETI initiative was obviously shaken among legislators. In a public letter to the CSU administration, California Assembly Members Jim Cuneen and Debra Bowen called on CSU officials to radically revise their technology plans for the university. As the San Francisco Chronicle reported on January 22, the legislators wrote, "As proposed, CETI may lock the state into technological solutions that are likely to become obsolete before the term of the agreement runs out. We want to encourage CSU to move away from a process that effectively awards exclusive rights to any company."

Similarly, California Senate Majority Whip Leroy Greene wrote a letter to CSU campus newspaper editors raising serious concerns about the CETI proposal. He specifically cited testimony by NetAction's Nathan Newman that, "Given the size and importance of the California State University system, CETI's monopoly nature will give Microsoft a massive strategic advantage in its ongoing effort to monopolize global software and Internet standards." Senator Greene further noted that the Legislative Counsel's analysis had highlighted four ways in which CETI violates the state Constitution.

A second round of hearings on CETI is planned for the end of February, and NetAction will continue to mobilize public pressure to assure that California's universities remain a place of innovation and open standards, not a private training ground for Microsoft technology.

About The Micro$oft Monitor

The Micro$oft Monitor is a free electronic newsletter, published as part of the Consumer Choice Campaign http://www.netaction.org/msoft/ccc.html. NetAction is a national, non-profit organization dedicated to educating the public, policy makers, and the media about technology-based social and political issues, and to teaching activists how to use the Internet for organizing, outreach, and advocacy.

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