While the Justice Department's intervention against the Microsoft-Intuit merger blocked that route to Microsoft monopolization of online banking, there are still serious dangers from Microsoft's anticompetitive strategies. Like a hydra, as one strategy to monopolization is chopped off, another one pops up in its place as the company uses its presence in so many aspects of computing to squeeze out rivals.
Blocked from directly controlling the standards for electronic transactions, Microsoft has increased its efforts to dominate sales of the computer systems and Internet servers where those transactions happen. With its Windows desktop monopoly as a base, Microsoft has increasingly expanded its market share in general business computing using a whole combination of development tools, control of technical training, and its involvement in Internet standards to reinforce its dominance. (See NetAction's White Paper "From MS Word to MS World" at http://www.netaction.org/msoft/world/ for an in-depth analysis of those developments.)
Already, a majority of computers being sold for hosting information on the Internet or on corporate Intranets use Windows NT software, and Microsoft is focusing on electronic commerce as a key area for business software dominance. Microsoft has established alliances with Hewlett-Packard and Verifone--the maker of most credit card "swipe" machines in retail stores--to promote Microsoft's server software for electronic transactions. Tandem computers (now owned by Compaq) has been a traditional supplier of computers for banks and has created an alliance with Microsoft this past year to promote Microsoft's database server to banks managing their ATM networks.
For companies interested in doing transactions directly over the Internet, Microsoft has promoted what its calls its Merchant Server. Lacking the technology inside the company, Microsoft in mid-1996 purchased a company called eShop Inc., which held patents on key technology for online sales, and encorporated that technology into Merchant Server. Analysts described Microsoft's purchase of eShop as a body blow to competing Web technology. Microsoft itself stated that eShop technology would give it a one-to-two year advantage, and outside analysts have been saying it gave Microsoft as much as a three- year jump on the competition--a lifetime in fast moving technology areas. Major financial institutions including Bank of America and Wells Fargo, as well as hundreds of other financial institutions, agreed to support Merchant Server. Microsoft and its online partner Verifone added secure Internet retailing and payment systems, further strengthening the package that Microsoft has been able to offer in selling not only Merchant Server but its underlying NT computer software, as well.
For banks and financial institutions themselves, Microsoft introduced the Marble server in 1997 to turn bank Web sites into "branded virtual ATMs." Marble gives banks a conduit to provide Net banking functions, such as funds transfers, bill payments and balance inquiries. Tied to the OFX standards, Marble automatically connects banks to personal finance software packages and Internet browser software. Marble is designed to connect these functions to the bank's other information systems with 128-bit encryption to provide security.
Despite its compatibility with OFX, Marble is most tightly integrated with Microsoft's Money and Investor personal software, thereby helping Microsoft in the personal finance software market. In this way, Microsoft is able to use dominance in one area, operating systems and server technology, to gain an anticompetitive advantage in another, in this case the financial software market it could not dominate as merely a one-on- one competitor. Internet analyst Scott Smith, the director of the digital commerce group at Jupiter Communications, has argued that Intuit could be in deep trouble; "Intuit is going to need some kind of technology partner in the long term to help them maintain their market share because the benefit of a total solution like Marble is that it gives you everything at once...Why should a bank just use Quicken as their interface if that means they have to go out and develop the rest of the system themselves?"
Next: The Payoff: Getting a Cut of Each Financial Transaction
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