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What's Going on in Washington

Week of May 3, 2002

Most people know Microsoft is in Washington (DC). Most people know there has been a bit of a browser war. Most people have heard that nine of the original US states that sued Microsoft are not about to accept any compromise deal and have pushed forward. But not many people understand what the stink is really all about.

Investigations into the wrong-doings of Microsoft began ten years ago. The US DOJ was already then looking for corporations that were willing to testify against Microsoft. Why challenge Microsoft? Because the DOJ saw Microsoft as a monopoly, and the US has very stringent legislation against monopolies. Yet it would take several years before any star witnesses were to appear.

Over the years the DOJ has had many star witnesses. Corporations which have felt the crunch of Redmond. These companies include Sun, Netscape, and Novell/Caldera. Both Novell/Caldera and Sun have won individual suits against Microsoft.

When the World Wide Web exploded and Mosaic, later Netscape, happened on the scene, Bill Gates invited the Netscape CEO Mark Andreessen to Redmond Washington. Bill told Mark in no uncertain terms that he would not allow Mark's already successful company to develop its famous browser for the personal computer market - for Windows. Mark naturally thought Bill was out of his mind. Mark refused to discuss the issue with Bill, and Mark later found out what Bill had up his sleeve.

Bill could not allow Mark to push his browser onto the Windows platform because the Netscape browser could in essence make Microsoft Windows irrelevant. Bill understood that his operating system was a thing of the past, and that modern home users wanted only to surf the net. He had said so in his book The Road Ahead. And the Netscape browser had 'APIs' (an application programming interface) for developing third party applications which could easily have flooded the market and made it more obvious than ever that Microsoft Windows was a fifth wheel. Bill knew he didn't have a product to meet the new age of technology, so he had to hold the hands of the clock back. He had to stop Netscape from entering the PC market.

Bill accomplished this 'shut-out' in a number of ways. The first tack was to address OEMs - original equipment manufacturers. These PC vendors are traditionally bound by very low price margins and always welcomed Microsoft's willingness to do good business with them. And after all, Bill's old adage was 'get the operating system out there, get it out there cheap, all else will follow.'

But the OEM agreements Microsoft held were tough. Microsoft sold Windows very cheaply to these vendors, but only on the principle that every computer that left the factory would count as a Windows license, and not just the computers customers specifically wanted Windows on. And the worst part of this deal was that the OEMs had to pay up front for these licenses - before they had manufactured the PCs. And if they did not manufacture enough PCs, they were not entitled to a refund either. The unused licenses could be applied to a new contract, but nothing was returned from Redmond.

Given this vice-like grip that Microsoft holds over almost all PC manufacturers, implementing a 'shut-out' of Netscape was a piece of cake. Microsoft simply insisted that any OEM that had too many PCs leaving the factory with the Netscape browser on them would not be entitled to the same lucrative pricing on Windows licenses anymore. Companies as seemingly indestructible as IBM fell under this crunch. Microsoft analysed their production statistics and twisted the screws. Microsoft didn't care how these companies stopped the spread of the Netscape browser, only that they did it.

The next tack was addressing the Internet service providers world-wide. Many of these ISPs live in symbiosis with Microsoft. Most of them distributed the Netscape browser like it was going out of style. No more. Any ISP found giving away too many Netscape downloads would also be cut out of the money emanating from Redmond.

What the DOJ found objectionable about this was that it had nothing to do with product improvement; it was mafia tactics all the way. And this is precisely why laws exist to stop monopolies.

To take a browser off the Internet-hungry market without offering a replacement was unthinkable, so Microsoft had to buy technology to start developing their own. That is always the way with Microsoft: They are not known for ever being in the forefront of innovation or research; they simply buy other technologies and, as some would have it, gradually destroy them. Microsoft bought into a technology based in the same browser code that Netscape had developed, and ended up spending over five billion US dollars getting it into decent shape.

Microsoft was not worried about the money. They never contemplated charging for their browser. On the contrary, they shipped truckloads of diskettes (yes, IE was originally on a single 1.44MB diskette) to department stores and computer outlets where you could grab a handful for free on your way out at any time. Netscape needed to charge money for their browser, as they had no other source of income. Microsoft didn't need to charge, and even this gave Microsoft an advantage.

At the same time all this was happening, Sun Microsystems was also threatening to make inroads into the PC market with their Java technology. Microsoft's tack here was to introduce a 'similar' product - Visual J++ - which gradually would diverge enough from the Java standard so as to break it. Again, the threat with Java was that PC users would identify Microsoft Windows as a totally unnecessary component of their computers. By keeping Java off the PC, Microsoft could hope to make time stand still and keep on selling Windows.

Sun won its lawsuit against Microsoft. Executives from Microsoft had even admitted that the reason their Visual J++ product had become incompatible with the Java standard - a document Microsoft and 119 other companies had signed - was to break the standard.

Microsoft's response to the outcome of the trial was to introduce a new 'Java clone' programming language called C# and to disable any good Java implementation on their new operating system Windows XP. If a Windows XP user opts to use Java, the only implementation that Microsoft makes available is years old and very poor, even by Microsoft standards (yes, Microsoft has had better implementations). Sun Microsystems sees this as yet another deliberate marketing tack and so has now sued Microsoft for an additional one billion US dollars.

And when things started getting hot under the collar for Bill, back in around 1997-1998, he and his engineers decided on a fall-back defence strategy just in case things went wrong in Washington (DC), as they in fact did.

The Windows system architects began systematically moving old operating system APIs (application programming interface) into the new modules that made up the increasingly complex (and some would say bloated) Microsoft browser. Why? Because Microsoft correctly saw that the objections to their monopoly would centre on their bundling of the browser with the operating system. And just as importantly, because Microsoft understood that Windows was basically less than useless, despite its lock on the market. Windows didn't give the Internet surfer much of anything, but the way Microsoft had been able to control the OEM market and the ISP market with Windows was significant. And if the DOJ were to ever insist Microsoft unbundle their browser, Redmond could get shaky. And so Microsoft had to be ready to prove that such was impossible.

Developers who have dealt with the Microsoft APIs saw this happening all along. Old programs started linking to new modules which Microsoft was creating for their browser setup, instead of in the traditional way. Microsoft was taking functions that had nothing at all to do with browsing or accessing the Internet and putting them in the browser files. If anyone were to ask Microsoft to unbundle their browser from their operating system, they could now chance a bluff.

The fight in Washington is about the monopoly abuse Microsoft has exerted on the PC marketplace. Clearly Microsoft has not dominated because they have led the way with innovation. They have instead stifled innovation. New companies sprout up all the time with fantastic ideas; Microsoft cannot tolerate this. And because Microsoft themselves never lead the field with new ideas, they have to stop these new ideas in their tracks or go under. And when the threats start to get tangible, Microsoft has enough of a market advantage to force intruders away.

The nine states which together with the District of Columbia wish to see stringent sanctions placed on Microsoft are out in their own best interests. They have not accepted Microsoft's explanations and excuses. They see their constituents suffering and want to stop it. If everyone could benefit by the great inventions that people come up with, so reason these nine, we would all be better off.

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