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Justice Department Decides To Break Up Microsoft
Posted by
emmett
on Wed Jun 07, 2000 03:32 PM
from the penfield-jackson dept.
from the penfield-jackson dept.
Well, it's official. The United States Department of Justice has called for the breakup of Microsoft into two separate companies: an applications company which will manage software like Microsoft Office and Internet Explorer, and an operating systems company that will manage products such as Windows NT. CNN coverage here.
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Justice Department Decides To Break Up Microsoft
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The hammer has fallen (Score:4)
This will be a big boost for the WINE effort, as I mentioned previously. More than that, we'll probably see every x86 OS that has a POSIX-compliant API module offer a Win32-compliant API module. In time, they'll all run Office just fine. Some of them will probably work better than Microsoft's OS offerings, too.
Microsoft can't arbitrarily change the APIs to break compatible software, either; the decision prohibits that. And of course none of this waits on appeal; only the breakup is delayed.
In the end, this might be good even for Microsoft. They've dumped much junk in their OS to maintain their monopoly. That strategy now stops working. So they may let the engineers determine what goes in the OS again, as they did when Dave Cutler designed NT, instead of the marketing people, as they did with Win98/98/NT4/NT2000. We'll see.
Microsoft will probably drag their feet on API disclosure. But it won't work. The only question is whether they give in before, or after, the judge sends some Microsoft executives to jail for contempt. That's a very real possibility. Federal judges have more than enough power to enforce their orders.
Microsoft probably won't win on appeal, either. Unlike Judge Sporkin, who made some mistakes in the first Microsoft antitrust case back in 1994 [usdoj.gov] (yes, this is try #2), Judge Jackson has done a good job. Nobody has pointed out any serious errors on his part. The trial has been watched by so many people that any major reversable errors would have been widely publicized.
Read the actual final judgement [usdoj.gov]; it's better than most of the commentary on it.
Re:Is anyone else disgusted by this? (Score:4)
Isn't the point of democracy to first elect responsible leaders and then have them lead? Possibly, though, the democratic process doesn't quite work wherever you live?
The idea that government should not be allowed to interfere with business in any way is absolutely absurd. Business has only its own interests at heart. The government theoretically has the interests of the population at heart. If this is not true, there is somthing wrong with the process by which people come to power and this needs to be fixed, rather than bowing down before the almighty corporations.
here's a link to the PDF of the ruleing (Score:5)
-Jon
Re:Start celebrating right now (Score:3)
Can we find the terms of their file format patent license to be a contractual tie? (bet you we can)
Well, actually, no, not the way this restriction is written. But another provision of the remedy does offer a lot of promise:
Developer Relations. Microsoft shall not take or threaten any action affecting any ISV or IHV (including but not limited to giving or withholding any consideration such as licensing terms; discounts; technical, marketing, and sales support; enabling programs; product information; technical information; information about future plans; developer tools or developer support; hardware certification; and permission to display trademarks or logos) based directly or indirectly, in whole or in part, on any actual or contemplated action by that ISV or IHV to -
i. use, distribute, promote or support any Microsoft product or service, or
ii. develop, use, distribute, promote or support software that runs on non-Microsoft Middleware or a non-Microsoft Operating System or that competes with any Microsoft product or service...
Bingo! We just have to have an ISV (Red hat? Suse? Mandrake?) bring out a media player that incorporates ASF, Microsoft sues, and gets slammed by this provision. Any of you lawyers out there care to comment?
--
Re:Start celebrating right now (Score:3)
Telling someone "here, this is what we do, oh, and BTW, you can't do that without paying us licensing fees" doesn't seem much use to me. I don't think the jugement affects this. Nothing that I could see (IANAL) seemed to stop them from owning and using patents - in fact, the final judgement states that IP rights used by both companies (presumably including patents) "shall be assigned to the Applications Business, and the Operating Systems Business shall be granted a perpetual, royalty-free license to license and distribute such Intellectual Property in its products".
Re:Ruling is unfair (Score:3)
If Valve and Interplay owned effectively _all_ of the game market, Sherman Act would apply to their working together so closely too. The fact is, it's so unnatural for something like that (Valve and Interplay owning 95% of games or so, nobody much even considering buying games from other vendors, 'nobody ever got fired for buying ValveAndInterplay') to happen, that it's hard to see how unnatural the Microsoft situation is. Does one car maker sell 95% of all cars? Does one soft drink vendor have 95% of the supermarket shelves and twist the arms of supermarkets to have veto power over anything in the supermarket, by threatening to withdraw their product?
When Valve and Interplay can work together so well that they can _break_ a computer software store simply by pulling all their products and leaving the store with empty shelves and nothing to put on them, _then_ I'll consider forbidding them to share information except in public.
Microsoft's been in that position for _years_ and the restriction is deeply justified. I personally would have been happy with just a *SLICE* "OK, now go about your business", but as we know, Microsoft lies, so the ruling _assumes_ that if you just went 'chop' and walked away, Microsoft would go 'florp' and join together again immediately, either clandestinely or right out in the open, and would _be_ still one company, with nothing changed.
It's a pity the ruling had to get into this stuff and make picky little regulations, but really- as if you could tell Microsoft "Okay, break up now! And be good and allow real competition to happen!" As if! So, since they are so deeply criminal, you have to oversee every little thing, because they are totally unrepentant.
*sigh* Hell, nuke 'em. Simplest solution :)
This really isn't doing any good... (Score:4)
Quite frankly, two companies is doing nothing. The 'applications group' definition is so blatantly ambiguous and vague that it's trivial for the applications group to say 'okay, we claim WebTV, all our cable company holdings, MSN, etcetera' and embed these kind of things within their applications, continuing to illegally support the applications side of the monopoly.
The OS group will likely compensate by raising prices - there is absolutely no clause whatsoever in the ruling against unfair pricing for consumers and OEMs. Microsoft is not forced to justify costs in any way, shape, or form.
The ruling also has a very severe loophole, which the OS group will be very quick to abuse. They know that in 10 years, if they don't win in appeals, they can get back together again. And they will. Now, what's this loophole? If you read over the ruling, Microsoft is not allowed to cause any "Middleware" to run at decreased performance levels or have difficulties with the OS, *EXCEPT* in the instance where they provide in writing a reason for this, and possible workarounds.
There are NO requirements for what the reasoning must be whatsoever, or restrictions on workarounds. So, in other words, they will DELIBERATELY collaborate WITHOUT collaborating. Microsoft will claim that Office was DESIGNED for Windows and the competitors did NOT so they are trying to 'catch up' or some such nonsense. Or they may just say 'because we feel like it' and list 'only write for OUR OS' as a workaround. There are nowhere NEAR enough preclusions and restrictions against abusing existing market share.
This ruling has more potential to cause HARM to consumers than anything else. It is VERY easy for the applications group to claim WebTV and abuse market share and marketing. There are so many ways for Microsoft's two groups to abuse this ruling *within the ruling's context* and get away with it.
I have ALWAYS advocated a three-way split. Operating Systems, Applications, and Other and Internet Holdings. In case you didn't know, Microsoft owns *MANY* Internet properties, which are tailored EXCLUSIVELY to Internet Explorer. With the applications group in control of these properties and Internet Explorer, they can continue to do this. They also own a cable company that operates near/in DC as well as WebTV. Allowing the applications group to maintain/retain control of these properties and refusing to force them to divest themselves of these properties and/or splitting these properties into a seperate group will give the applications group a painful advantage.
Assuming that the OS group does poorly, once the 10 years are up, the Applications group could merge with them again, or they could just build their own OS based on the OS group's code. There are no restrictions that will prevent Microsoft from regaining a monopoly within a month after the 10 year period has expired, much less a year. Once the 10 years are up, Microsoft will be back to their old ways.
Do you really think this is teaching Microsoft a lesson? They've probably been hiring managers and high level people like mad for weeks leading up to this. All they have done in court is posture and lie. They have known for weeks they would lose and are counting on appeal. They're ready for a split if it comes down to it, and if not, they can simply fire the extras. They won't move, either. To move would cost them all credibility.
Reguarding their stock, as a couple people have asked me, I am not an analyst, but I don't forsee their stock actually plummeting till they lose on appeal. Microsoft's cockiness, attitude, and general "we will get our way because we're the biggest thing America has going for it" (think about the tax revenue) seems to be contagious. Especially to investors. Combined with the sheer amount of shares within the company, this would tend to indicate low volume, maybe a sharp drop, but not a true freefall. Perhaps another point or two. However, Ballmer has damaged confidence and trust *SEVERELY* by filing to sell several million shares *BEFORE* the ruling was issued, as if knowing that the stock was going to plummet. This was released by the SEC today - they seem to be going out of their way, AND the DOJ (note how the ruling wasn't issued till AFTER close of the market?) to prevent a collapse in consumer confidence. Were consumer confidence in Microsoft to collapse, very VERY bad things could happen to the market, and with Microsoft's market cap and valuation, could trigger severe repercussions, in my opinion.
I don't forsee this being out of the courts for at least two years - Jackson had the option to expedite the case to the Supreme Court on appeal (IANAL, that's just how I understood it) and chose not to, indicating another force towards not destroying consumer confidence. Maybe they're counting on everyone forgetting while Microsoft waits on their appeals to be heard. I'm not sure - I don't work for the gov't, and IANAL.
Disclaimer: These are my views, not yours, not my employer's, etcetera, ad infinitum. Reproduction of this comment in whole or part is expressly prohibited without written or emailed consent. Emailed consent may be obtained by sending email to prj@nls.net [mailto]. Absolutely no commercial reproduction is permitted without written consent, so much as is allowed by Slashdot and VA Linux, formerly Andover.Net's "comments are owned by the poster" policy. No, I'm not anal - I'm just sick of my quotes being stolen.
=RISCy Business
Re:Where's the win? (Score:3)
IE actually grew from Spyglass's version of Mosiac, but it's so ridiculously unfair to deny the order of magnitude improvement that IE3 was. For crying out loud, it had the first good JVM *anywhere*.
IE would have destroyed Netscape without the dirty tricks. Problem was, they got greedy and tried to both co-opt HTML(thus dooming IE4) and enforce compliance By Any Means Necessary.
They just didn't need to.
Yours Truly,
Dan Kaminsky
DoxPara Research
http://www.doxpara.com
Mirrored (Score:3)
Detailed: jozz.com [jozz.com]
Re:I've been reading the judgement... (Score:5)
1) Split up into two companies is based on what the two portions of the company were doing as of Apr 27, 2000. No saying "Hey, Office is part of the OS"
Interpreted literally, this would mean a "Microsoft employees counting the days until they vest their stock and retire" company, and a "Microsoft employees biding their time to pad their resume" company. Those are the two biggest functional splits at MS.
2) The 2 NewCo. may not recombine, enter into Joint Ventures, provide APIs to each other that are not available to other ISVs.. or basically collude.
Big deal, the developers on the never-gonna-ship netdocs project don't even share API's with their PM.
3) The OS company cannot know OEMs for supporting other OS's, OEM's can change the boot up sequence.
Cannot know? Do you mean know in the biblical sense? That would explain why Michael Dell is so submissive and obedient.
4) Microsoft shall disclose to ISVs, IHVs, and OEMs in a Timely Manner, in whatever media Microsoft disseminates such information to its own personnel, all APIs
In a timely manner is the sticking point. Microsoft's arguement is that they've never delivered anything in a timely manner before, and this would constitute undue hardship.
--Shoeboy
I don't work for microsoft anymore.
(former microserf)
Re:I've been reading the judgement... (Score:4)
Are you kidding? Get paid to be a constant pain in the ass to corporate executives! Where's my resume....
A funny thought... (Score:4)
--
Grant Chair, Linux Int.
Pres, SVLUG
The most interesting part... (Score:5)
Internet Explorer was a done deal, I suppose. No point in even discussing it.
Java virtual machines? Every major OS has now successfully integrated Java, but now Windows can't? Does that mean I have to run my Java apps within IE, or application providers have to include a VM with their package?
Server software? I'm ambivalent about this. From an engineering standpoint, most server software probably can't be considered part of the OS. But for practical purposes, I think it makes sense to allow that. Especially since putting the server software in the same company as the client software defeats much of the purpose of the ruling.
Developer tools? I'm also ambivalent about this, for the opposite reason: I think compilers should be considered part of the OS, but I can see the danger in that arrangement.
Indexing server software? Does that mean ActiveDirectory, or whatever it's called? I don't know much about server systems, but isn't that basically NT's security system? It would be very dangerous to have security separated from the OS.
Voice recognition software? Oh well, I guess it'll be another few decades before we can talk to our computers. (SR won't become universal if it's not supported by the OS.)
"Client Applications"? No more command-line ftp? How about ping? More seriously, what about Windows file sharing? A server OS isn't worth much if it's not allowed to serve files.
Well, that's enough for now. As I've said before, I think splitting up Microsoft is a good thing in and of itself. (I'm not sure that the government should have that power, though.) But they need to do some more work on the line between the two companies.
Re:But now we wonder... (Score:3)
That is, the Supreme Court can tell the DoJ to shove it through appeals like everybody else.
I don't know the Justices well enough to determine whether they are likely to, but I just know that they can.
Where's the win? (Score:5)
Lets say a breakup is completed. Exactly what prevents this leverage from being executed?
So Microsoft Office gets ported to new platforms...this is new? Microsoft has been willing to port its code to popular alternatives to their Windows OS for quite some time--they're even starting to do a semi-decent job of it on the Mac. After all, why let any other Office vendor take over a market?
Splitting Microsoft will probably have the effect of making somewhat riskier steps(i.e. Media Player for an Operating System that MS/OS is seeking to prevent from gaining market acceptance) more feasable. But overall, I can't imagine either corporate culture changing significantly merely because of a simple division.
The split does not solve problems. At best, the split helps enforce whatever primary remedies Jackson can put into place--and considering the culture of MS is at least partially, "We know what's right, and we're smart enough to get around any loosely worded agreement that prevents us from doing that right", compliance is going to be damn near impossible without some truly intrusive measures.
Splitting the company isn't intrusive. It's just a bureaucratic structure.
My first thought would have to be, no matter how the split occurs, an outside board needs to be able to demand with force of law that any programmatically interesting function that's been left undocumented be remedied. The NT authentication functions, required for remote management, come to mind. This is a good example of Microsoft's technical acumen obscured by their business distrust.
It's funny, some Linux people say Microsoft can't code, can't innovate, can't do anything right. And Microsoft agrees. It must be so depressing to work in an office where your code is presumed to be so bad by your own coworkers that they'd go so far as to revoke Compaq's write to sell Windows just because they couldn't imagine that the product was good enough to eventually dominate a market on its own merits.
We shouldn't be directing our regulatory furor against the coders--honestly, they've done some damn good work over there at Microsoft, and about all they've got for it was ten instances of "innovation" per paragraph, followed by chants of "by any means necessary". Microsoft's business side needs to be muzzled--and the bottom line is, splitting one ravenous horde into two still leaves you with two ravenous hordes.
Yours Truly,
Dan Kaminsky
DoxPara Research
http://www.doxpara.com
MSFT: Predicted Stock Prices (Score:3)
The OS group would be at about $17/share, with earnings in the three-quarters of a dollar range.
The Applications group would be about $40/share, with earnings above a dollar per share.
What will be most interesting is to witness the impact this has on other stocks. If the WIndowsOS is only worth $17, then what's BeOS worth? Bugger all... (and this is, perhaps, accurately reflected in its current pricing).
--