The Microsoft Bubble

A lovely sort of bubble floats over Redmond, Wash., and nothing seems to puncture it, not even a federal ruling that Microsoft has been deliberately and enthusiastically breaking the law. Out in the real world, United States of America vs. Microsoft Corp. was decided yesterday and will soon be appealed. Inside the bubble, it’s a sort of sporting event called “DOJ vs. the Freedom To Innovate.”

Outside the bubble, we’ve learned that Microsoft paid Compaq and others not to distribute competitors’ products, pressured Intel and Apple to hold back on technological innovation, and employed an array of “machinations” to undermine Java. Reality inside the bubble, as a smiling Bill Gates explained an hour after the verdict, is that “Microsoft’s past success has been built on innovation and creativity.” Innovation is a word used as much as possible; seldom heard is the word law. Neither Bill nor Steve (as they’re called inside the bubble) used the word yesterday in their public statements or e-mail to the staff—as in, “Let’s keep making as much money as possible but from now on try to obey the law.” Steve (interestingly) did mention “integrity” on his list of company values, but he kept it vague. Microsoft has never said anything like the following: We understand the law of antitrust; we take seriously our responsibility under the law; we make a point of educating our staff about the law’s limits on corporate behavior, and we ensure that the law is obeyed. Corporate ethics are not often stressed, inside the bubble.

Personally, I’m outside the bubble, over on the East Coast, where we like to think of Microsoft products as bloated and unreliable and we keep on using them anyway. I’m composing this note on Microsoft’s word processor; I’ll send it in to via Microsoft’s e-mail software; Slate will display it under an MSN banner; and you, of course, will probably read it in Microsoft’s browser. Should you feel bad about that? Nah. It’s too late anyway. There’s something disconcerting, even anachronistic, about the decision’s focus on the principal target of Microsoft’s predation, namely, Netscape. That was a short-lived little company, and now it’s gone, finished, absorbed into America Online—not exactly a flag for anti-monopolist consumer advocates to rally round.

Netscape was a fleeting artifact of corporate history, we now see. Cyberspace would have bloomed with it or without it. The Web browser that mattered briefly was Mosaic, the one both Netscape and Microsoft took off from. No matter what sort of remedies the courts choose, it cannot be brought back to life. From here on, the browser will fade away, an invisible part of the operating system. Even now, many consumers have only the vaguest sense of what or where their browser is. That’s as it should be.

Netscape will be remembered only as a harbinger of an alternative universe, a future that might have been. Judge Thomas Penfield Jackson understood that; he has now definitively laid to rest one truism of modern life, widely believed outside the bubble as well as inside: that when it comes to high tech, the judicial system is clueless. If it was once true, it’s not true anymore. This judge’s decision sketches our recent history in deft and savvy strokes:

Microsoft early on recognized middleware as the Trojan horse that, once having, in effect, infiltrated the applications barrier, could enable rival operating systems to enter the market. … Middleware threatened to demolish Microsoft’s coveted monopoly power. Alerted to the threat, Microsoft strove over a period of approximately four years to prevent middleware technologies from fostering the development of enough full-featured, cross-platform applications to erode the applications barrier. In pursuit of this goal, Microsoft sought to convince developers to concentrate on Windows-specific APIs and ignore interfaces exposed by the two incarnations of middleware that posed the greatest threat, namely, Netscape’s Navigator Web browser and Sun’s implementation of the Java technology. Microsoft’s campaign succeeded in preventing—for several years, and perhaps permanently—Navigator and Java from fulfilling their potential to open the market for Intel-compatible PC operating systems to competition on the merits.

Yes, that all rings a bell. So now what? There’s not much satisfaction in necromancy. In the search for remedies, the judge and prosecutors will spend plenty of time conjuring the spirits of the dead, but they can’t bring back the past, and they don’t, in fact, want to destroy Microsoft—majestic exemplar of the fin de siècle boom. They’re nervous watching the Nasdaq plummet as it is.

They can’t be optimistic about imposing behavioral remedies on these feisty and unrepentant executives. They can’t hope to untangle the many versions of Windows now. And as Bill and Steve repeated yesterday, the future has moved on anyway, to applications suites and online commerce and un-PC devices. The government could simply try to relieve Microsoft of its ill-gotten gains, but that would entail fines of a magnitude never seen on the planet Earth.

A structural remedy, the breakup of the company, might work, but not the breakup most analysts are talking about, where operating systems and Internet applications would go separate ways. It’s possible to imagine (oh, admit it, it’s fun to imagine) a different sort of breakup, creating three or four or five little Microsofts, each starting with the whole arsenal of products and lots of cash; each as tough and aggressive as ever. Suddenly the economy would benefit from the kind of competition that Microsoft likes to pretend exists already. Hardware makers would have a choice. So would consumers. And the government could back away—job well done.

Or then again, maybe Microsoft didn’t really break the law and it’s all going to go away on appeal. That’s what they’re saying inside the bubble, anyway.