Judge Jackson: "Microsoft is a Monopoly." Now What?

By: Walter Metcalf
Date: 11/10/99

When the case of the U.S. Department of Justice vs. Microsoft finally began on October 19, 1998, two things fairly soon became evident:

  • First, several Microsoft witnesses, notably Bill Gates himself, were very inept at expressing their position. (Gates even went so far as to assert that Judge Jackson wasn't capable of understanding the issues involved!);

  • Second, Microsoft personnel were very unaccustomed to working in an environment where facts, not hype, determined the outcome.

Background articles:

Microsoft or Justice: Which will you choose? An excellent, balanced article by well-known OS/2 devotee Tom Nadeau.

Gates Grilled By DOJ In Video Testimony
Gates' appearance described as "terrible" and "beaten", and to "need a memory upgrade." News report by Darryl K. Taft.

D-Day for Microsoft
Guide Steven Gindin on the end of the world as we know it.

On November 5, 1999 at 6:30 p.m. EST, that ineptness came back to haunt Bill Gates and Microsoft in a big way. However Judge Thomas Penfield Jackson's Findings of Fact is viewed, it seems clear that His Honour accepted the Government's position as supported by its witnesses pretty much as it was presented. On the other hand, if you followed the trial at all, you can see that it was difficult, in my opinion, for him to do much else, given the disconnected, contradictory nature of so many of Microsoft's arguments.

By contrast, the days that the IBM witnesses spent on the witness stand were not wasted. Judge Jackson had this to say about IBM and OS/2 Warp:

In late 1994, IBM introduced its Intel-compatible OS/2 Warp operating system and spent tens of millions of dollars in an effort to attract ISV's to develop applications for OS/2 and in an attempt to reverse-engineer, or "clone," part of the Windows API set. Despite these efforts, IBM could obtain neither significant market share nor ISV support for OS/2 Warp. Thus, although at its peak OS/2 ran approximately 2,500 applications and had 10% of the market for Intel-compatible PC operating systems, IBM ultimately determined that the applications barrier prevented effective competition against Windows 95. For that reason, in 1996 IBM stopped trying to convince ISV's to write for OS/2 Warp.

This calls to mind a statement by John Soyring, director of IBM's Network Computer Services during the trial that "It's because of the lack of availability of shrink-wrap applications that users went to Windows...." Gates had learned the lesson well that consumers buy operating systems to run applications (not the other way around), so he sought to control the applications market (read developers or ISV's) by whatever means necessary to ensure Microsoft's continued stranglehold on the Intel PC operating system market.

DOJ's Reaction

As you would expect the DOJ officials--especially Attorney General, Janet Reno, Assistant AG for Anti-Trust, Joel Klein, and leader of the Government's trial team, David Boies, were all pleased they won. They expected to win: you don't launch a case of this magnitude without a reasonable expectation of winning. What they apparently did not expect, however, was such a complete sweep. Judge Jackson decided against Microsoft on three issues:

  1. "Microsoft enjoys monopoly power in the relevant market....";

  2. "Microsoft possesses a dominant, persistent, and increasing share of the world-wide market for Intel-compatible PC operating systems."

  3. "Through its conduct toward Netscape, IBM, Compaq, Intel, and others, Microsoft has demonstrated that it will use its prodigious market power and immense profits to harm any firm that insists on pursuing initiatives that could intensify competition against one of Microsoft's core products."
This complete sweep in favour of the DOJ sparked a celebration among the Justice Department officials that caused one reporter to liken their behaviour to that of a sports team who had just completed a sweep at a major sporting event.1

What's Next

It's important to realize that Judge Jackson's ruling is only a "Findings of Fact," and is only the the first stage toward reaching a final ruling, which itself can be appealed, possibly even as far as the Supreme Court. The immediate next step under U.S. law is for each party--the DOJ and Microsoft--to present their responses to Jackson's Finding, called "conclusions of law". Based on those documents Jackson will make his final ruling. So the "Findings of Fact" does not itself carry any legal weight; however since it was so massive in its support of the Government's position, it does provide a strong basis for the Government to ask for some severe measures to end Microsoft's harmful monopolistic practices and where possible provide remedies for harm done in the past to the consumer and to software and PC manufacturers.

Possible Remedies

According to articles published in the New York Times on November 3, 1999, U.S. officials are considering four proposals or remedies for resolving the Microsoft case. Two of them involve splitting up Microsoft. These measures are: 2

  1. Force Microsoft to publish the proprietory source code to the Windows operating system;

  2. Force Microsoft to auction the Windows source code so two or three other companies could sell competing systems;

  3. Split Microsoft into several companies each holding all the source code and intellectual properties for Microsoft products, but in competition;

  4. Split Microsoft into three companies: one holding the operating systems; another holding the application products such as Word and Excel; and the third holding the Internet and related products.


It's too early to predict the future PC landscape, either from the point of view of consumers or of Microsoft. Since the U.S. Government has been handed such a sweeping victory, the Justice Department may feel it has the basis for taking some of most severe actions it has been contemplating. But since even the least severe measure would have a drastic impact on Microsoft, Bill Gates may decide to fight this decision and the upcoming ruling with all of his considerable might. On the other hand, he may, as several observers predict he will, decide to try to settle at the bargaining table.

Call me pessimistic, but I personally don't believe this victory over Microsoft will result in a new OS/2 client from IBM. According to the Finding of Fact, IBM spent tens of millions of dollars attempting to market Warp 3--even for a company like IBM, that isn't chicken feed--and they got burned; I just don't see IBM going back for a rematch.

However, there are some other effects beneficial to the OS/2 user that are not unreasonable to expect in the near future, even before the final decision is reached, whether at the bargaining table or in the appeals court.

  1. Increased legal activity against Microsoft.

    1. Once the DOJ filed suit against Microsoft in 1998, several smaller concerns were encouraged to do likewise. These include the 19 states and a few private companies, such as Caldera.

    2. Now that the DOJ has won I think we'll see even more smaller concerns, perhaps even individuals who feel they have been mistreated by Microsoft, encouraged to sue them.

  2. Increased OS/2 ISV activity.

    1. It's not always easy to read companies' motives, but we may already be seeing some of this. Video drivers have always been a major problem for OS/2 users. Fairly recently, SciTech Software, Inc., a company that had been making excellent drivers for Windows and DOS platforms, started creating a native OS/2 version of their product. One cannot help wondering if the DOJ lawsuit had not been filed and was not so obviously proceding in the Government's favour, if MicroSoft would have left SciTech alone to fill probably the greatest weak spot in the OS/2 operating system.

    2. In recent weeks, not one, but two software companies have expressed an interest in entering the almost empty high-end OS/2 sound-card market. A SciTech representative during a workshop at the recent Warpstock 99 stated that making a sound driver for OS/2 was something they were considering as a project down the road. Then in an announcement last week on Warpcast, Theta Band Software also expressed an interest in developing drivers for two types of sound cards, provided they were the only ones to do so.

  3. General loosening of Microsoft's grip on ISV's and Manufacturers

    1. Several pro-Microsoft pundits are quick to point out that Bill Gates won't go out of business--as if that was the DOJ wanted or what the trial was about, or what most Microsoft foes wanted. 3

    2. Bill Gates is a powerful bully; the goal is to force him to play by the rules: no one wants to play with a bully. However, as rich and powerful as Bill Gates is, he has been dealt an enormous, potentially devastating blow. As a business man, his main interest now is damage control: he has to do whatever he can to minimize the damage to him personally and to his company. In addition the trial has stripped him of all his pretense: for perhaps the first time, the world sees him for who and what he is, so I believe he will have to act considerably more circumspectly than he has done in the past. These two factors mean first, he will have fewer resources (notably time and attention) to scrutinize other players, such as ISV's, and second he will have to think two or three times before he puts his heel on the throat of a potential competitor as he has been so ready to do in the past.

    3. Consequently, there will be, I believe, those with a desire to work on OS/2 and/or for OS/2 users, but were afraid to do so in the past because of Microsoft, who will now be willing to take the chance and fulfil their desire because of the reduced risk of Microsoft intervention.

Walter Metcalf

Next week: PPWizard--the HTML, REXX, and IPF Preprocessor


1 For exceptionally vivid coverage of this media event see Darryl Taft's article in the Computer Reseller News.

2 See Government Looks At Splitting Microsoft.

3 Microsoft invests billions of dollars in the personal computer market; losing all that money would do real harm to the consumer.

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