Network: Does tackling Bill Gates do anything for you?

Microsoft may be losing the battle of the browsers in the US courts, but the real fight for technology markets has already moved on.
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The Independent Culture
The financial markets have already started to digest the impact of the findings of fact in the antitrust court case against Microsoft. Assessing what it all might mean for the company's future is one thing but sorting out what it means, in practical terms, for consumers is much more difficult.

The conventional wisdom among many technology experts in the US has been that the antitrust case against Microsoft will not necessarily make any difference at all. After the great excitements of the weekend, as everyone took in the words of Judge Penfield Jackson, that might seem odd: after all, his statements caused the company's stock to plunge and stirred up speculation that the remedies which he might propose could even include sanctioning the break up of Bill Gate's Microsoft empire.

There is an argument for saying that the whole action is well behind the fast-moving curve of the software market; and the long-term effect may, in terms of direct impact on consumers, be relatively small. But that is to miss the point. The case was supposed to be about choice.

Part of the argument for playing down the practical implications of the Microsoft trial is that most of the issues to which it relates are now history, and that, in some ways, is unanswerable. After all, the point at issue was the market for Internet browsers. Microsoft was alleged by the US government to have used every weapon in its armoury to squeeze out Netscape and its Communicator, so that its own upstart Internet Explorer could make ground.

Look at the market statistics and it becomes clear that if that was what Microsoft was trying to do, then it won. Two years ago, when the case began, Netscape had 62 per cent of users for Internet browsers, with Microsoft way behind at 36 per cent, according to a study by Zona Research based on 300 technology professionals. Microsoft passed Netscape in 1998 and by last month its market share had grown to 64 per cent. Some surveys show that up to 90 per cent of new users are adopting Internet Explorer. There are still several other possibilities, such as Opera, but they are minorities. So you can buy whatever browser you like but the chances are that it will be Microsoft: after all, that's what most users are offered.

Netscape, of course, is now owned by AOL, and it is planning to bring out the new version of Communicator (version 5.0), next month - a year later than originally planned and nearly a year after Microsoft brought its own 5.0 on to the market. Netscape's version 4.7 got a few raspberries from reviewers and excitement over the arrival of 5.0 cannot be said to be uncontained. In terms of technology, as well as market share, it is seen as lagging.

Equally, the browser battle is no longer the hot issue in software. The industry pundits long ago lost interest in which browser did what. Even during the court hearings in Washington many have declared the PC to be passe. The devices are not going to suddenly go away but the hottest competition is now upstream of the PC, on the network, and also downstream, on hand- held devices such as Palm Pilots, pagers and mobile phones. Microsoft is by no means guaranteed success in these markets. It faces challenges from open operating systems such as Linux, while Apple's new iMac range of Windowless computers has also made a small dent.

So, the argument goes, Microsoft has already settled the browser battle but it is not doing as well in many of the new fields. Technology has moved on. Microsoft supporters argue that the whole trial has been a charade, used by the US government to make a political point. The Microsoft opponents essentially shrug their shoulders. The antitrust legislation which the government is using in this case dates back to the days when industry in America was a matter of steel, oil and railways, not routers and DSL lines. Indeed, antitrust in an industry such as software is always shooting at a rapidly moving target.

Trying to shape the industry's behaviour is very difficult. But the trial will have a dramatic effect on competition in the longer term. It shows that, even if crime and punishment are separated by very long periods in Internet time, the government will not permit companies such as Microsoft to abuse their market position, which it clearly did, or to benefit from the results.

The judge argues very clearly that Microsoft did limit consumer choice: it restricted their ability to choose a browser and it restricted the ability of software producers to get alternative operating systems on to manufacturers' computers.

Microsoft argues that the reverse is true: it has been a great force for innovation, and that has benefited consumers. It has the size and market placing power to develop the tools that people want, to get them to market and make them work. If others failed, that merely shows their weaknesses. As Judge Jackson pointed out, that ignores the massive advantage conferred on Microsoft by Windows.

Windows is, and remains, the most popular consumer operating system available. The US government cannot change that, but it can change the ways in which Microsoft uses it as a commercial tool - by restricting access to it through pricing and sales policies towards computer manufacturers, and by making it difficult for other software manufacturers to link their software to it. The government case is that were it not for Microsoft, you would have a wider choice of products now, some as good and maybe better than the ones Microsoft offers. So, if the government limits how Microsoft uses Windows, consumers may have more choice in the future.

There are interesting points here for consumers. Should you delay making decisions about what system to buy in the belief that there may be more around later? The answer, almost certainly, is no. It will be at least a year before the case has any direct impact. In the interim, as Microsoft feels inhibited about throwing its weight around, there may be no proliferation of products in some areas. In any case, it will take time for the manufacturers of software or hardware to react to any change in Microsoft's circumstances.

So are prices likely to go down? Not necessarily, or not because of the court case, anyway. Microsoft has always kept the price of its operating system relatively low precisely to ensure that it gains the maximum market share. Given that there is unlikely to be any great change for some time in its operations, new competitors are not going to emerge overnight for the mainstream consumer products. Prices for many products like PCs are going down and will probably continue to do so: the impact of the law will not be clear for some time.

After product range and price , the third issue for consumers, and perhaps the most important, is the impact of the antitrust case on the next generation of applications. Microsoft will be under close scrutiny as it launches new products; there are more competitors emerging in areas such as operating systems. meanwhile the Internet, and the growth of applications for it, is already stimulating a proliferation of new entrants. Only over the years to come will we know if shackling Microsoft can benefit the consumer.

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