FOCUS: MICROSOFT: Why the law can't contain Bill Gates
Microsoft's legal battle will last years but don't weep for its boss
Sunday 07 November 1999
The future of this man, his vision and the company which he has built from nothing to dominate totally the computer business is now in the balance. The company is the subject of a huge competition case, and if Friday's statement from the court is to be believed, it is losing. Bill Gates himself lost $20bn, when the judgment affected Microsoft share prices. And when Judge Thomas Penfield Jackson wrote his damning conclusions about Microsoft, calling it a monopolist and charging it with a massive abuse of its power in the market, he was not speaking just of a company or a hierarchy: he was damning Mr Gates. His credibility is on trial, as much as his company, as lawyers and consumers come to terms with how one man sought to use American capitalism, and to change it in the process.
He is, in many respects, an unlikely figure to follow in the footsteps of the pirate kings of American industry, the monopolists who sought to dominate the explosive growth of American heavy industry 100 years ago. Though he is worth pounds 75bn, owns Leonardo Da Vinci's Codex Leicester and has a house worth more than pounds 31m, Bill Gates is not the man in the top hat and the frock coat, the classic capitalist. Tremulous and thin- voiced when he stood up to defend himself on Friday night he sounded less plutocrat than plebeian: more like a junior marketing executive caught out fiddling his expenses than John D Rockefeller.
But don't be fooled. The Economist has called Mr Gates a "paragon of industry" and a "ruthless predator", and both are true: he has succeeded beyond all imagining in creating a behemoth of American industry, but, as the antitrust trial has made clear, it has not always been very pretty. It has succeeded primarily through its ability to bring products to market and to outmanoeuvre competitors.
Bill Gates started with a programme which linked together the devices on primitive computers and allowed the user to control them in a relatively easy way: a Disk Operating System. The breakthrough came in 1980 when IBM needed an operating system for its new personal computer. Gates and his colleague Paul Allen bought a rough working version from a local company for $5,000 and sold it to Big Blue, which turned the machine into an industry standard - and MS-DOS with it.
But IBM didn't own the program: Microsoft did. And within a few years it was clear that the key to the new age of computing was not the large boxes with which IBM had made its name, or even the smaller ones that it was selling by the pallet-load: it was the code which made them work, and that meant Microsoft. From MS-DOS came Windows, the world's most widely used software program and the foundation for the modern age, in which computing power is widely dispersed and easily accessible.
Now the internet is shifting that revolution into a higher gear. And it was the internet which both crystallised Microsoft's importance and inspired its current problems. For the user, the keystone of the internet is the browser, the programme linking each individual to the vast range of network possibilities. Micro- soft was faced with a stiff challenge from Netscape, the upstart young company which was pushing its Netscape Communicator. Microsoft, its opponents alleged, used its power to choke off competition and establish its internet explorer as the standard.
Microsoft claims that it is just competing like everybody else: that by innovating, developing products and then selling them as hard as it can, it is doing what capitalists do. "Users said to us, `we want to get on to the internet ... we want to do that in a simple way where we just buy a Windows PC and it's there. And we know that it works and Microsoft provides all of its support services for us'," Mr Gates told the news service CNET in 1997. "We delivered to that."
And when he stood up to defend himself on Friday, it was the same argument: that he had delivered innovation. "The court's findings do acknowledge that Microsoft's actions accelerated the development of the internet, reduced the cost to consumers and improved the quality of web-browsing software," he said. "This lawsuit is fundamentally about one question: can a successful American company continue to improve its products for the benefit of consumers? That is precisely what Microsoft did by developing new versions of the Windows operating system with built-in support for the internet."
Yet Judge Jackson has rejected this idea, conclusively. "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," he wrote. "Microsoft's past success in hurting such companies and stifling innovation deters investment in technologies and businesses that exhibit the potential to threaten Microsoft. The ultimate result is that some innovations that would truly benefit consumers never occur for the sole reason that they do not coincide with Microsoft's self-interest."
If you are tempted to weep for Mr Gates - or are preparing to dance on his grave - think again. When Standard Oil was broken up, John D Rockefeller's wealth actually increased. Everything has moved on now, of course, at the lightning speed described by Mr Gates. Netscape is now owned by America On-Line, the Virginia company which is the world's best-known provider of internet services. There are other challenges to Microsoft, from languages like Java and Linux.
The game is moving from the PC and the browser, down to handheld devices like the Palm Pilot, or up and out on to the network. Vast new combinations are being spun from fibre-optic cable, software, semiconductors and hard cash, labyrinthine webs of corporate control aimed at capturing the largest share of the largest markets for the longest possible time. Microsoft is right in there. The game is not over for Mr Gates: in some ways, it may only just be beginning.
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