1 -February 17, 2000 [Reuters]
Corp. Chairman Bill Gates said the software giant would be willing to
open to competitors the source code of its Windows operating system -
its flagship product - to settle the antitrust lawsuit brought by the
U.S. Justice Department, Bloomberg Television reported Thursday. "Microsoft
Corp. would be willing to open the source code for its Windows software
to competitors in order to settle the antitrust case filed by the U.S.
Department of Justice," a Bloomberg news release quoted Gates as saying.
spokesman Jim Cullinan declined to confirm the report, which was issued
just hours after Gates launched Windows 2000, the company's latest product
that it hopes will help it dominate the corporate computing world.
Microsoft is in negotiations with the Justice Department to find a way
to settle charges that the Redmond, Washington-based company violated
antitrust laws by using monopoly power in computer operating systems to
crush rivals. By opening the source code to Windows, which accounts for
about 40 percent of the company's revenue, Microsoft would allow other
software developers, including its competitors, to change and sell their
own versions of the software.
Wednesday a report in the Wall Street Journal said Microsoft was willing
to agree to greater disclosure of the inner workings of Windows and to
other concessions to settle the case.
executives including Gates have said they oppose any plan to settle the
suit that would break the company up. U.S. Circuit Judge Richard Posner,
who is presiding over the talks between Microsoft and the Justice Department,
has told both sides in strong terms not to speak to journalists about
denies report quoting Gates as ready to open source code to settle antitrust
2 - February 17, 2000 5:54 PM PT [Charles Cooper, ZDNet News]
an interview with Bloomberg Television on Thursday, Gates was quoted as
saying the software giant would be willing to open to competitors the
source code to its Windows operating system, its flagship product, to
settle the lawsuit brought by the U.S. Justice Department.
Or was he?
did not comment in any way on the mediation process or any settlement
proposals," said company spokesman Jim Cullinan.
the news wires crackled as observers attempted to deconstruct his statement.
The only point that was clear was that nobody outside of Microsoft's chairman
really knew whether it signaled a break in the legal logjam.
"Just because he says he's interested doesn't indicate he's ready to make
a deal," said Stephen Houck, a New York antitrust lawyer who was the lead
counsel for the 19 states during the course of the Microsoft antitrust
trial. "Making the source code available has a lot of theoretical appeal.
But they would have to do a lot of work to make sure it's a viable package
that would interest potential competitors."
May, company President Steve Ballmer (who's now also CEO) said Microsoft
had not ruled out making at least part of the Windows source code available
for the public domain. At the time, Microsoft was under pressure to react
to the growing momentum of Linux.
there's been no movement on that count since then.
a rule, company executives have strenuously resisted suggestions that
Microsoft should put what are the essentially its crown jewels into the
arguments coming in D.C.
latest flurry occurred less than a week before Microsoft and the government
are set to present final arguments before U.S. District Judge Thomas Penfield
Jackson in Washington, D.C. The two sides have been meeting separately
with a court-appointed mediator, U.S. Circuit Judge Richard Posner.
Microsoft nor the government has commented on the substance of the talks.
But sources familiar with the deliberations say the negotiations have
gone slowly and that Posner has remained unable to bridge the gap between
This will either affect the market greatly, or it won't.
is not yet clear if this is a ploy on Microsoft's part, or just confusion
a la the left hand not knowing what the right hand is doing. Although
we can make a case for it either way, we will give Redmond the benefit
of the doubt and assume it is not deliberate.
does this mean anything in the greater scheme of things regarding the
Department of Justice's (DOJ) anti-trust case? Ultimately, yes, but currently,
no. But it conveniently allows us to segue into the possible remedies
available to the DOJ.
the alternatives the DOJ is likely to consider are:
Open the source code
Some combination of the first three
least for the next 12-18 months, Number 5 will not happen. [This ignores,
for the moment, the high probability (>95%) that Microsoft will appeal
Judge Jackson's ruling(s). Appeals will likely put any DOJ actions on
hold.] The probability of Number 4 occurring is approximately 100%, but
it's the mix that is up for discussion. So let's look at the first three.
is one of the more confrontational (and in some ways glamorous) options.
But unless it is combined with a "No Bundling" dictum (i.e. preventing
MS from adding an application into the OS and deciding it was part of
the OS all along), it is unlikely to loosen Microsoft's stranglehold on
the desktop market. Add to that the suggestion from Professor Lawrence
Lessig that breakup might not provide the hoped-for consumer benefit,
and we believe it is unlikely to happen.
We cannot see the market benefits to opening the source. Proliferation
of Windows "flavors" is not necessarily what the market wants. One of
the big complaints regarding Linux is that there are too many distributions,
each having its own pluses and minuses. Making Windows more Linux-like
will provide benefits for a relatively small population, and Microsoft
is probably still in control. We also believe that opening the APIs will
provide only modest benefit. R
holds the greatest promise for keeping MS from repeating past "misconduct".
Having a technologically, unbiased watchdog/overseer is probably the single
best way to prevent abuses before they occur, rather than after the damage
has been done. However, the political ramifications are significant, and
the free-marketers will have conniptions. Plus we'd hear endless carping
from Redmond about how the government is "stifling innovation" etc., etc.
course, all the preceding speculation is pretty much moot. We expect Microsoft
will appeal any ruling other than a free pass (99% probability), and we
expect the appeals process will drag things out until either (1) a new,
pro-Microsoft, Administration is elected or (2) the market has changed
sufficiently that any regulatory measures presently contemplated will
At some level, this is an interesting little diversion from the normal
intensity of the Microsoft trial and the high-tech "Internet speed" environment
in general. The confusion coming out of Redmond provides an interesting
counterpoint to the political debates and charges flying during the Presidential
a more realistic level, the outcome of the trial will greatly affect (both
directly and indirectly) the computing and business world for the coming
years. However, customers/users need not delay any purchase due to these
latest events, because any significant changes to the OS world will give
customers plenty of time to react and adjust their strategies (if necessary).
Current business plans should not be affected by this trial until penalties
(if any) actually get meted out.
the meantime, we will keep watching for more "misquotes" .