Microsoft, Five Years after the Anti-Trust Case
SCOTT SIMON, host:
Five years ago, the United States government took on Microsoft in an old-fashioned trust-busting case of the kind that scattered Standard Oil and cut AT&T down to size. After settling with the federal government, the company is as rich and powerful as it's ever been, but old-fashioned competition from the likes of Google and Linux might prove a bigger challenge to Microsoft than the Justice Department. Our friend from the business world, Joe Nocera, has written about the five-year anniversary of the case for The New York Times. He joins us from WFCR in Amherst.
Joe, thanks for being with us.
Mr. JOE NOCERA (The New York Times): Thanks for having me, Scott.
SIMON: With the advantage of hindsight, what did the federal government's case against Microsoft resolve?
Mr. NOCERA: Well, less than you would think, as it turned out. You may recall that the judge in the case, Thomas Penfield Jackson, actually had ruled that the company should be broken up, but that didn't happen. He was basically overruled by the Court of Appeals and they sent it to a different judge because he had done various things like talk to the press while the case was going on. And so when it was settled, it was settled on terms that were very favorable for Microsoft, and there are various changes that it had to make in its contracts and the way it deals with manufacturers and so on, but the big, central issue of the case, which is can you or can you not put any piece of software, add it to Windows and make it part of the operating system even though there are competitive products on the market, that was not settled. And it remains the sort of looming question of what Microsoft can and cannot do with the operating system.
SIMON: I think one of the deepest impressions the trial left was you got the idea that everybody else in that world of computers just hates Microsoft's bytes, don't they?
Mr. NOCERA: You may be a little bit surprised to hear this. Microsoft was actually stunned to discover this. And so actually this is one of the things that has changed in the five years since the trial. Microsoft has made extraordinary efforts to get back in good graces with competitors, with Silicon Valley. It's settled these suits. It now holds joint press conferences with Sun Microsystems' CEO Scott McNealy. He's the guy who once called Windows a giant hair ball. A lot of the competitors who used to, you know, shake in fear at the thought of Microsoft coming after their business don't really shake in fear anymore and, you know, Google is really quite a good example of that.
SIMON: What kind of threat is Google to Microsoft? They do different things, don't they?
Mr. NOCERA: Well, they do now. Here's the way to think about it, Scott. You have an operating system that underlies--that you need to turn on your computer, but it becomes less important, for instance, to have Windows working with the office suite of applications or Windows working with this or a Windows working with that, because you get on the operating system, you immediately go to the Web, you're immediately on Google, and then you start doing everything that you used to do on Windows through Google. So who cares what operating system you have?
SIMON: Is Linux any kind of a threat, the Linux operating system?
Mr. NOCERA: This is another interesting thing about the trial, Scott, is that during the trial Microsoft was constantly saying, `There's this threat out there called Linux.'
Mr. NOCERA: `There's this threat out call'--and people would kind of laugh at them.
SIMON: `Yeah, who says we crush competition? Linux is about to eat our lunch.'
Mr. NOCERA: Right, right, right.
Mr. NOCERA: And Linux was this tiny little thing five years ago. And son of a gun, Microsoft was right. Linux is a competitor, and they are a huge competitor in the market for corporate computing. And Linux now has 20 percent of the corporate computing market, which is pretty astounding.
SIMON: I'm told the governments of Brazil and Germany use Linux rather than Windows.
Mr. NOCERA: Actually China's pretty interested in it also. And I'll tell you one other thing, Scott. I think Microsoft would have been much better off in the end if they had accepted Judge Jackson's verdict and allowed themselves to be broken in two. I think the fact that they are wedded to Windows and all other parts of the company have to flow through Windows and don't--can't act independently and have to preserve Windows, I think that's really hurt Microsoft, and I think the company would have been much, much better off in the end, both for shareholders and for consumers, if they had just let themselves be broken in two.
SIMON: Joe Nocera, columnist from The New York Times, thanks very much.
Mr. NOCERA: Thank you, Scott.
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