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Transcript from April 4, 2000
Microsoft Chat

npr_guest: Hello!

npr_host: Hello! Greetingsfrom NPR Online..... Good Afternoon everyone We are expecting several guests today who will comment on the Microsoft decision and what it means to consumers, the computer industry and the ever-growing ever-more pervasisve Internet.... Please ready you questions and we will sort through you thoughts We would appreciate that you keep your thoughts and comments directed to the subject at hand..... Please refrain from sordid comments be adults, please!!!! or at least act like ones.....lol Stand by for an indepth discussion on the Microsoft decision! we will be talking to prominent commentators and leading experts and software executives in just a few moments! Step right up with your questions please focus your thoughts on the Microsoft decision which claims that the world's largest software manufacturer has engaged in anti-competitive practices that have thwarted many other leading companies including Netscape, Sun Microsystems and Apple Computer First we would like to introduce William E. Kovacic, a professor of law at George Washington Univeristy he is a leading observer of the Microsoft case

zooey_franny asks: is the microsoft verdict the reason why the nasdaq and tech stocks in particular are tanking?

npr_guest: I think the question that intrigues me the most is will Microsoft stock continue to sag and what is happening to the stock of the competitors?

metamc: why is Microsoft being allowed to have an appeal, I though those were just for criminal trials? Appeals are routine and are permitted as a matter of right for civil cases as well as criminal cases. This is quite common in the anti trust area. Velvet_Spider asks: will anything actually ever happen to microsoft or will the appeal go on indefinatly thus leaving it as "business as usual" for microsoft? We will know that in about four months. Judge Jackson has seversal questions to decide about remedies. One is, should he impose remedies that take effect during the appeals? The appeals will last a minimum of one year. And a maximum of maybe two years. It is possibvle that Judge Jackson will impose restrictions on Microsoft' behavior during the appeals. At the end of the appeals, it is possible for either conduct remedies or structural remedies such as a breakup will be imposed. One other thought. It is possible that the exisstence of the lawsuit by itself will gradually weaken Microsoft in the marketplace. That is what happened to many defendents in past monopolization cases. The litigation can cause the firm to suffer in several ways. First, the litigation diverts key personnel away from doing their jobs. Every hour that a software engineer spends to support the lawsuit, is an hour taken away from new product development. When you add all those hours up you can have a substantial cost to the company. I would call this a form of intrernal bleeding IBM suffered from this badly In the 1970s Even though it defeated most of the antitrust cases brought against it. The second effect is that competitors begin to act more aggressively. They use the litighation as a window of opportunity. Third, the lawsuit gives lawyers a larger role in the company. This tends to slow things down. Fourth, the lawsuit tends to reduce morale within the company. It makes it more difficult to recruit the best talent and keep it.

mabesser asks: Will the MS breakup rival the MaBell breakup for impact?

npr_guest: There are some interesting similarities and differences. The similarities involve the effecdt on innovation and the effect on stockholders. The bell system breakup revealed that demonolpolozation can increase innovation. It also showed that sharehyolders and employees sometimes can do better after the diverstiature. There are some important differences too. The structure of the Bell System. was the result of regulatory choices. And not a natural market evolution. In breaking up the Bell System, the government did not have to worry about destroying the results of a competitive process. A second difference is that the Bell System Diverstitature was probably easier to carry out. The successor companies had existing organizations within the Bell System. That condition might not exist for some of the Microsoft divestature proposals. Perhaps the greatest Microsoft problem would involved taking apart existing teams of human beings. We do not have a good recent precedent in antitrust experience. for doing that.

jamsco_99 asks: will it allow for more competition into the pc market If the government's theory in the Microsfot case is correct we will see more competition. among PC manufacturers. There will be more competition because the PC makers will offer a wider variety of choices They will compete against each other by modifying the software and the presentation of information contained in the computer.

EmoNerd1 asks: what will the decision mean for linux and the open source movement?

npr_guest: One way to interpret the decision is that it favors an open architecture approach to software design I expect to see the govenrment to propose remedies that encourage a movement in that direction. This is would tend to benefit a Linux business model. This is related to a point we discdussed earlier. One way to test this hypothesis is to watch the stock price of companies that would benefit from the expansion of Linux. If this decision is good for Linux, those prices will go up. fkafka_1 asks: Can the plantif(s) ask for monetary damages instead of, or in addition to, any other penalties?

npr_guest: The government plaintiffs int his case have stated that they are not seeking damages The principal mechaniism for recovering damages will be the private lawsuits that have been filed against Microsoft. There are over 100 of these cases pending at this moment. IPman asks: Is it going to be a big downturn in MS stocks?

npr_guest: My expectation is that we have seen most of the downturn already. I think the lawsuit will continue to act as a drag on the stock. But I would not expect the litigation to cause the stock to collapse. mabesser asks: What was Gates' logic, do you think, in not "playing well" with the mediators?

npr_guest: I think it will be a long time before we learn exactly what happened in those discussions. It would not surprise me if the prolific Judge Posner writes that book. It is very difficult from the press acounts alone to identify how cooperative Micrososft was. One thing is for certain. As Judge Posner said, the disclosures about the negotiations did not help the process. Whoever made the disclosures did not want this process to succeed. That may also be an interesting part of the future book.

npr_host: Thank you william We now would like to introduce National Public Radio correspondent Larry Abramson He covers a varitety of topics including telecommunications, regulation, computer privacy and legal issue He has also been covering the Microsoft Antitrust case Welcome Larry

npr_guest: Hi.

honey_crash asks: will microsoft as a company recover from this?

npr_guest: I think the answer is most definitely: yes. Even if the company is broken up, it's pieces will be very valuable. And they still make products that people are accustomed to using. The company has amazing power, and their products do work for the vast majority of people. They're recover from the stock price drop. Let's remember that the stock price has risen immensely over the past few years, so this recent drop is relatively minor. The bigger question is whether its competitors seize the opportunities here and offer the products that could pose a competitive threats--look at the revolution that the Palm system unleashed.

squeakycat_2000 asks: so what companies will come out of all this ????

npr_guest: It's important to look at the companies that have been important all along, but have not gotten all the press that Microsoft has: taken Cisco, for example. Their valuation is right up their with Microsoft's, and they make a product that people will continue to need no matter what--routers and switches for the Internet. Then of course there's Sun Microsystems and Oracle, which are already exploiting an advantage they have in applications run in services you can use over the Internet--this hasn't taken off for consumers, but it will be big for businesses. It is, however, very hard to imagine a day when any other operating system holds the power that Windows has. Linux still has very little visibility for consumers and for many small businesses. Windows will not lose its place for some time to come... but some day, it's conceivable we'll have an environment that is not dominated by the desktop. But right now, let's face it--the desktop is still king. All our other devices---Palm Pilots, etc-- depend on a desktop interface.

metamc asks: Do you think Gates ego gets in the way of negotiations?

npr_guest: Sure it does. Many other CEO's take a lower profile--Intel for example took the quieter path, and settled with the government in its anti trust case. Clearly, Gates "ego" also helped him build this collosal company. But it's fair to say that he may have outlived his usefulness for the company. Swagger may not be the best thing for Microsoft right now. Good strategy could be useful. Let's remember that Microsoft was late getting into the Internet. Their zeal in destroying Netscape came partly because they were so complacent, so far behind. Ballmer's assension is clearly a sign that the company wants to tone down it's image a wee bit. But Gates is still young and he's still irrespressible. His influence will be felt for some time to come. Please post questions regarding the Microsoft decision and what that may mean to the internet and technology and business........

still_my_bleeding_heart asks: Do you think that with the current Micorsoft thing that Apple will have a better chance and they will become bigger and more widely recognised?

npr_guest: Keep your hopes up! but no way. I mean, Apple's reputation now is like that of Volkswagen--there are great fans of VW, and they now make pretty good cars. But they will never be a major player, at least not for the vast majority of users. I'm not sure they need to--although if you're a user, I'm sure you'd like to see more applications written for the mac. You probably will--but they're likely to be apps that you get off the Web, or "rent" online. Apple's best chance is to exploit its niche for creating clever applications, like the film editing software on the new machines--they'd lose their edge if they tried to reach a mass market.

npr_host: Thank you Larry.... You have been very helpful..... We are now moving on to Mike Sax, president of the Eugene , Oregon comapny, Sax Saftware..... PLEASE POST YOUR QUESTIONS FOR MIKE SAX HE IS READY TO TAKE QUESTIONS MIKE SAX RUNS A SOFTWARE COMPANY IN EUGENE OREGON AND WILL COMMENT ON THE CHANGES IN THE INDUSTRY THAT MAY HAPPEN BECAUSE OF THE MICROSOFT DECISION

IPman asks: if it more competition, would it drive the price of PC and service down?

npr_guest: i actually think that if the government chooses a remedy that would cause

npr_guest:different versions of windows from different vendors to exist, then the cost to PC manufacturers to test and support different versions would probably go up,\ resulting in higher PC prices, not lower prices. i think it depends on what the remedies will be but we might see companies that specialize in creating customized versions of windows that help PC manufacturers differentiate their products.

luckyrana asks: What is wrong in saying that "i am going to deal with you only if you deal with me exclusively"

npr_guest:it depends on the circumstances but it's interesting to note that the judge in this ruling did not find any illegal exclusionary contract. no exclusionary contract engaged in by microsoft. the judge is condemning the way our industry works by simultaneously impeding and working together That way of co-optition is a fundamental part of the way our industry works and is one of the reasons our industry has delivered such incredible consumer value over the past 20 years. So I'm very concerned that this case might change the way companies work with each other -- at the ultimate expense of the consumer.

foutah asks: Does the industry resent MS success?

npr_guest: In general, the industry has both respect and maybe some resentment for Microsoft. I do believe that a small minority of top executives -- mainly MS competitors -- such as Larry Ellison Jim Barksdale, and Scott McNealy are very resentful of Microsoft's success. And they have put a lot of energy and money into encouraging the government to make things harder for Microsoft.

metamc asks: What do you think about Microsofts programs/OS in general?

npr_guest: I think they're very customer-driven... and they generally put customer research before technology so they may not always technologically be as pure and advanced or cutting-edge as they could be. But they address customer needs which is probably why they have been so successful.

jbbrighton asks:Is there a higher likelihood of developing middleware that people can actually use?

npr_guest: In the case, the judge defined middleware as software that fits between the application and the operating system. And could therefore render the operating system irrelevant. The best example of this is Java, and while it has been a failure on the client side it has very strong support for server-based applications. I'm not sure if it's more likely that more middleware will become popular but if Windows would be fragmented into multiple versions from multiple vendors, there's a good chance that some form of middleware -- most likely Java -- could provide a uniform environment for application developers to build on.

suumesse98 asks: A good time to buy microsoft now??

mrskatiewitter asks: who is the nprguest?

npr_guest: I don't have Microsoft stock and I don't plan on buying any, but not because it's not a good purchase. I think the company has a sound strategy and some very bright people and a fairly loyal customer base. So the basics are there and they are good. But I don't know what the effect of a long, drawn-out litigation will have on the stock price.

britney_spears_fl asks: How is Gates dealing with this news?

npr_guest: I believe that he really honestly believes that he is right and I can imagine that it would be quite frustrating to see your competitors issue press releases about an artificial way to limit your success ... success you've worked so hard for for so many years.

npr_host: thanks Mike, you were very informative......

npr_guest: Glad to be here.

npr_host: thanks to all of you for your questions and attention.... we hope to see you next time For more on the Microsoft decision, go to www.npr.org until next time...... hasta lluego and farewell.....