AP Photo/Lacy AtkinsBILL GATES MAY WELL HAVE SPENT THE PAST TWO weeks wondering how he ended up starring in the third act of Citizen Kane without getting billing for Acts 1 and 2. If the World's Richest Man didn't like the way he came off in Pirates of Silicon Valley (the book and the movie), God knows what he'd make of the film that ought to be made from the preliminary findings in the Microsoft antitrust case.
Make no mistake about it, the voluminous Findings of Fact issued by federal Judge Thomas Penfield Jackson is no ordinary legal document. It has a plot. It has conflict. And what characters! Victims, villains, opportunists, and a company whose leader wished for something and got it, forgetting the well-known adage about being careful what you wish for . . .
At first glance, the story's main victim -- and a Little Nellish figure it is -- is Netscape, late of Silicon Valley and last seen pulled apart like a wishbone by America Online and Sun Microsystems. Once upon a time, Netscape was nearly synonymous with the Net's bright promise. Born online! Built online! Best and brightest! Too cool for Microsoft and AOL and all those old-school companies!
Most of the FoF concerns Microsoft's determined and multifaceted attempts to lay waste to Netscape. Microsoft attempted to bring Netscape into the fold; when that failed, it moved to stymie Netscape's progress. See Microsoft undercut Netscape's partnerships. See it use its own partnerships to beat Netscape over the head. According to the findings, Microsoft did, in short, the kinds of things that big, established companies ã have the power to do to little upstart companies. Microsoft had the power, certainly; whether or not it had the right, and whether it harmed consumers in the process of rightly or wrongly exercising such power, is the crux of the legal issue in the antitrust case.
Some of the most fascinating material in the FoF, however, concerns how Microsoft used its long-standing partnerships with computer vendors such as Compaq and Hewlett-Packard (not to mention chip giant Intel) to ensure that Microsoft was the face that the legions of Net-curious new computer buyers would see when they switched on the computer. Microsoft forbade companies not only from putting Netscape's and others' icons on the desktop, but from altering their own computers' start-up routines to present the user with anything less cryptic than the familiar start-button interface. In several cases, Microsoft even demanded that computer manufacturers use only the Internet Explorer browser on their own in-house computers. (They didn't force consumers to do that -- can you imagine Bill G. calling your house to tell you to get rid of Netscape? -- and that "forbearance" formed part of Microsoft's claim that it had, in fact, benefited the consumer in the main.)
If Microsoft did unto its partners as the FoF claims -- and remember, those companies still have to work with Microsoft; there's no joy for the likes of Intel or Compaq executives in giving damaging testimony -- then the partners, not Netscape, are the true victims here. Just because they were the weapon rather than the target doesn't mean that they didn't suffer all the more. For instance, we're told in the FoF that it takes just three tech-support calls from a baffled customer to eat up a computer vendor's entire profit margin. And new users call the hardware guys first, not the operating-systems team. If Microsoft prevented Compaq and others from making the user experience easier, thus causing more tech-support calls and less profit (both in tech-support costs and subsequent lost sales), then Microsoft done them wrong indeed. And it deserves to be punished.
WHY DID MICROSOFT GO SO FAR TO slaughter Netscape and capture the Net -- moving from hard-but-fair competition (according to the government's previous rulings) into tyranny -- when just a couple of years earlier, the company had found communications such a yawn that it couldn't be bothered to implement decent modem support in Windows 3.1? The answer seems obvious now, when you can't swing a cat without hitting a URL. You might even think that Microsoft must have gazed upon the Net and seen a wholly new terrain for making history -- a brave new world where from the ground up a smart, hard-driving company could shape the future of commerce, of entertainment and of the one-to-one consumer experience.
And you would be wrong. To misquote Puff Daddy (or Weird Al, if you'd rather), it's all about the middleware, baby.
Middleware, as conceived and almost executed by not only Netscape but Java, promised to free the world's software developers from the tyranny of operating systems. Good middleware would make it possible to "write once, port anywhere" -- write a program on, say, a Mac, and rest assured that it would work on a PC operating system (i.e., Windows). Small Java-language programs that can do that exist now, but nothing big that might threaten Microsoft's 90 percent share of the PC operating-system market. To protect its market dominance, Microsoft had to make damn sure that such big apps never came to fruition.
And so it did.
Netscape didn't deserve to die for innovating, but it only looks like a sacrificial lamb if you know nothing of the industry over the past five years or so. Yes, Netscape made a brilliant browser; yes, it promised great things; yes, it had nothing like the war chest and reach that Microsoft allegedly used so evilly. But history teaches us -- hell, even the FoF teaches us -- that smart competitors can and do survive Microsoft's onslaught. Intuit survived. RealNetworks survived, and even bested Microsoft with a savvy "misunderstanding" of their joint contract. And AOL -- one of the companies that has consistently screamed loudest where Microsoft's depredations are concerned -- not only survived but handed Microsoft its ass in the online-services competition.
The endgame between Microsoft (and the Microsoft Network or MSN) and AOL (and Netscape), explicated late in the FoF, is also fascinating stuff. AOL purchased Netscape a year ago and concluded rapidly that the only feature of lasting value was the traffic garnered by Netscape's front page (which that unfortunate company had, just like Microsoft, refused to allow its partners to circumvent or alter).
Microsoft was clearly ready to sacrifice MSN to kill Netscape, but AOL was happy to sacrifice Netscape as well as its own subsidiary GNN service to get Netscape's page views, remaining in bed with Microsoft all the while. Ask yourself: If Netscape was so vital, so promising, so viable, how is it that in the end, it had no friends at all beyond the Linux crowd?
There are dark underground streams feeding this strange fruit. A careful read of the FoF suggests that Microsoft was not the only worm in the computer-industry apple -- even though the company is a monopoly, and even though substantial change clearly needs to be made not only in the way the company does business but in the structure of the business itself. If you lay out Microsoft's actions, it's plain that the company was taking certain kinds of power away from computer vendors. It was, however, giving analogous powers to Internet service providers. For instance, while Microsoft prohibited computer vendors from changing the way Windows looked at start-up, the company encouraged Net providers to build customized versions of Internet Explorer, providing a DIY kit free. (Netscape provided a similar kit after nine months, but charged $1,995 for it.)
Now what? The stock market had just a few hours of post-FoF jitters before Microsoft's price stabilized just two points below pre-FoF levels -- on news that the company would be teaming up with Radio Shack, and developing an online version of Office. But whatever Microsoft was thinking before the FoF release, appellate courts most assuredly aren't going to pull its floppies out of the fire this time. Sometime soon, this winter even, a hard rain's a-gonna fall. The main worry here (and this is true whether you're pro- or anti-Microsoft) is how it's going to go down -- and whether the cure will be worse than the disease. What many forget in these days of "more efficient government" is that government is not designed to be efficient; it's designed to be just, and even (sometimes) fair. Any legal remedies could be messy and insensitive to how the industry works. And they might take forever -- drawing out this mess far longer than anyone wants it to go. There's pressure throughout the industry to get to the table. If Microsoft genuinely cares, it'll sit down and start talking settlement.
At the close of the gripping Tales of the FoF, you've got to wonder: How does Bill -- and to the eyes of narrator/Judge Thomas Penfield Jackson, Bill clearly is Microsoft, his bad decisions consistently outweighed by his subordinates' good ones -- see himself? As a victim? A stalking horse? John Wayne? Shane? Just another kid on the playground? Therein lies the tale: Bill thought of himself as just another smart, tough kid on the playground. But he wasn't. The government erred in 1995 (and before and after) by not telling him, before he hurt someone, that he had outgrown the playground. And the person he hurt most might turn out to be Bill Gates himself.
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