Microsoft antitrust ruling may open options

The recent U.S. Court of Appeals decision in the Microsoft Corp. antitrust case could ultimately give corporate end users the ability to pick and choose among some Windows applications that the company plans to integrate with future versions of the operating system, say some legal and industry analysts.

“Just think about the extent to which future Microsoft planning includes writing software code for collaborative applications into the Windows [operating system] itself,” said Herb Hovenkamp, an antitrust expert and law professor at the University of Iowa in Iowa City. “I think Microsoft is going to have to rethink that whole strategy.”

The case is still unsettled, and its ultimate impact, if any, on Microsoft Corp.’s operating system design remains to be determined. The appeals court remanded the case on June 28 to a lower court, and there is also the prospect of a settlement. But the appeals court decision, which upheld the finding that Microsoft used illegal means to maintain its monopoly status, raises some interesting possibilities for end users.

Testimony by one large end user, Seattle-based The Boeing Co., played a key role in the government’s contention that integration hurt consumer choice. The appeals court ruled that Microsoft’s commingling of Internet Explorer code with the operating system is anticompetitive. The court said: “the commingling deters OEMs from pre-installing rival browsers.”

A Boeing official, in a videotaped deposition and in documents, testified in 1998 that the aircraft company had standardized on Netscape Communications Corp.’s browser but said the integration between Internet Explorer and the operating system couldn’t be disabled. Supporting two browsers would increase costs, a Boeing official said. The Boeing official who testified declined to comment.

Legal experts say the concerns raised by the court may ultimately be applied to media, instant messaging and other applications Microsoft is integrating with the Windows XP operating system, due in October. “It’s not beyond the pale that they might have to componentize XP to some extent,” said Donald Falk, an antitrust attorney at Mayer, Brown & Platt in Palo Alto, Calif.

For instance, if Microsoft is ultimately required to enable PC makers to remove some applications from the operating system or add others to it, end users may find it possible to purchase a Windows system more to their liking.

Mitch Blackburn, vice-president of operations at rental car firm ANC Rental Corp. in Fort Lauderdale, Fla., is one such end user.

Because of the system demands of the Windows operating system, ANC has “to buy a pretty large workstation with lots of memory, fast processors, lots of disk,” said Blackburn. If he could purchase a “light” version, “that would be really advantageous,” he said. ANC currently has more than 12,000 workstations.

But end users also said it would be difficult to begin switching to non-Microsoft products.

Amy Courter, vice-president of IT at marketing firm Valassis Communications Inc. in Livonia, Mich., said it’s unlikely the company would move from Internet Explorer to Netscape because the company hadn’t completed the investment, training and testing. But she still believes that a componentized operating system would be beneficial. Just “the thought of competition sometimes creates better products,” she said.

Even if PC makers gain flexibility in swapping out a Microsoft application with that of another vendor, they may “choose not to take it because of the support cost issue,” said Rob Enderle, an analyst at Cambridge, Mass.-based Giga Information Group Inc. “It will typically cost them more to support a nonintegrated offering than an integrated offering,” he said, noting that IT managers could therefore still be left with few options.

Microsoft, for its part, insisted the decision would not affect its product design.

It’s also possible that the appeals court decision could prompt lawsuits from rival vendors challenging Microsoft’s operating system design, said Hillard Sterling, an antitrust attorney at Gordon & Glickson LLC in Chicago. “It’s going to take a long legal battle to apply these restrictions to XP applications,” he said.