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Features - It's the Content Stupid: A Real life analysis of Microsoft and 21st century society, or why the DOJ doesn't get it. Part I

By Charles Kafoure, Published on June 14, 1998

Charles Kafoure is a technology consultant based in Indianapolis. He has been in the business of providing equipment, software and/or services for twenty five years.   He has managed the establishment of large, turnkey computer projects in Korea, China, Singapore, Japan, the U.S., other Asian and European countries, and in Australia.   He currently focuses on technology services for legal, real estate and other professional businesses.  He will soon publish an article entitled, "Litigation Management: Organize Using Project Management Methodology."

(Archived August 15, 1998)


Author's Note

This article began as a simple analysis of the DOJ action against Microsoft. After a couple of days, I realized two things: a) the DOJ case has no merit, and is not worth more than a page or two, and b) Microsoft’s role in the world of technology (that is to say "the world") is significant, and needs to be examined carefully, but in the right context. I am not a lawyer, but have determined that lawyers aren’t required just yet, as the issue is not yet properly framed from social and technological perspectives. It is difficult to ask the right questions and come to the right conclusions when the issues underlying those questions are ill-defined and no one really knows the correct basis for the conclusions.

"I got by with a little help from my friends..."

Notwithstanding the above paragraph, I wanted to address a few legal and legal history points, and chatted with a three lawyers along the way for background. Thanks to Robert Doyle, Arent, Fox, Kintner, Plotkin & Kahn, Washington, DC, and David Russell, Johnson, Smith, Pence, Densborn, Wright, & Heath, Indianapolis. Thanks also to a lawyer in private practice who does work for Microsoft, and who wishes to remain anonymous. They all offered some interesting insights. I "know" a lawyer named David Hirsch, Beckman & Hirsch, Burlington, IA (we participate on a couple of the same LISTSERVs), and his comments provided some valuable ideas. Thanks to all.

My technological preferences

This article was written on a Apple Macintosh 7100, an original PPC, with OS7.6.1, which I like much more than Windows95, using Microsoft Word, which I like best, on either the PC or Mac platform.  I always use Netscape Navigator, whether on my laptop PC, desktop PC, or desktop Mac. I do not like the Internet Explorer.

"and without any help from my subject.."

I got help from neither the DOJ nor Microsoft. I believe that the reasons for non-cooperation were much different for each, but I can't be certain of this, having had no substantive conversation with either.

Microsoft’s PR firm, Waggener-Edstrom, promised fast answers to my questions four weeks ago. Now, after four phone calls and three emails, I have nothing but "I am sorry. I will try to get answers today. I have been so-o-o-o busy." They got the best of both worlds. They can’t say that they refused to answer, but they didn’t, and they can refuse to answer, because they did. Confused? Me, too.

The DOJ, on the other hand, didn't return any of five phone calls to two different people (the first one was on vacation when I called the last two times.) I finally got to speak with the second one, who said (at 3:06pm) "I really wanted to get out of here at 3:00. Would you like to see the Press Release after the Court of Appeals’ decision, then call back on Monday?" Contents of the Press Release:   "We’re disappointed in the Court of Appeals’ decision in the consent decree case. We remain confident that the evidence and our legal arguments in our antitrust case filed on May 18, 1998, will demonstrate that Microsoft’s conduct has violated Federal antitrust laws."

Inspiring, isn’t it?

The order of Business

Pat I of this article will cover a bit of history of the world of computing, and address the DOJ case. In Part II, I will further detail what I have identified as the newest era of computing, The Public Era, discuss Microsoft’s role in it, and why we should be watchful of them.

Introduction

Computing in the 20th century has made an enduring impact on our society. In much the same manner that the evolution of the automobile changed the way we lived from the late 19th century forward, our lives will be forever altered by events surrounding the development of the computer, especially since the early 1980s when it became affordable, and began a journey from novelty to necessity, from scarcity to standard. Much has been discussed about Microsoft and its role in this development. Clearly, Microsoft has been the leader of the Personal Era by providing the Operating Systems (OS) for traditional Personal Computers (PC’s), but that era has ended. Microsoft’s power, however, will still be felt during the Public Era, but in a different way.

During the course of this article, we will examine the history of computing, briefly discuss and dismiss the current DOJ caper, then move onto the true challenges which Microsoft presents to the future of computing, framing the questions which so urgently beg to be answered.

 

Three Eras of Computing

The Central Era The Personal Era The Public Era

Since the invention of the computer more than fifty years ago, there have been a stream of incremental changes. Each year brings a smaller, more powerful, more practical computer. Each year, more people benefit from the computer. Each year, more people understand the computer and what it can do for them. In order to analyze the current situation, though, it is necessary to group this history into significant time blocks, each reflecting fundamental differences from the previous one. These differences can be defined by an examination of how information originates, where it is stored, how it is processed, and who processes it. The "American Heritage Dictionary" defines "era" as "a period of time characterized by particular circumstances, events, or personages", so we will use it here to describe those time blocks. There have been three distinct eras during the period since the computer was invented more than fifty years ago, and a careful examination of them will provide a basis for dismissing the DOJ action, and for discussing concerns about Microsoft in the future. This version of history is greatly abbreviated, and is only meant to provide a keystone for those two discussions.

The Central Era

This era was characterized by central control of data processing. During the early years of this era, the decisions, the authority, the systems, and the operations were all highly centralized, thus removed from the operating departments. The computer used at the time, the mainframe, was large and power hungry, requiring special environmental conditions, and used software that was anything but user friendly. Because of the specialized nature of the knowledge base, and of the environmental requirements, this era was marked by empire-building in the Data Processing department (DP). Later incarnations of centralized computing allowed distributed processing, but control of who, what, where, and how remained with the mainframe, and with the DP staff.

Mainframe

In the early part of the Central Era, data were collected from various operating departments ("locals", for this article), turned over to DP for processing, and reports were then generated, with all the work and responsibility at the DP end. As a result, most locals considered DP either a mystery or an annoyance, creating a sensitive organizational issue. There was a great knowledge gap in this era, with the DP people knowing computing, and the operating people knowing about the business. The two didn’t have much common ground. In reality, the decisions about what information to process and what reports to generate came from high levels in the organization, further feeding a system of confusion and frustration at the working level. The people who needed to use the processed data didn’t always agree with its form or substance, owing partly to the ignorance at the executive level of the true needs and importance of the working level, partly to the ignorance of the working level of the corporate goals for the processed information, and partly to the lack of empowerment of operating employees. Denying empowerment denies participation, a necessary component of the successful organization. The net effect of all of this was the realization that human and organizational factors needed improvement. Technological development needs a catalyst, and these human resource problems were just what was needed.

During most of this era, IBM controlled the marketplace. Whatever was done either complemented IBM or competed with them on their terms, using similar, or identical, technology.

Distributed

During the latter part of this era, IBM struggled with "distributed processing." In the early ‘70s, technology became available to communicate with mainframe systems from remote locations. 278x/378x technology allowed "remote batch" processing, which was really nothing more than "dumb" peripherals at remote locations to provide relief of transportation, thereby slightly improving productivity. This technology jarred the DP world into realizing that more was possible. Next came 327x which allowed remote data entry through CRTs. A major breakthrough, however, came with the 379x series, which promised true "distributed" processing. The 379x, unlike anything which came before it, had intelligence, and could not only communicate with the mainframe, but process on its own. Now, locals could not only provide data to a mainframe for processing, they were entitled to process on their own, if only to a limited extent. Owing to its hard-line stance on mainframes, however, IBM kept the 379x technology highly proprietary and connected tightly to its mainframe.

The transition to the next era was very difficult for IBM. They had presided over their industry for 15 years, with outright dominance for most of that time, and their attitude was "We are IBM. We set the rules, and one of our rules has always been that the mainframe is the center of the universe. We will not change, but will only promote PCs to the extent that they will not interfere with our control of this universe." Their response to the era change was nearly too late. IBM was one of the most admired companies in the ‘70s, but now faced a crisis because they didn’t anticipate change. In 1981, Microsoft became authorized to distribute MS-DOS to any hardware vendor. That fact can stand alone in providing the contrast between eras, and as a lesson in change management.

 

The Personal Era

Desktop Computing

Invigorated by the indications of the earlier era that the individual wanted part of the "action", a cottage industry, led by Steve Jobs, was founded in the late ‘70s to develop a computer for the desktop. Companies like Apple and Commodore entered this marketplace, knowing that it was time for the paradigm change. An era of the individual was dawning, and the PC was no more than a manifestation of that change. The individual would rule. The individual would be assisted in their role as ruler by using a computer empowering them to control more of their own information and workflow, whether at home or at work or at school. Once again, human and organizational factors drove a major technological change.

When we discuss technology at our family breakfast, or with business associates in a planning meeting, or with friends over a glass of wine, we think of a light slate-colored box with a large display looking like a TV, a typewriter-like keyboard, and a strange device called a "mouse" next to it. The box is powered by a device called a processor, and, for most of us, that processor is manufactured by a company called INTEL. The display illuminates when the computer is turned on, and most of us see one logo or another trademarked by a company called Microsoft. It is the dominant player in the marketplace for Operating Systems (OS) for INTEL PC’s, indeed once possessing a lawful monopoly. These systems were designed and built for local computing to run applications, software which is written to run specific tasks for the user. Companies like INTEL, MS, and manufacturers of peripheral equipment such as storage devices have made great technological strides during the past ten years to furnish us, the end user, with better and more powerful ways to perform computing on the local level. Processing speeds have increased by several fold, disks hold many times more data now than they did then, multimedia (the ability to play and record audio-video on the computer) has improved dramatically, and the amount, scope, and quality of application software has exploded. All of this has been accomplished with a staggering cost-performance improvement, fueled by Microsoft and INTEL.

Intra-organizational networking

During the late 80s, the concept of sharing data became popular, and companies began to implement Local Area Networks (LANs) within the organization. As an example, Novell popularized an incarnation of LAN called "client/server." Its showcase product, NetWare®, was an early leader in the chase, and provided many users within an organization with the ability to share information. Years prior, organizations like the International Standards Organization (ISO), the Institute for Electrical & Electronic Engineers (IEEE), and the Department of Defense (DoD) developed various standards for data communication and transfer, removing the high cost of development of proprietary communication standards and therefore allowing networking companies like Novell to enter the market, thus making LAN technology widely available, and spawning a important and innovative industry.

As the technology improved, the scope of this activity was expanded to making enterprise data available to its users in multiple locations. This model, called Wide Area Networking (WAN), merely mirrored the LAN over a larger geographic area. Most enterprises used common carriers to connect their sites, while just the largest few (like the DoD) which could afford a private network. What had begun as the ability to connect two computers with coaxial cable and transfer information from one to the other turned into an enterprise-wide computing model. However, the traditional PC remained the device of choice, primarily because most of the processing continued to be done locally, therefore requiring the application software that was written for the traditional PC.

Antitrust on the Personal Era

During the latter part of the Personal era, Microsoft came under the scrutiny of the Department of Justice for monopolistic practices. There were serious allegations, many justified, because, under the then-current model for computing, the market for personal computing was the same market for traditional PC’s, which was the market for Microsoft OS’s, clearly defining a market which Microsoft was monopolizing, and thus subject to antitrust laws.

Déjà Vu

In a situation with eerie similarity to IBM’s denial of the importance of the PC, Microsoft virtually ignored the Internet toward the end of the Personal Era. Its attitude seemed to be "We are Microsoft. The desktop needs us and our customers aren’t moving anywhere without us. We refuse to address the Internet unless it impacts our OS business." It watched for a while, then saw the "light", and rushed a product, the Internet Explorer, to the market.

The Public Era

To define the Internet in detail is well beyond the scope of this article, so we will proceed assuming that each reader will use their own definition, and hope that it is reasonably close to reality. Whatever the definition, the Internet has entirely changed the computing paradigm, primarily because the availability of information has expanded beyond the control of the enterprise, prompting the need for a different, wider-ranging set of standards. The Internet has broadened the scope of the network, allowing any device to connect so long as it has the capability to conform to certain open standards. There is no longer a need or guarantee that the end user appliance will be a traditional PC, which Microsoft controls. This has happened because there is no central computing authority to dictate how access is obtained, or what to process, or who the processor is or how to process. There are now standards which are set by organizations which recognize the universal nature of the network, and that universal access to that network is the key to success. The user OS has been de-emphasized, as increasing amounts of data, and logic to process the data, is now accessible through the public network, whether on public or private sites. One example of this technology is the browser. The connection and transport (TCP/IP) and processing of the data is done above the OS level, and is performed to the TCP/IP and Java standards, rather than to the proprietary standard of a given OS such as Windows. It has diminished the importance of the OS, thus allowing for the de-emphasis of the traditional PC, and promoting the rise of devices which more reflect the job that they are required to do.

This transformation is what has shaken the world of computing, and has changed the market place forever. It affects both the argument for dismissing the DOJ suit, and for addressing the real threat from Microsoft. We will euthanize the DOJ case against Microsoft first. It is in the way of useful argument.

The Dead DOJ (Netscape) Case

The market, as defined by DOJ, is incorrect

The monopoly is not durable

Internet access is a legitimate part of the OS

Antitrust laws protect competition not competitors

The DOJ, assisted by its whining but powerful partners, James Barksdale (C.E.O. of Netscape Communications) and Scott McNealy (C.E.O. of Sun Microsystems), are precluding any meaningful discussion of the current state of the technology world and Microsoft by its absurd prosecution. It is a comedy, and appears as if two 12-year-olds, Jimmy and Scotty, jealous of their more successful nemesis, Billy, went to their smarter but nerdish buddy, Joel, and said, "Get Billy", and then ran away to leave Joel their cruel works. Joel couldn’t figure out any legal way to get Billy, so he made something up. The problem with this scenario is that Billy really does have the potential to do something wrong, but his enemies have selfishly and unwittingly assisted him in creating a diversion, and are helping him to avoid talking about the real problem. Billy is laughing all the way to the bank.

The years 1995-1997 marked the end of the Personal Era and the beginning of the Public Network Era. It is for that reason that Microsoft’s dominance of the desktop OS for PC’s is irrelevant to our society from this point forward. The desktop (user interface, to be precise) now has the primary responsibility of accessing to the public network for one reason or another (research, commerce, information, news, company business), and so, as such, the importance of its OS is greatly diminished because the information to be processed and the logic to process that information is outside the desktop, made accessible and usable only by common standards such as those with strange-sounding names like TCP/IP, HTML, and Java. Each of these standards is important because none of them require the Windows OS to operate.

It is futile and wasteful to have lawyers trying to fit a law passed in 1890 to a situation which only became ripe in the middle 1990s. The DOJ investigation and lawsuit, instigated and sustained on behalf of its client Netscape, is without any merit whatsoever, and should be dismissed.

Since the DOJ remains stuck in the wrong era, and thus is using the wrong market model, it necessarily doesn't have a case. We will bury the DOJ case before undertaking the real business at hand, which is to define why we should be watching Microsoft.

The market, as defined by DOJ, is incorrect

With the advent of the Public area, the paradigm of computing has changed dramatically during the past thirty-six months, and the traditional PC, as described herein, will no longer enjoy a predominant (at least in monopolistic terms) position on the user end of the computing marketplace. With emphasis on Internet access, the appliance market will become crowded with other devices along side the traditional PC, only some of which have any MS software at all. The computing marketplace has been freed from the constraints imposed by Microsoft’s market dominance at the user end. The following is a partial list of competitive devices and technologies, all poised to join the user end of the computing model of the early 21st century:

The monopoly is not durable

Once the computing model, thus the market, are redefined correctly, Microsoft’s "monopoly" is clearly ephemeral, and therefore not subject to any current antitrust statute.

Internet access is a legitimate part of the OS

Internet/public network access is an integral part of any reasonable definition of computing for 1998 and beyond, and, therefore, should be part of any OS for any appliance. MS has the right and responsibility to include that capability in its operating system. Any actions to the contrary merely prove the premise that the DOJ is representing Netscape and a few other companies. Apparently, the Circuit Court of Appeals agrees with that statement, as reflected in its opinion of June 23, 1998 which lifted the injunction preventing Microsoft from including IE in its OS, and returning a decision to the lower court to revoke or reexamine the need for a Special Master.

Antitrust laws protect competition not competitors

This heading should actually have come first, not last. The DOJ’s case is clearly meant to protect a single competitor, Netscape. Now that the Court of Appeals has quashed the DOJ argument about IE, this case is over. The public filings needed to be withdrawn to bring closure to the situation, and make room for the new debate.