It's safe to say Bill Gates is one of the smartest businessmen in the world, so you have to wonder what he's thinking when he thumbs his nose at the Justice Dept. On Dec. 15, Microsoft Corp. appealed an injunction handed down days before by a federal judge that temporarily forbids the software maker from requiring PC makers to bundle its Internet Explorer Web browser when they ship computers with Windows. Meanwhile, a court-appointed "special master" is reviewing whether the bundling violates a 1995 consent decree that bans tying the sale of one product to another.
Microsoft argues that Web browsing is an integrated feature of an operating system--not unlike the code within Windows for finding files on a hard drive--and that the government has overstepped the narrow bounds of the 1995 decree. Further, it contends the government is meddling in Microsoft's "right to innovate."
BOLD. Microsoft makes some good points. It's hard to argue against the software giant's claim that an operating system with a built-in browser is an improvement. But Microsoft is undermining its position by its insolent behavior. It is making it clear that it will do anything it can to get around Justice.
In a move that flaunted the injunction, Microsoft dreamed up this "choice": PC makers can delete Internet Explorer files from Windows 95--not a very viable option since Microsoft warns that doing so could render the operating system useless. Or they can ship their PCs with a version of the operating system that is more than two years old and lacks the browser as well as key enhancements added to Windows since then. Or stick with the latest version of Windows with Internet Explorer, for the same price. It's not hard to figure out which option PC makers will choose. The Justice Dept. was not amused by this maneuver. On Dec. 17, it filed a contempt motion.
Perhaps now, Microsoft will rethink its strategy. Not only has its intransigence infuriated Justice, it has drawn the ire of competitors and customers and inspired separate probes into its business practices in Texas and elsewhere. If Microsoft doesn't back off--and gets embroiled in lengthy litigation--it won't be just the software maker and its shareholders who lose. Justice insists that Microsoft's upcoming Windows 98, which includes Internet Explorer, is covered by the court order.
That could delay Windows 98--giving millions of consumers and businesses a reason not to buy PCs, which could guarantee a PC slowdown late next year. In filing for an expedited appeal, Microsoft cited industry concern over Win98, which is expected to spur sales of PCs and related software by mid-1998. "Significant segments of the U.S. economy may be affected by doubts surrounding the release of Windows 98," the company asserted.
There is a way to avoid that risk. Microsoft can stop fighting the Justice Dept., unbundle its products, and let PC makers and consumers choose. A company with Microsoft's skills should be able to produce two reasonably up-to-date versions of Windows--one with Internet Explorer, one without. Most PC makers already bundle Internet Explorer. And, given a choice, they will likely choose the integrated product. All the government is asking, for now, is that PC makers and consumers get a choice. So, Bill, let the markets decide, and save yourself a lot of trouble.