The Microsoft Factor

As the government's antitrust case against Microsoft Corp. proceeds in Washington, the Internet may already be undermining the company's dominance. A strong stock market is providing the means to finance a series of deals that is changing the structure of the Net, the latest involving America Online, Netscape Communications, and Sun Microsystems.

Just a short time ago, the Net appeared to be locking up. Everywhere on the Net, Microsoft appeared to be leveraging its 90% share of the operating-system market into controlling other businesses. No longer. In recent months, Compaq and Dell have decided to take control of their own "first boot" screens and now channel consumers to their portal partners, such as Excite. Computer makers are designing PCs with specific buttons that channel consumers directly into their partners' Web sites. Net service providers, for their part, feel freer to offer both Netscape and Explorer browsers and a variety of content.

In the space of a year or so, the Net landscape has become more open, more dynamic, and more competitive. The AOL-Netscape Communications-Sun Microsystems deal highlights the change. The combo will give Microsoft and others strong competition in the booming field of electronic commerce, expected to reach $3.5 trillion by 2002, as well as in new media. The competitive prospects for both Netscape's browser and Sun's Java software programming language are much improved.

Something has changed in the high-tech zeitgeist. Certainly, new technology and expanding markets on the Net are part of the explanation. But the entire competitive environment in high technology may also be improving thanks to the Microsoft case, emboldening rivals to compete and innovate without fear of retribution. Too many PC makers and Internet service providers have broken free to wheel and deal and innovate since Justice launched the case to believe it is simply coincidence. Silicon Valley mavens, forced to air their grievances against Microsoft after years of private complaint, now appear emboldened to act.

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