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What will happen if Microsoft finally loses?
After the first round, thoughts turn to likely remedies
MS on Trial Yesterday's court victory for the DoJ may just have been the first battle in a war that could rage for several more years, but already the question of what's to be done about Microsoft is being raised with more vigour. If Microsoft ultimately loses it will inevitably find itself on the wrong end of a queue of private antitrust cases, which means it would do well to keep its near $20 billion of cash handy - but there are the remedies from the main event for the company to worry about too. Judge Jackson has already concluded that Microsoft competes unfairly, is a monopoly, and that the way it conducts its business is unacceptable. So if this verdict stands, these areas will need to be addressed. This is the territory the DoJ itself wants dealt with; it will not be seeking a fine or a damages award - that will be up to the companies and groups who count themselves as victims. Breakup into a collection of "Baby Bills" is popular with many of Microsoft's critics, but it probably wouldn't be the most effective solution. There is understandably a desire to hurt Microsoft because of its previous behaviour, but splitting the company into multiple competing units or into several different business units would be extremely difficult. Part of the problem is of course that Microsoft's various lines of business are far too deeply embedded in one another, but the likelihood is that taking an axe to this would smash the company, rather than just fixing the problems. There are of course plenty of people out there who'd view smashing Microsoft as the perfect solution, but aside from that being a greater punishment than is warranted, any measure that looked likely to cause the destruction of MS would be a political hot potato, and would play into the hands of the company's defenders. If the remedies can be portrayed as too brutal and unjust, a backlash could still save the company. Other, less dramatic remedies would be more sustainable, and more effective. Microsoft could be forced to operate a publicly-disclosed OEM and reseller price list for its software, with a simple discount for volume purchases. No more deals in smoke-filled rooms. No more market development agreements, no more leverage by Microsoft to get its customers to conform to draconian requirements in its contracts. Any other onerous licence restrictions could also be declared void, so that Microsoft has a standard contract approved by the court (perhaps supervised by a special master). Judge Jackson seems to have entirely backed the DoJ and its expert witness Professor Felten when it comes to the tying together of IE and Windows, so we can perhaps expect a remedy that undoes the welding of IE to Windows 98. Microsoft would be required to provide a removal program to get rid of IE from Windows, and to demote it from its status of preferred browser. Where Microsoft has added additional code to IE to get it to function closely with Windows, it should be obliged to provide any missing software - free of course. One remedy favoured by Sun's Scott McNealy has some possible merit. Microsoft's growth is fuelled by its ability to hire bodies and buy into markets, so an appropriate punitive measure would be to stop all mergers or acquisitions for,say, 15 years, or whatever is deemed the period of time during which Microsoft has acted anticompetitively. This could be accompanied by some compulsory divestment, which would go some way towards the Baby Bills concept, but could be more easily applied to units which could be conceivably free-standing. Source code is another issue that could be addressed. As Microsoft owns, according to Jackson, in excess of 90 per cent of the market, Windows code could be declared to be an essential facility, a concept well-known in antitrust law. Microsoft would retain its intellectual property rights, but a new industry would be created for specialist programmers who could produce drivers and locate bugs. This would inevitably require independent oversight, but if properly implemented it would make it impossible for Microsoft to use it own knowledge of the code to disadvantage competition, and it would make it impossible to break rival products via code changes. That wouldn't be quite as drastic as making Windows open source, of course, but it would strike at the heart of so many of Microsoft's business practices that it would quite possibly be the most drastic measure of the lot. ® Complete Register Trial coverage