September 20, 2007 4:00 AM PDT
Perspective: Has Google actually read U.S. v. Microsoft?See all Perspectives
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This theory has some problems. For example, it would transfer any monopoly power to the middleware, and why should either apps or operating system developers or the government want that? But it was close enough for government work, and became a key part of the consent order. Microsoft is under strictures to ensure that middleware works with Vista.
The goal of the decree remains: to allow the proliferation of middleware, which will in turn provide a mechanism that will allow the development of competitive operating systems for Intel-based PCs, if anyone is inclined to create such systems.
Middleware has indeed flourished during the past six years, whether as a result of the order, the inherent dynamism of the tech industry, Microsoft's own need to nurture developers, or all three. Each new PC contains an average of 35 pre-installed non-Microsoft programs, and in four out of five middleware categories non-Microsoft products outstrip those from Microsoft.
This eruption of middleware has not produced any spate of new operating systems, and there is serious doubt that the theory of the double bank shot was a sound one.
But, as noted, it was never a goal of the consent order to reduce Microsoft's market share. The goal was to allow the market to work freely, and that has been achieved.
Even if one takes a broader view that the point was to create checks on Microsoft, that is certainly occurring. The iPod has given Apple new pizzazz. Judging by the commentary about Linux coming from the free software community, Microsoft is already dead. Another new big thing is "software as a service," which could reduce a desktop operating system to a few lines of code to connect peripherals. The price-earnings ratio for Microsoft stock is less than 20, so Mr. Stock Market doesn't see the company as possessing much pricing power.
Perhaps the most important development is Google itself. In 2001, Microsoft argued that the existence of middleware companies with links to the applications developers contradicted the conclusion that it had monopoly power. The Court of Appeals refuted this by noting that middleware companies that provided an alternative to Microsoft's own middleware offerings did not actually exist, and that one of Microsoft's sins lay in "keeping rival browsers from gaining the critical mass of users necessary to attract developer attention away from Windows as the platform for software development."
Now, not only has middleware grown, but Google's desktop search program, whether or not technically "middleware," provides a platform to which applications could attach, and, as Google says proudly in its intervention brief, it already has critical mass: "Hundreds of millions of...copies have been distributed to users," and "already, third-party developers have written thousands of applications using APIs in Google Desktop."
In reality, the very existence of Google renders most of the Microsoft consent order unnecessary. If Google were interested in promoting a competitive desktop operating system, it could create one or it could throw its weight behind Linux. In either case, its weight includes power over Internet search. Mr. Market agrees on the relative power of the two companies, because it gives Google a price-earnings ratio of roughly 46, more than double that of Microsoft.
So what is really going on, if Google is not interested in operating systems (much better money in search)? The real game is to blur all boundaries between desktop search and Internet search, so as to use Google's existing market power to maximum leverage. If this twists the Microsoft consent order away from its proper focus, and turns it into a device for suppressing competition in search by preventing Microsoft from developing a superior desktop product, which it then expands into search, that is a bonus.
An ironist might call this monopoly maintenance by Google. Perhaps antitrust fans can anticipate a U.S. v. Google, in which Exhibit 1 will be the intervention brief.
James V. DeLong is special counsel for Kamlet Shepherd & Reichert. He is also vice president and senior analyst for the Convergence Law Institute. The opinions expressed here are the author's alone.
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