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| Architosh News Reports | |
| Architosh Staff ([email protected]) |
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Opinion: Will Antitrust Law really impede 'software innovation'?
With Judge Jackson firmly ruling against Microsoft in the antitrust case with US Department of Justice, some are speculating that this decision may actually hurt software innovation and competition in the industry. Will it? The Theory: Microsoft equals software innovation For starters, in order to have a reasonable discussion on this theory the semantics of the word "innovation" should be reviewed. Simply, Webster defines the word innovate as simply to "introduce new methods, devices, etc." Moreover, 'innovation' means not only something "newly introduced" but refers to "new method (s)", [of] "practice", "device", etc. The word innovate or innovation is characteristically broad in meaning since 'method' and 'practice' are characteristically broad.
Throughout the trial Microsoft CEO Bill Gates has claimed over and over again that Microsoft should have the right to freely innovate in the software business. And they should. However, the real question here is over whether certain types of "practices" of innovation should be considered both fair game and legal. Strategically Microsoft has chosen to not break out the word "practice" from "innovation", and for good reason. Some of Microsoft's "practices" are far from fair game -- and, according to Judge Jackson, definitely illegal. By hiding behind the word "innovation" -- a word that many associate with invention and that means new "methods" and "devices" -- Microsoft is trying to engender sympathy in a public that knows the difference and value between true innovation and bogus innovation. What is true innovation? Correct me if I'm wrong but what the public might conjure up in their minds when they sympathize with Gates over the right to innovate is useful software features and new hardware and software paradigms. A Web browser that is able to save a page in a format more suitable for desktop printing or be able to search multiple search engines simultaneously is a tangible software innovation. Having a software/hardware innovation that allows a new type of mouse to maneuver around Web pages in new and convenient ways is a tangible innovation. Neither of these two examples would be merited as insignificant "innovations" by the typical Windows user. They represent real progress and allow people to do new things or old things better.
Gates would have you believe that at the heart of his pleas with the government is the right to innovate with software at this level -- with innovations you and I simply know and understand as new features in software that are inventive, creative and useful. However, the reality is Gates doesn't need to go to war over the right to do any of these things. They simply exist as 'creative terrain' for the ambitious, aggressive, and imperialistic software engineer who aspires to be number one. Behind the 'innovation image' that Gates is portraying is a different type of innovation, one that centers on practice or conduct. This is the type of innovation that Gates is truly talented at. Some might say that this is just business strategy and should be discounted as a form of innovation. Yet, as reviewed above, we must come to except that the word innovation has broad meaning in this context. Heck, one might say that Gates should be allowed to innovate with business practices. And he should. However, the real concern here is whether certain of these 'innovative business practices' are fair game or legal. Certainly tying Internet Explorer to the Windows operating system constitutes innovation at the level of Webster's broad definition, for it DOES introduce "new methods" or something "newly introduced". But the question here is whether it is of the same form of the innovation examples given above?
Simply put, this is a very tough decision. For doesn't it depend on point-of-view? From the consumers' vantage point it might not seem different from say, an added feature to a browser that allows one to search multiple search engines at the same time. Both add convenience and pleasure. Both are tangible software moves by a company to enhance its product. And both may decrease the use of a rival product, by accident or intentionally. But they ARE of different form. While bringing search engine capabilities into a browser may cause less dependence on outside search engines, and eventually put them out of business, these search engines are not without recourse. For do they not collect the data that an embedded searching feature would search to begin with? And can they not create software to place within Windows to expedite searching from within different programs, including the OS itself?
How was Netscape suppose to compete with Microsoft in the browser wars? Unlike the example above, Microsoft did not introduce a technology that was dependent on Netscape's existence. Quite the opposite existed. Netscape's browser was dependent on Microsoft's operating system. Specifically, it was dependent on it being open for acceptance of another browser program. This was not the case with Windows 98. Specifically, Internet Explorer became, in Microsoft's words, "integrated with the operating system". This is foreclosure, as the courts define it in this case. What defines this form of innovation, whether it be a new device, software or method of doing software business, is whether it forecloses the competition the such a way that they have no means of recourse and recovery. Requisite in this foreclosure was Netscape's inability to affect the destiny and control of the Windows operating system because it was controlled by its chief rival -- Microsoft. Clearly the concept of 'foreclosure' is an important aspect of making a distinction between the types of practices (innovations) and methods that warrant government scrutiny and those that don't because they constitute fair and competitive play. If such foreclosure happens due to technological progress that is one thing; if it happens because one rival controls the destiny over an element over which both rivals depend, then that's an entirely different thing. Microsoft controls the destiny of Windows, just as Apple controls the destiny of the Mac OS, or SGI its brand of Unix.
If Microsoft and Gates think that the value of an integrated browser is of more value than the foreclosure of a rival software maker then their actions are justified to them. However, shouldn't that decision be made up by the consumer for which Microsoft is reportedly benefiting? Microsoft has acted on the consumers' behalf, without giving them a choice, without allowing them to choose Netscape's browser as the browser they wish to see integrated into Windows. Foreclosure Is Not Innovation Those that defend Microsoft and fear that the government may be taking over software development are not distinguishing this principle from their arguments. For example, Ron Cass, dean of Boston University's Law School remarked for a TechWeb story that depending on the government's actions, the case could "simply make business harder for Microsoft and easier for competitors."
" 'Or it could be solved in a way that frustrates the further development of an operating system whose continuous improvement has been the engine of growth for a significant portion of the computer market,' " The key term here is "engine of growth". What defenders of MS fail to do is to discuss and differentiate growth as it relates to the industry versus Microsoft. They are not the same. Microsoft provides the platform from which most software growth takes place, but this has little to do with the growth of the entire computer industry, nor does Microsoft provide the only OS for IBM compatibles. These software developers are not dependent on MS's engine. If Windows went away, there are other OS's out there -- many of which are better -- that would gladly take its place in the industry. The real driver or engine for innovation is competition at the OS level. What would happen if Microsoft failed to catch the Macintosh OS or fell further behind? What would happen if the BeOS leap frogged Windows and everything else (some may say it already has)? What Microsoft refers to as innovation is foreclosure. The message is, "if we can eliminate more pesky competitors we can offer you more software and hence more innovation". According to the same TechWeb article, Richard Schmalensee, expert witness for Microsoft and dean of the business school at MIT, said that if the DOJ wins, innovation will suffer. Further stating:
" 'In the short run, this case, and perhaps a future remedy, will make Microsoft less aggressive,' he said. 'That may, in the short run, encourage the innovation of others. Less competition in product development, less aggressive innovation leaves room for others. Whether that's a net increase for innovation for the industry, for the economy, is doubtful.' " What is really doubtful is whether anybody can provide any evidence that innovation in the industry will suffer because the government developments new conclusions of law that set ground rules up for business relationships. And if the new rules regarding to product tie-ins foreclose on competitors without recourse and recovery and hence eliminate a competitor's chance at redeeming its product in the market. Schmalensee questions whether a "net increase" in innovation will occur if competitors are given a chance to compete on a level playing field. That's ridiculous! Microsoft feeds off the same talent pool as everybody else. To say that leaving room for other software companies feeding off the same talent pool to produce innovation in the industry is doubtful is hogwash.
Quite simply this notion that innovation will suffer if the DOJ wins perpetuates a myth that Microsoft IS innovation. While the public and computer consumer may not know or even care about the truth, the real reputation of Microsoft in the industry, by those that know, is that Microsoft's reputation as an innovator is doubtful and suspect. This is not to say that Microsoft is a talentless hack -- they have produced some neat stuff over the years -- but to equate them to innovation in the industry is completely unjustified and unsubstantiated. Smaller Firms Innovate Better Know doubt Microsoft has brought much to the table in the last two decades. But they have often brought it late, copying and besting other's original ideas. Microsoft, of course, is not saying they are original -- that, even the public knows, is untrue. If Microsoft was on trial over this fact the case would have been closed long ago. It simply is not true. For much of the 80''s and early 90's Microsoft was playing catch-up to Apple's Macintosh. It was the advancement of the GUI, graphical user interface, that brought about the whole evolution of the industry. Without it computers would have remained arcane as DOS and UNIX really are. On this front, it must be recognized that Microsoft has hardly innovated at all. Trepidatious and cunning, Microsoft has chosen to emulate only those elements that provide unanimous value -- such as the Windows Start menu, which is modeled after the Macintosh's Apple menu of the 80's. Microsoft has also provided scant innovation in the desktop publishing revolution, a revolution that largely affected the typical collage student and brought computing into their lives. Font technologies and page layout programs like Adobe PageMaker or QuarkXPress were and still are the mainstay of college reports, not to mention the corporate world. The innovation largely responsible for bringing computers to the masses in the 80's and early 90's came not from within Microsoft's walls but from without. Microsoft was also late to the Internet revolution, finding itself quite behind rival browser maker Netscape. What looked like the browser war to consumers must have looked initially like catch-up to Microsoft software developers working on Internet Explorer. And it wasn't just browsers, but email as well. When it comes to the details of the personal computer revolution, Microsoft actually looks quite pathetic relative to its size and resources. So many smaller firms with less of everything innovate far better than Microsoft. And when it comes to inventing new paradigms of computing, Microsoft is nowhere to be seen. Xerox, Apple, Adobe, Palm, Canon, HP, IBM, SGI, Sun Micro, and a host of others all deserve more credit than Microsoft when it comes to the type of innovation that equates to the big steps in the digital revolution. And isn't it the big steps that matter?
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