The initial sharp drop in the value of Microsoft shares yesterday will have given an unpleasant jolt to the company's shareholders and to its employees - 1,500 of whom are in Ireland. However the stock later recovered most of its losses; investors had been expecting a negative judgement and many believe that whatever way the case goes, the shares still represent a good investment. It remains a goliath of a company.
Microsoft's battle with the Attorney-General of the United States has been running for nearly 13 months. Its origins lie in Microsoft's phenomenally successful Windows software which now drives the basic functions of more than 90 per cent of the world's personal computers. Another computer company, Netscape, pioneered software with a different function, that of helping computer users browse the Internet. Microsoft is charged with merging its own Internet browser with its Windows software in a deliberate attempt to drive Netscape out of business and deprive consumers of a real choice. In addition, it is alleged that Microsoft used its enormous clout to stop computer manufacturers and Internet companies opting for Netscape's browser.
The case continues but last Friday Judge Thomas Penfield Jackson delivered "findings of fact". Chief among the facts he established is that consumers were damaged by Microsoft's actions, in particular by the its linking of the Windows system with the browser. This is of great import because United States antitrust legislation exists, in the main, to protect consumers rather than companies. Tough competition is acceptable, unfair competition is not.
On Friday, Mr Bill Gates, the chairman and chief executive of Microsoft, made some conciliatory noises, stressing his desire to resolve the issue. His views would seem to have hardened over the weekend however because he now appears resolved to see the case through, all the way to the Appeals Court and the Supreme Court if necessary. The lawyers will clean up. Mr Gates ought to catch himself on. It is one thing to insist, as he does, that Microsoft must remain at liberty to add new features to its products. It is another matter to want to control every gateway into the Internet; indeed some argued yesterday that the availability of new products through the Internet is already creating powerful new competition for Microsoft. Perhaps Mr Gates takes his inspiration from IBM which fought a 13-year anti-trust action against the US government and won. But IBM went into the action as the industry leader and came out significantly weaker. And now it's a long way behind the market leader. Settle, Mr Gates.