|
Are You XPerienced?
John
Hogan
johnghogan@hotmail.com
This is a
Commentary published on 7 November
2001.
Citation:
Hogan J, 'Are You XPerienced?',
Commentary, 2001 (3) The Journal of
Information, Law and Technology (JILT)
<http://elj.warwick.ac.uk/jilt/01-3/hogan.html>. New citation as at 1/1/04:
<http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/2001_3/hogan/>.
1.
Introduction
Windows XP, the latest version of
Microsoft's ubiquitous operating system, was formally launched on
October 25[ 1 ]. By
all accounts, Windows XP is an excellent product. It has been
described as 'the best Windows yet', 'stable and reliable...simpler
to use and compatible with more software and hardware' than earlier
versions of Windows[ 2 ]. Yet
even before its official launch, XP had proved massively
controversial:
'[Microsoft] has also turned
Windows XP into a sort of Trojan Horse. It has built in a bunch of
features including instant messaging, online photo-printing, and a
so-called passport to the Web, that appear to be blatant efforts to
lure consumers into using a set of new Web-based services Microsoft
is launching, while ignoring alternative services that may be
better. The goal seems to be to trap users in a sort of Microsoft
company store. It as if you finally had a chance to buy a sleek,
reliable new car after owning a series of lemons. But then you
found the new car was rigged so the manufacturer could track in
which garage you parked the car, blare its ads at will through the
radio, and steer you towards toll roads it owned'[ 3 ].
This commentary analyses Windows XP
and its part within Microsoft's broader '.Net' initiative. Some
discussion of the ongoing antitrust case is inevitable, but the
primary aim here is to explain Microsoft's plan for moving
computing to the Internet, and to put it in context[ 4 ]. While the arguments
advanced by Microsoft's critics are not without merit, it should
also be recognised that the company is currently creating and
presenting a vision of the future of computing. Bill Gates is
gambling the company on the success of .Net.
2.
Windows XP
Windows XP integrates instant
messaging, streaming media and digital photography capabilities
into the operating system (OS). To the extent that computer
manufacturers and consumers are reluctant to install additional,
competing applications, Microsoft's practice of embedding its
applications in the operating system presents a clear threat to
firms operating in the application markets downstream.
In July, Senator Charles Schumer
(New York) asked the US Department of Justice to include XP in
settlement negotiations, arguing that it was 'hard wired to prefer
Microsoft applications' over those of Eastman Kodak, a firm based
in New York State. Kodak accused Microsoft of designing XP so as to
steer consumers towards Microsoft's imaging applications and to its
preferred online photo-printers[ 5 ].The Senator argued for 'open access for competitors
to offer their software application products on an equal basis with
Microsoft applications'. Kodak's concerns have since been addressed
- its software now appears on XP, and the companies are working on
an online photo-printing deal - but the complaint brought unwanted
political pressure on the development and launch of XP. The Senate
Judiciary Committee has since decided to hold hearings on Internet
competition, and these will include an examination of whether
Windows XP shuts competitors out of markets.
Senator Schumer had also argued
that the integration of instant messaging and streaming media
capabilities would unfairly hurt media giant AOL Time Warner, which
is also based in New York[ 6 ].
Interestingly, Kodak is partnered with AOL. At the end of July, the
two companies launched a new version of their 'You've Got Pictures'
service for viewing, sharing and storing photos online: Kodak's
attack on Windows XP coincided with its AOL
announcement.
3.
Microsoft .Net
Far more significant than any
single feature of Windows XP is the broader technology it
introduces - '.Net MyServices', formerly known as HailStorm. .Net
MyServices will organize a variety of personal information, from
online calendars and contact lists to credit card details,
facilitating online transactions such as banking and shopping.
These services will be accessible from any digital device,
anywhere.
'The pitch goes thus: a user's
personal information and other data are now scattered across the
technological landscape - among numerous devices, different pieces
of software, and countless websites. If people move, they need to
update their addresses separately in many electronic places. [.Net
MyServices] is supposed to make all of this far simpler. The user's
information will be stored in huge data centres run by Microsoft
and reached via the Internet when needed...
Microsoft's idea is that [.Net]
will allow websites and groups of people to co-operate far more
easily than is possible today. Imagine that you want to go on a
vacation trip with your friends. A travel site could take that
information, plus data from MyProfile, to put together a tailored
package for flights, hotel and entertainment. And it could arrange
for payment through MyWallet. Later, if the plane is late,
MyNotifications would send out an alert to a mobile phone specified
in MyDevices'[ 7 ].
Windows XP will also feature an
integrated browser called MSN Explorer. This will sit on the
desktop with the latest version of Microsoft's standard browser,
IE6. Importantly, MSN Explorer is tightly tied to Microsoft's
Internet properties: links with labels such as 'Money', 'Shopping'
and 'Music' lead to Microsoft-owned or Microsoft-partnered sites.
MSN Explorer seems set to be the user interface for .Net My
Services: links lead to offerings from .Net MyServices such as
'MyCalendar', 'MyStocks' and 'MyPhotos'. Windows Messenger may
offer an additional user interface[ 8 ]. It will support '.Net Alerts', instant messaging
subscriptions that can track dynamically changing online
information such as share prices and auctions. .Net Alerts will
allow companies such as McAfee to send out virus warnings to its
customers.
Central to .Net MyServices is
Passport, an online identification and authentication utility. It
allows people to sign in to multiple sites with the same password,
and to store personal information such as credit card numbers for
online purchases at partnered stores. Approximately 160 million
people already have some kind of electronic ID from Microsoft,
having being assigned one when they signed up for Microsoft
services such as Hotmail. Microsoft claims that more than 200
companies have signed on to the Passport 'e-wallet' service, as
well as all of Microsoft's MSN properties and travel site Expedia,
and that Passport facilitates 2 billion authentications a month.
Somewhat predictably, XP users will not be able to use features
such as Windows Messenger without signing up with
Passport.
In September, Microsoft announced
plans to open up its Passport service. It will allow third parties
to register Passport members and will seek to establish
relationships with independent networks, so that the standards from
one service will be accepted within the Passport network and vice
versa - much like the global network of ATM machines. Ideally, this
will allow virtually everyone to maintain a single identity
anywhere on the Internet.
.Net MyServices is the first
offering under '.Net', Microsoft's broader strategy for moving
computing from desktops and networks to the Internet[ 9 ]. So, in addition to the
free and subscription-based Web services available to consumers,
Microsoft will develop a range of business-oriented services,
selling software tools that will serve as a platform on which
businesses can build Web services[ 10 ]. Effectively, .Net is being marketed as a set of
'platform assets' that drive business for developers and Web
sites[ 11 ].
Microsoft's plan is that .Net will
be the operating system for the Internet, or a platform on top of
which web services can be built, just as Windows is a platform for
PC applications. Rivals such as AOL Time Warner and Yahoo will
offer similar services; importantly, they have equally large
customer bases. Indeed, AOL is the only firm with an existing
subscription-based paying relationship with its installed base. It
is working on a set of Web services, code-named Magic Carpet, which
build on its 'Screen Name' service that lets users sign on to
multiple websites. Like PC operating systems, the platform for Web
services will be subject to network effects:
'The more users who sign up for,
and the more services that are built on top of, a directory [such
as Passport], the more attractive that directory becomes for extra
users and services providers. Microsoft has certainly made sure
that [.Net] can benefit from this happy circularity. Although the
standards for accessing the services are open, their inner workings
are proprietary. It will be all but impossible for .Net users to
switch to another service and take their data with them. Details of
AOL's plans are not yet known, but it is unlikely that it will
offer a completely open solution'[ 12 ].
4.
Microsoft's Antitrust Headaches
On June 28, the US Court of Appeals
unanimously overturned Judge Jackson's order to break up
Microsoft[ 13 ]. It
sent the case back to the District Court for hearings on remedies
and for re-examination of whether Microsoft illegally tied Internet
Explorer (IE) to its Windows operating system (OS). In an effort to
streamline the case, the Department of Justice (DOJ) has since
announced that it will not seek a break-up order or a rehearing of
the tying claim. Instead, the DOJ will focus on the appellate
court's affirmation of Jackson J's finding that Microsoft employed
anticompetitive means to maintain its OS monopoly[ 14 ].
4.1 Desktop Real Estate
The appellate court found that by
not including IE in the 'Add/Remove Programs' utility, Microsoft
deterred PC manufacturers (OEMs) from pre-installing a rival
browser, thereby insulating its OS monopoly from the 'middleware
threat' posed by the combination of Netscape's browser and the Java
programming language. In response, Microsoft announced on July 11
that it would relax its OEM licensing agreements, allowing them to
remove some Microsoft icons from the Windows desktop. The exact
scope of this policy shift is not clear, but it seems to be limited
to icons for Microsoft's browsers: IE and MSN Explorer. That is,
any relaxation of the licensing arrangements is narrowly tailored
to the specific violation of excluding IE from the Add/Remove
utility. Microsoft will require OEMs to include a desktop icon and
a 'Start Menu' link for its Internet-access service,
MSN.
It is unlikely that this about-turn
is sufficient to remedy the underlying antitrust issue. Microsoft
could be required to alter future versions of its OS to allow OEMs
to replace integrated applications such as Windows Messenger or
Windows Media Player with competitors' offerings, instead of simply
piling more icons onto the desktop[ 15 ]. Despite this, the relaxation of OEM licensing
agreements will certainly stimulate competition in the nascent Web
services market. Since the July 11 announcement, AOL has been
negotiating icon deals with at least nine OEMS, and it has
confirmed a deal with Compaq whereby AOL will be the exclusive
Internet-access service offered during the Windows XP start-up
sequence. This goes some way to explaining Microsoft's desire to
ensure a degree of prominence for its MSN Internet service. And, on
October 23, Yahoo launched 'Yahoo Essentials', a package of Web
services that will piggyback off Microsoft's OS and browser. Yahoo
Essentials will offer instant messaging, e-mail, photo-facilities
and document storage. It will also set Yahoo as the browser default
home page and search engine. More importantly, many of the services
will be set as default services on the Windows XP Start menu.
Compaq will pre-install the package on its new Presario desktops
and laptops[ 16 ].
4.2 'Commingling'
In the detail of the ruling on
anticompetitive monopoly maintenance, there is a particular danger
for Windows XP. The Court of Appeals found that, insofar as it
deterred OEMs from pre-installing rival browser, the commingling of
operating system and browser code (which meant that IE-specific
code was an irremovable part of Windows) was
anti-competitive.
'As a general rule, courts are
properly very sceptical about claims that competition has been
harmed by a dominant firm's product design changes. In a
competitive market, firms routinely innovate in the hope of
appealing to their consumers, sometimes in the process making their
products incompatible with those of rivals; the imposition of a
liability when a monopolist does the same thing will inevitably
deter a certain amount of innovation. This is all the more true in
a market, such as this one, in which the product itself is rapidly
changing. Judicial deference to product innovation, however, does
not mean that a monopolist's product design decisions are per
se lawful'[ 17 ].
Microsoft unsuccessfully challenged
as a factual matter the finding that it commingled browsing and
non-browsing code. In the absence of a showing of any integrative
benefits from the commingling, the DOJ's prima facie case
of anti-competitive effect was sufficient to ground a finding of
illegal monopoly maintenance. This has particular implications for
Windows XP, which features tightly integrated media and messaging
applications. It is hardly surprising, therefore, that on July 18,
Microsoft filed a brief with Court of Appeals, arguing that the
court had 'overlooked - or misinterpreted' critical evidence in its
ruling on the commingling issue. Its request for appellate
re-consideration of the issue was rejected on August
2.
Arguably, the concept of the
operating system has to change with the concept of computing: the
shift from the desktop or network to the Internet will necessarily
involve a shift in the nature, scope and understanding of the
operating system. However, it remains the case that where such
applications are embedded in the operating system, Microsoft may be
adjudicated to have illegally commingled code so as to deter the
installation of competing products.
4.3 Playing for Time
In the immediate aftermath of the
Court of Appeals decision, there was a real likelihood that Windows
XP would be included in a remedy. Further, Microsoft's opponents
were calling for an injunction preventing the release of XP. So,
Microsoft dragged out court proceedings and settlement
negotiations, while rushing to release XP. At the time of writing,
the company seems to have succeeded on all points.
On August 7, Microsoft applied to
the Supreme Court, asking it to overturn the District Court's
Findings of Fact[ 18 ],
the foundations of the entire case, on the basis of Judge Jackson's
inappropriate conduct and apparent bias. It also applied to the
Court of Appeals for a stay on the order remanding the case to the
lower court. While the appellate court had criticised Judge Jackson
and saw fit to remand the case to a new judge, Colleen
Kollar-Kotelly, it had found no evidence of bias in his Findings of
Fact. On August 17, the Court of Appeals issued a terse order
denying the bid to delay further proceedings while the Supreme
Court considered whether to intervene. On October 9, the Supreme
Court rejected Microsoft's application.
In August, in an attempt to push
the parties towards a settlement, Judge Kollar-Kotelly directed
Microsoft and the DOJ to complete a joint status report on how the
case was to proceed. The parties failed to reach agreement. On
September 28, Judge Kollar-Kotelly ordered the two sides into
settlement talks, with a November 2 deadline. If no settlement has
emerged by then, remedy hearings will begin on March 11, 2002. It
seems that little progress is being made. Eric Green, a law
professor from Boston University, was recently appointed as a
mediator.
On September 6, the DOJ had
confirmed that it would not seek an injunction delaying the release
of Windows XP. While the reluctance to break up Microsoft or delay
the release of Windows XP (which may give a much-needed boost to PC
sales) in part reflects the pro-business stance of the Bush
administration, it also works to preclude Microsoft from further
delaying proceedings. Importantly, the DOJ also suggested that a
remedy should involve Windows XP, saying that it wants the District
Court 'to investigate developments since the trial concluded'.
Judge Kollar-Kotelly has since rejected an argument advanced by
Microsoft that remedies should be limited to the specific misdeeds
raised during the trial, noting that she has 'large discretion' in
constructing a remedy - an incentive for Microsoft to settle the
case.
4.4 You Can Run, But You Can't
Hide
The European Commission recently
expanded its investigation of Microsoft business practices to cover
the integration into XP of Microsoft's Windows Media Player[
19 ]. On October 10,
The Wall Street Journal reported that the Commission has
alleged that Microsoft deliberately engineered incompatibility into
Windows XP in an effort to dominate the online market for media
software. Under EU competition policy, a dominant firm's design
changes will not attract scrutiny if they are implemented for the
purpose of objectively improving its own product. So, a dominant
firm is not free to make design changes that primarily impose
difficulties on its downstream competitors. Similarly, the
proportionality principle suggests that a dominant firm is not free
to cause substantial inconvenience to its competitors to achieve a
minimal improvement in its own product[ 20 ].
The leaked Statement of Objections
argues that 'nondisclosure of specifications needed for
interoperability' is contrary to EU competition law[ 21 ]. Quite simply, rivals
need 'the information that is necessary for effective communication
with the PC operating system'. The Commission has relied on its
Tetra-Pak decision. In that case, Tetra-Pak was found to
have abused its dominant position in the market for packaging
machinery and cartons by, among other things, withholding
information about its machinery from competing carton makers. It
was required to disclose the technical specifications for the
cartons. The Commission has alleged that Microsoft's failure to
share the information necessary to allow programs to interact with
Windows without glitches constitutes an abuse of its dominant
position in the markets for PC and server operating
systems.
The Commission's recent decision in
IMS Health seems particularly relevant to the Microsoft
investigations, although it is a considerably more controversial
precedent than Tetra-Pak [ 22 ]. IMS Health collects health-care information for
pharmaceutical companies under a method of data collection known as
the 'brick' system. Essentially, regions are broken down into
bricks within which drug sales can be tracked and analysed: at
issue was IMS Health's brick structure for Germany. In theory,
rivals can build their own structure simply by choosing where to
set the boundaries, but IMS Health's competitors in Germany found
that most pharmaceutical companies wanted either IMS Health's
existing structure or something based directly on it. Under
principles of intellectual property, a particular brick structure
can attract copyright protection, and IMS refused to license its
copyright to its competitors. Last July, on the same day that it
blocked General Electric's merger with Honeywell, the Commission
imposed interim measures, ordering IMS Health to immediately
license its copyright to competitors. The Commission argued that,
as an industry standard, IMS Health's proprietary data collection
system was an 'essential facility': IMS Health's refusal to licence
its data collection system therefore constituted an abuse of a
dominant position.
5. Battling for E-hearts,
E-minds and E-wallets
Microsoft's .Net is a gamble on the
future of Microsoft itself. The company is advancing into new
markets - and, to an extent, it is also defining those
markets. Windows XP, the introduction to .Net, suggests a
unified view of online computing:
'Windows XP is important because it
finally unites Microsoft's venerable consumer software, which has
been based on its original MS-DOS programming, with the more
robust, non-DOS version known as NT and designed to run on servers.
Completing the transition begun with Windows 2000, which was not
originally intended for PCs, XP is designed to integrate the
desktop operating system not just with a local network server but
with the global network of the Internet'[ 23 ].
The implementation of the various
elements of .Net will see Microsoft square off with its arch-rivals
Sun Microsystems and AOL Time Warner. Essentially, Microsoft is
competing with Sun for the de facto programming language of the
Internet, and with AOL for the online consumer. This is not
competition within markets, but competition
across markets and for markets.
5.1 Sun Microsystems
The Java programming language was
launched in 1995 by Sun Microsystems. Since then, it has become
synonymous with creating Web applications, or 'applets'. Whereas
Java is based on data processing, or moving applets around the
Internet, the focus of Microsoft's competing language, C#, is much
more about the transfer of information[ 24 ].
Programs written in Java are run in
their byte code form by a 'Java Virtual Machine' (JVM), which in
turn works on any computer that has software called the 'run time
environment' installed. Effectively, this allows Java-based
programs to run on a multitude of platforms, which is why it has
been so popular on the Internet. So, the JVM can be thought of as
the platform on which Java-based programs are run.
In July 2001, Microsoft announced
that while Windows XP would support Java, it would not incorporate
Sun's JVM. Although this decision appears to eliminate an important
distribution channel for Sun, it should be noted that XP will work
with a pre-existing JVM, and with downloads of current and future
versions of the Sun JVM[ 25 ].
Also, programs such as AOL's Netscape Navigator 6.1 incorporate
Sun's JVM. More significant is the fact that Sun's current JVM is
not compatible with IE6: the browser can only use Microsoft's JVM,
which is built around C#. While Sun will make available for
download an IE6-compatible version of its JVM, many users will be
deterred by the size of the file (5MB).
In January, Microsoft launched a
new set of software tools that translate Java software so it can
support .Net, allowing developers to convert Java-based software
into Microsoft-based software without having to rewrite code.
Oracle and Sun responded with a set of tools that translates
Microsoft Active Server Pages (ASPs) to Java Server Pages (JSPs).
The companies also hope to migrate users of Microsoft's server
database to Oracle's server database. Microsoft will embed elements
of .Net's programming framework into its server software, and IBM
and Sun will shift elements of their Java-based development tools
into their server operating systems. (Server software runs
Internet transactions, and so is an integral part of Microsoft's
.Net strategy, and Sun's competing vision, ONE.)
5.2 AOL Time Warner
Whereas Microsoft is a technology
company, AOL Time Warner is primarily a content company, relying on
partnerships with technology companies such as RealNetworks.
However, despite their different appearances, Microsoft and AOL
share the goal of 'owning' the Internet user.
Over time, AOL has bolted features
such as instant messaging, calendaring and photo services onto its
proprietary Internet access service. AOL Anywhere allows customers
to access its services through decides such as mobile phones,
BlackBerry pagers, and AOLTVs. AOL also has the second-largest
cable system in America, with 2 million broadband Internet
subscribers[ 26 ].
The mass adoption of broadband Internet access will allow AOL to
deliver its movies and music to subscribers.
AOL has more than 30 million
subscribers, almost 5 times as many as Microsoft's MSN service.
However, Microsoft's Internet properties are among the world's most
visited, and its browser is the most popular. Further, users
accessing the Internet from Windows XP for the first time will be
prompted to sign up for Passport, which will introduce them to .Net
MyServices.
The battle for the consumer Web
services market will be determined by the success of the
identification tools underlying the competing packages. Passport
and .Net will compete head-to-head with AOL's 'Magic Carpet'
project, which builds on AOL's Screen Name and Quick Checkout
services. These services currently offer AOL users a single sign-on
and password that can access about 40 AOL properties and about 100
third-party e-commerce sites.
In July 2001, AOL made a $100
million investment in online retailer Amazon. In return, AOL will
enjoy access to Amazon's e-wallet or identification technology.
Amazon owns crucial e-commerce patents, covering its 1-click
ordering facility, its affiliates program and its recommendation
tools. Apparently, the deal will require Amazon to use AOL's Screen
Name service instead of Microsoft's Passport. By partnering with
the Web's largest retail company, AOL has gone some way to
insulating itself against Microsoft's advances. Microsoft soon
responded with its own high-profile partnership. This month, it
struck a deal with Disney's ESPN.com that gives MSN exclusive
rights to the sports site's content. ESPN will eventually
incorporate Microsoft's streaming media technology and adopt
Passport as an authentication option.
5.3 Ganging Up on Bill
Sun and AOL have also entered into
a joint venture that will compete with the e-business aspect of
Microsoft's .Net initiative. The joint venture, called iPlanet,
seems to build on Sun's Open Net Environment (ONE) strategy, which
is based on the Java programming language. In August, iPlanet
announced the introduction of a set of Web services software tools.
Sun will release a free developer's kit that will guide developers
on building Web services to the ONE framework. It also plans to
release industry-specific Web service developer's kits in the
future.
Whereas AOL and Yahoo have
developed consumer-oriented messaging applications, Microsoft's
Windows Messenger is aimed at both consumers and corporate users.
For example, it includes a document-collaboration feature, and will
allow corporations to set up closed messaging groups that rely on a
corporate server. Against this backdrop, it is hardly surprising
that Sun and AOL's iPlanet joint venture is developing corporate
instant messaging software (which will presumably have the
advantage of interoperability with AOL's existing messaging
network).
Finally, Sun recently launched
Liberty Alliance, an alternative to Microsoft's Passport, claiming
that it will provide a neutral method for handling online
identities. Founding members are Sun, General Motors, Bank of
America, Nokia, RSA Security and RealNetworks. It seems that Sun
has built a 33-company coalition in just two months, although AOL
and Yahoo are notably absent. Sun has said that its ONE strategy
and iPlanet e-commerce software products will incorporate the
Liberty specifications.
6.
Conclusion
Microsoft's tendency to integrate
into its operating system features that are commonly understood as
stand-alone applications merits antitrust scrutiny. However,
Microsoft's critics may ignore a crucial point: Windows XP is not a
traditional PC operating system. Rather, it is more akin to the
interface for a new system of online computing. Remember too, that
in the emerging markets for online services, Microsoft is competing
against two heavy-hitters: Sun Microsystems and AOL Time Warner.
Barging into a nascent market and crushing a smaller firm is one
thing, but creating new markets and leaving your rivals trailing in
your slipstream is quite another.
Footnotes
1 Computer manufacturers
began shipping Windows XP systems on September 24. Excellent
coverage and analysis of Windows XP and .Net, Microsoft's
over-arching 'Web services' strategy, is available at < http://www.news.cnet.com >. See in particular < http://news.cnet.com/news/0-1003-201-7540650-0.html >.
2 . Walter Mossberg,
'Microsoft Taints New Windows XP with Self-Promotion', The Wall
Street Journal Europe (September 20 2001), at page
21.
3 . Ibid . Mr
Mossberg also described as 'somewhat suspicious' the fact that
software from some of Microsoft's rivals will not work fully under
Windows XP. For example, Version 6.0 of AOL's client software and
RealNetworks' 'Real Jukebox' media player both require user
updates.
4 . See Hogan J,
'Competition Policy for Computer Software Markets', 2001 (2)
The Journal of Information, Law and Technology (JILT),
< http://elj.warwick.ac.uk/jilt/01-2/hogan.html >. (Sections 1.2 & 1.3 discuss the particular
nature of software markets and the antitrust implications; Section
2 analyses the trial proceedings in the Microsoft
case.)
5 . Connecting a camera to
Windows XP would bring up Microsoft's Scanner and Camera Wizard.
This guides users through the steps involved in uploading a digital
photo from a camera to the PC, modifying it with software, and
printing it through an online photo finishing service. A dialog box
displayed a list of installed software capable of accessing the
photos on the camera. Microsoft had not made allowances for camera
makers such as Kodak to use their own software to connect with
users' cameras by default (although a user could choose a default
program from the menu).
6 . The ongoing rivalry
between Microsoft and AOL is considered in Section 5.2. (below).
While AOL does not produce its own media player application, it has
an exclusive arrangement with RealNetworks.
7 . 'List Makers Take
Control', The Economist Technology Quarterly (September 22
2001), at page 31.
8. Instant Messaging (IM)
technology may establish itself as an independent platform for a
variety of communications and information-gathering applications.
Messaging already goes far beyond simple text-based messages,
incorporating audio and video-conferencing capabilities.
Microsoft's new IM application, Windows Messenger, will incorporate
file-sharing technology, allowing users to collaborate on
documents. Small companies such as ActiveBuddy are developing
applications that deliver information that would currently be
accessed through search engines over an IM platform.
9 . With .Net, Microsoft
hopes to replace one-time sales of software and upgrades with
recurring, subscription-based revenues.
10 . bCentral, a Microsoft
website for small businesses, will offer software tools to enable
business customers to create their own Web services.
11 . A critical aspect of
this is 'evangelising' software developers. More than 4 million
developers currently use Microsoft's Visual Basic tools: Microsoft
is encouraging them to build Web services applications on
Microsoft's software. It has introduced a new tool called
VisualStudio.Net, to facilitate developers in building Web services
to the .Net standard. See Section 5.1 (below).
12 . 'List Makers Take
Control', loc cit , at page 32.
13 . <
http://www.microsoft.com/presspass/trial/appeals/06-28opinion.asp >.
14 . The Court of Appeals
reversed the finding that Microsoft attempted to monopolise the
browser market.
15 . See the discussion of
the ongoing EU investigations at Section 4.4 (below).
16 . Yahoo is also building
a range of premium services, such as online music subscriptions,
finance services, and sports coverage. The portal has an audience
of 200 million members: the challenge is to 'monetise the
eyeballs'. Yahoo also hopes to decrease its dependence on
advertising revenue, repositioning itself as an 'online marketing
partner' rather than a neutral advertising vehicle. For example, it
plans to sell movie tickets online, it has created a joint Web
destination with Sony, and it plans to offer entertainment
companies services ranging from research drawn from Yahoo members
to Web-building services to provide an online identity for
entertainment product.
17 . Loc cit , at
page 36-37.
18 . 84 F. Supp. 2d 9 (DDC
1999), available at < http://www.microsoft.com/presspass/trial/c-fof/default.asp >.
19 . In investigations
brought on by complaints from server-manufacturer Sun Microsystems,
the Commission is examining whether Microsoft used its OS monopoly
to gain an unfair advantage in the server market. This has
particular implications for Microsoft's shift to a 'software as a
service' business model: .Net will be server-driven. (Whereas US
antitrust law requires negative effects on consumers as opposed to
competitors, EU antitrust law focuses on foreclosure, i.e. whether
dominant firm conduct or agreements between firms deny competitors
access to markets).
20 . Hogan J, loc
cit , Section 3.2 (footnotes 65-67 and associated text). See
also Sections 3.3 & 3.4, and Section 1.3 (footnote 19 and
associated text): 'Encouraging effective competition within an
established standard requires that antitrust policy compels
compatibility, or more particularly, that it enables the
development of interoperable (i.e. downstream) products... In the
context of [the Microsoft case]... a compatibility regime would
require the disclosure of the Application Programming Interfaces
(APIs) that hook Internet Explorer (IE) to other parts of the
Windows OS, allowing competing browsers the same degree of
interoperability with Windows as IE enjoys.' I argued that the
imposition of a disclosure remedy would be more effective than a
break-up. While Microsoft discloses the APIs that hook applications
to Windows, its does disclose the APIs that tie together the
component parts of the Windows operating system, which currently
includes IE and in the context of Windows XP will probably include
features such as MSN, Windows Messenger and Windows Media
Player.
21 . 'Microsoft Faces
Uphill Battle in European Antitrust Case', The Wall Street
Journal Europe (October 12 2001), at page
4.
22 . 'Battling over
Bricks', The Economist (August 25 2001), at page
54.
23 . 'Microsoft's XP tests
antitrust rules', Oxford Analytica (October 24 2001),
available at < http://www.breakingviews.com >.
24 . Flowing from this,
Microsoft has developed C# with XML (Extensible Mark-up Language)
in mind. XML is not a programming language: it cannot be used to
manipulate data. It is a protocol for the transfer of data over the
Internet - HTML (Hypertext Mark-up Language) is seen as too limited
for the future of the Internet. While Java supports XML, Microsoft
may have an advantage in that C# is being developed with XML in
mind. See 'A Lingua Franca for the Internet', The Economist
Technology Quarterly (September 22 2001), at page
14.
25 . Under the terms of a
court settlement, Microsoft was restricted to distributing a four
year-old version of the JVM, which did not display the full
functionality of the Java language.
26 . AT&T's Broadband
division is up for sale, and has attracted a $52 billion bid from
Comcast. Microsoft is determined to prevent AOL from becoming the
dominant player in the US cable market: the combined market share
of AOL and AT&T's Broadband operations is approximately 40%. In
July, the Financial Times reported that Microsoft was prepared to
use its financial muscle (it has a cash pile of $45 billion) to
encourage alternative bids for AT&T Broadband.
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